A guide to St Petersburg's construction industry
Published on 24/08/2015
While Moscow might be the capital of Russia, it would be a huge mistake not to take into account the second-largest city: St Petersburg. This metropolis, located near the Finnish border in western Russia, is a trade hub and an impressive city with a long history. It is also home to a large number of high-profile construction projects.
This has made it a good location for international investors in the past. Commercial construction companies have taken advantage of the city's status as a manufacturing hub to build plants and factories, while other firms have taken interest in it because of its size and importance to Russia as a whole.
If you're interested in entering the build and interiors market of St Petersburg then read on for some helpful facts and tips about this vibrant area of Russia.
Key statistics*
- Population: 5,195,700 (2015).
- Population growth: 0.1 per cent (January-June 2015).
- Second-largest city in Russia.
- Gender balance: 45.4 per cent male, 54.6 per cent female.
- Average age: 41.2 years old.
- Percentage of population of a working age: 56.2 per cent.
- Unemployment: 1.4 per cent.
- Average yearly income per capita: $6,329.18.
- Gross regional product: $37.95 billion (2013).
- Volume of foreign investment into the economy: $13.4 billion (2013).
- Accounts for around 4.3 per cent of Russia's GDP.
- Starting a business takes an average of seven days (average for Europe and Central Asia is 12.1 days).
Construction statistics*
- Construction industry turnover: $5.8 billion.
- Construction industry annual growth: 6.5 per cent.
- Value of construction work completed: $6.6 billion.
- Permission granted for 54,700 residential units in 2014, up from 42,500 the year before.
- Average area of a residential unit: 59.6 sqm.
- Total area of commercial construction completed: 110,200 sqm.
- Foreign investments in construction: $37 million (2013).
- People employed by the construction industry: 64,300 (2015).
Major projects
1. The Lakhta Center
Nine km from the centre of St Petersburg is the Lakhta Center, a huge structure that has already broken one world record and may break several more. In March 2015, some 19,624 cubic m of concrete was poured into the bottom foundation plate of the tower, which is around 3,000 cubic m more than the previous Guinness World Record holder for largest continuous concrete pour.
The building will serve as the new national headquarters of Gazprom, Russia's state-run oil and gas company. The 86-storey building has an estimated cost of $2.5 billion, and once construction is complete in 2018 it will hold a children's museum and science centre, a four-star Crowne Plaza hotel, a planetarium, a cinema, and a shopping gallery.
2. New Zenit Stadium
In preparation for Russia hosting the 2018 soccer World Cup, a number of new stadiums are being constructed around the country; for more on this subject, read our free white paper. One of these is being built in St Petersburg, although it does not yet have a finalised name.
The stadium is currently being referred to as the 'New Zenit Stadium', as it will be home to the FC Zenit St Petersburg soccer team once completed. This is scheduled to occur in May 2016, should everything go to schedule.
New Zenit Stadium will have a total capacity of 69,000 people once finished. The arena will be state-of-the-art, featuring a retractable roof and a roll-out pitch. The overall cost of this major project is estimated to be more than $1 billion, making it one of the most expensive stadiums in the world.
3. Kresty-2
The Kresty Prison is notorious in St Petersburg for having held political prisoners during the days of the Tsars and the Soviets. However, the building no longer meets modern standards, so it is being replaced by a new prison - Kresty-2 - that looks likely to be the largest in Europe once it has been completed.
The design of the new prison features two cell blocks, each in the shape of an 'X', which has led to people giving the building the nickname 'Crosses-2'. This mimics the shape of the original Kresty Prison, but the new blocks will be twice as tall. Each one will hold 1,792 prisoners over eight storeys.
The building will also feature a dormitory for inmates serving as prison housekeepers that will hold 280 people, as well as 216 solitary cells for dangerous inmates. This will give it a total capacity of 4,080 prisoners, making it bigger than France's Fleury-Merogis Prison - the current largest in Europe - which holds around 3,800.
Doing business in St Petersburg
One of the unique things about St Petersburg compared to the rest of Russia is the sheer number of small businesses. The city contains the highest concentration of small and medium-sized enterprises (SMEs) in Russia, meaning that build and interiors projects undertaken there will often involve large numbers of subcontractors rather than a few large firms.
If you're used to doing business in Moscow, St Petersburg might be a welcome surprise. The World Bank's 'Doing Business 2015' report took St Petersburg into account for the first time this year; before 2015, only a nation's capital was considered. This inclusion bumped Russia up to the 62nd best place to do business in the world, when previously it had ranked 92nd.
There are four fewer steps to obtaining a construction permit in St Petersburg than in Moscow - 17 as opposed to 21 - and on average this process is quicker and cheaper than it is in the Russian capital. The taxes for businesses are slightly cheaper as well: 48.7 per cent of profit, compared to 49 per cent in Moscow.
International investment
St Petersburg receives millions of dollars in foreign investment, particularly from the UK. In 2011, the nation invested around $1.04 billion in the city, almost double the amount from the next-highest contributor, South Korea. However, China leads the way in direct investment in St Petersburg, with $345.4 million.
While the vast majority of foreign investment into St Petersburg goes to the manufacturing sector - almost $4.4 billion out of a total of $6.1 billion in 2011 - a significant amount of the rest is in real estate and construction. These two sectors alone accounted for $789.3 million of foreign investment in 2011.
Notable projects in recent years include the Novartis Pharmaceutical Manufacturing Plant, a $150 million construction funded by Swiss firm Novartis. Construction was delayed in late 2014, but the plant is up and running now.
Interior design trends
Traditionally, homes in St Petersburg are decorated in neutral colours. Beige, pastel pink, light brown and olive were all very popular shades over the last few years, particularly in bedrooms. However, now there is a trend towards more vibrant tones and different combinations of colours. Pink, blue and purple are especially becoming more popular.
Bathrooms in St Petersburg are also becoming more eclectic from an interior design perspective. Residents of the city are moving away from a single basic design and more towards a number of different options. Tiles or granite are still the most popular for flooring, but more adventurous plumbing features - from corner baths to shell-shaped showers - are coming into fashion.
*All statistics for 2014 unless stated otherwise.