A guide to the construction industry in Southern Russia

Russia’s Southern Federal District is the fourth largest in terms of population, with over 14 million inhabitants, and the seventh largest in terms of area. Some of Russia’s most important cities are situated here, such as Krasnodar, Rostov-on-Don and Volgograd, with the region acting as a vital gateway for culture and trade.

As with the majority of Russia’s most developed regions, construction plays a large role in the economy of the Southern Federal District; not least facilities being created for the upcoming 2018 FIFA World Cup. Of course, it is not just sporting facilities that are being constructed. Here, we talk about some of the region’s key building projects as well as the prospects for construction in the area.

 

Housing Construction

As one of the largest regions in the country in terms of population, there is a substantial demand for housing across Southern Russia. Russianconstruction.com revealed that, for the third consecutive year, the Krasnodar area delivered the second largest amount of new housing developments to meet this need.

The Rostov region also showed impressive growth during 2015 in the housing construction sector. From January to July, 1,364,000 square metres of housing was put into use. Around 16,000 new apartments were constructed during this period. A number of districts, including Azov, Gukovo, Novocherkassk and Bagaevsky were amongst those that showed the highest construction rates.

Overall housing construction stats for the Southern Federal District in 2015 (where available) are as follows:

• Republic of Adygea - 295,455 square metres of housing completed in 2015, 9% up on 2014
• Astrakhan Region - 575,200 square metres, 7.8% down on 2014
• Volgograd Region - Stats not updated for 2015 yet. 1.1 million square metres built in 2014, 38% up on 2013
• Rostov Region - 2.4 million square metres in 2015, 3.6% up on 2014
• Republic of Kalmykia - 1.25 million square metres, 0.6% up on 2014
• Krasnodar Krai - 4.6 million square metres in 2014, 2.9% down on 2014. There was a 20% increase in housebuilding from 2013 to 2014.

Developers in both the Krasnodar and Rostov regions are focussing on building affordable housing in 2016. A raft of different projects are planned. This is great news, considering the recent slowdown in Russia’s construction market and the economic difficulties facing the country.

Confidence is high amongst developers in the region. For example, Varvara Rotmistrovskaya, Director of the Magistrate Don construction company, revealed that the firm is beginning construction of a 34 hectare residential project in Rostov-on-Don’s Leventsovksy district in 2016. Three further developments are also planned for the city including a ‘cosy village’ residential project and two apartment complexes.

Selling is a challenge, but with a focus on affordability, plus government mortgage schemes, developers are confident their units will be snapped up. “We are planning to sell at least 90 thousand square metres in 2016. We have prepared a safety cushion,” said Sergei Ivanov, President of Development-Yug. “Now we are ready to launch 10 mass construction projects this year, including two in Rostov and two more in Krasnodar.”

Volgograd too will enjoy an increase in housing. West Construction plans on building more than 2 million square metres of housing over the next 15 years. September 2015, saw Regional Governor Andrei Bocharov lay the first stone in the Spring Valley development.

 

World Cup Focus

Rostov, Volgograd and Sochi have all been named as host cities for the 2018 FIFA World Cup. The drive to provide world-class football facilities, plus the required infrastructure and accommodation buildings, has seen a frenzy of large-scale projects across Southern Russia.

Many brand new stadiums had to be built to meet the 2018 deadline. The Rostov Arena will be the centrepiece of a brand new city centre when completed in 2017. But the key development in region will be the $600 million Yuzhny International Airport. The first new international airport built in Russia in the post-Soviet period, Yuzhny will replace the current site and handle 8 million passengers a year at its peak.

Despite initial uncertainty regarding its status as a host city, Volgograd has seen a number of developments alongside its own stadium. Chiefly, a large number of hotels were constructed to provide accommodation for teams and visitors alike. The Park Inn was rebuilt, alongside two Hilton hotels and the 720 million rouble ($9.2 million) Monomakh.

Sochi, due its status as the host of the 2014 Winter Olympics and the extensive facilities created for that event, has had comparatively little work completed. However, its existing developments are undergoing refinement. The Fisht Olympic stadium, centrepiece of the Winter Olympics, will be utilised for the World Cup.

As well as adding prestige to Putin’s Russia, the World Cup is also likely to inject billions of roubles into regional economies – not least the many construction and infrastructure projects completed or underway.

To find out more about the World Cup opportunities for international building material suppliers, read our guide to the building work going on in each host city.

 

Other construction projects

Of course, it is not just housing and projects aimed at accommodating the World Cup finals that make up construction activity in Southern Russia. A number of other projects have been completed in recent months or are slated for 2016.

For example, authorities in Krasnodar have demanded an additional 30,000 pre-school places be allocated. As such, new educational facilities will have to be built. A new airport terminal is also planned for Anapa in the Krasnodar region. A total of $1.5 billion has been spent on the terminal so far.

As a city with a noted industrial past, Volgograd will see an influx of factories and other commercial enterprises. Expansion on Lukoil’s oil refinery in the city is currently underway with completion expected in 2016. A sandwich board plant, commissioned by an Italian brand, was put into operation in late 2015 adding an extra 100 jobs for Volgograd’s citizens in the process.

Rostov could also be receiving a Scottish-style park named Glasgow after the UK city with which Rostov is twinned. Deputy Mayor Sergei Kuznestov announced the scheme, celebrating 30 years of the two cities’ twin status, in January 2016. The park will feature “Scottish symbols, flaura and fauna” and will sit in the Temernik housing scheme once completed.

 

How can you enter the Southern Russian construction sector?

With affordable housing still in demand, alongside a need for further facilities such as schools, hotels and factories, the construction industry is likely to perform well in Southern Russia.

The YugBuild exhibition, held in Krasnodar each March, connects Southern Russia’s top buyers, specifiers and government figures with international suppliers of the building and interior materials that are so in demand in Southern Russia’s building projects. Read more about the exhibition here – taking part could just give you the contacts you need to enter this promising market.

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