Growth for Russian Urals construction sector

European market research and consulting company PMR has forecast an upswing in the Russian Urals construction sector for 2014 and beyond.

PMR, in its report ‘Construction sector in Russia 2014 – Regional focus. Development forecast for 2014-2019,’ predicted 3% growth in the Urals federal district for 2014.

PMR forecast that regions with vast natural resource potential would see the greatest growth, including Siberia, the Urals, and Far Eastern Federal Districts.

It said the increase would be largely fuelled by state-funded civil engineering projects, mostly for the development of the country’s transport and heavy industry infrastructure.

The Urals federal district is expected to have the fastest developing construction market of all federal districts over the next three years.

However, PMR said this performance would be achieved thanks to a low comparison base, after three years of contraction, including a 13% drop in 2013.

The civil engineering segment is said to dominate the district’s construction market. According to PMR, this is responsible for over 60% of the market’s output, largely supported by investment in heavy industry.

Tyumen Province is the country's oil and gas region, while Chelyabinsk Province is one of the key metallurgical regions in Russia.

PMR said it also expected solid growth from the Volga federal district, where the construction market is expected to average a 3% growth over the next three years.

It is expected that the non-residential construction segment would drive this growth, with increases in industrial construction projects. Volga federal district is the second largest contributor to processing industry output in Russia.

Volga federal district was also tipped for growth in the shopping centre construction segment. Retail real estate developers in Russia have preferred to invest in large cities, according to PMR.

Five out of 15 cities with more than 1 million inhabitants, and seven out of 21 cities with 500,000-1,000,000 inhabitants, are situated in the Volga federal district.

Meanwhile, the Southern federal district was expected to see a market contraction in 2014.

PMR said this followed double-digit growth rates in three of the past four years.

However, PMR forecast that the construction sector would resume an upward trend in 2015, partly supported by projects to be implemented in Rostov and Volgograd provinces, as part of preparations for the 2018 FIFA World Cup tournament.