Future of Russia’s Construction Industry,Russia Infrastructure market - PowerPoint PPT Presentation

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Future of Russia’s Construction Industry,Russia Infrastructure market

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Russia infrastructure funding is heavily reliant on the state funding with 60-70% drawn from the state budget. This is because most of the projects are public centric with restricted revenue generating base. The Government once planned to invest an average of USD 90-100 billion every year from 2014-2020 in infrastructure, until the global crisis, compressing the Government to look out for more financing options – PowerPoint PPT presentation

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Title: Future of Russia’s Construction Industry,Russia Infrastructure market


1
Rail Network is Prime Focus of Construction
Sector in Russia Ken Research
2
  • Ken Research announced latest publication on,
    Russia 2016 Construction Outlook Growing Market
    with USD 300 Billion of Infrastructure
    Mega-Projects Pipeline, offer insights on the
    changing trends and key issues within the
    Infrastructure and Construction industry in
    Russia. The analysis of the aforementioned trends
    has been done across main sectors Real Estate
    Transportation Energy, Industrial Utilities
    and Social Infrastructure, within the industry
    with comprehensive overview of key sectors Power
    sector, Railways sector and Real estate-Mixed Use
    sector.
  • Key Topics Covered in the Report
  • Detailed profile of Infrastructure and
    Construction industry in Russia
  • Overall, Regional and Sector wise analysis of
    Megaprojects spending in Russia
  • Changing Dynamics, Opportunities and Challenges
    in the Russian Infrastructure industry
  • Detailed coverage of Project Financing and
    Project Risks (Cost Time overruns) Returns
  • Comprehensive overview of Key sectors Power
    sector, Railways sector Mixed-use sector
  • Competitive landscape of the Infrastructure and
    Construction industry in Russia
  • Regulatory framework (including PPP growth)
    applicable toInfrastructure and Construction
    industry in Russia

3
  • Economic Environment of Russia
  • Russia is one of the most affluent mixed economy
    in the world. Vast natural resources are the key
    determinant of the Russian economy. It has
    abundant oil, natural gas and precious metals
    making up a major share of Russian exports and
    comprising about half of the Govt.s revenue.
    This huge revenue helped Russia overcome the
    economic collapse of 1998and is also presently
    one of the key drivers of countrys growth. The
    Russian economy is characterised by significant
    state-control on key sectors of the economy.
    Large state-owned institutions hold strong
    influence over political and financial
    institutions and distort the economy. From early
    2014,, as a result of falling oil prices and
    economic sanctions from EU US, the economy is
    in recession and expected to show recovery by
    2017 (World bank). Looking at the macroeconomic
    landscape, Russia is home to 143.7 million
    people. With GDP 1.178 trillion USD and GDP (PPP)
    3.6 trillion USD, it is the fifteenth largest
    economy in the world as per nominal GDP and sixth
    largest as PPP. The sector wise contribution to
    GDP includes 59.7, 36.3 and 4 by services,
    industry and agriculture respectively.

4
  • Despite strong growth of the Russian
    infrastructure industry since independence, the
    industry is still ranked low on the global
    platform. With some improvement in its global
    ranking to 74th position in 2015 from 101st in
    2012 the country still lags behind in providing
    best infrastructure facilities.It has a decent
    power and railway network but inefficient
    infrastructure in transport and telecommunication
    sector. Primarily focussing on the power and
    railway sector, huge investments are committed by
    the govt. under various development strategy
    programmes. Under Energy Strategy 2030 the
    govt. aims to double the electricity generation
    capacity by 2030. Russia has a megaprojects
    pipeline worth USD 300 billion. Similarly, to
    strengthen the railways, the backbone of Russian
    trade, govt. has announced few high speed rail
    projects costing more than USD 20 billion.
    Looking at strategic trends in Russian
    Megaprojects, investment in brownfield
    megaprojects have increased along with increasing
    average size of the megaprojects. Since most of
    these projects are public centric, hence are
    largely funded by state, with 60-70 of the fund
    coming from state budget. However, global crisis
    has forced the govt. to look for other financing
    options especially PPP. There has been a
    significant growth in PPP projects in Russia. As
    a result of low interest rates offered on loans,
    many foreign construction companies domestic
    private companies have entered the industry.
    Apart from the govt. creating vast opportunities
    for the growth of the industry, it still faces
    challenges such as few stalled big projects with
    little progress due to delays in finding
    investors, also impacting the final cost and
    timely delivery of these projects.

5
  • Major Market Players in the Construction Industry
    in Russia
  • To reduce the burden of Govt. of financing
    megaprojects, private players are increasingly
    being attracted through various ways. From PPP
    projects to offering low interest rates on loans,
    govt. is trying hard to incentivise the private
    companies to enter the industry. Some major
    market players in selected sectors of
    construction industry such as Power sector,
    Railway sector and Real estate sector include
    RusHydro, ROSATOM, RUSAL, Interbering, Russian
    Railways, Gazprom, Rosneft, Mitsubishi, Mitsui
    Co, Shell, Eastern Energy Company, State Grid
    Corporation of China, Russia Ministry of
    Transport, Moscow Ring Railway, Saint Petersburg
    City Administration, Kaltchuga Capital Management
    SA, Rublyovo-Arkhangelskoye, CDS Group, Sibur,
    LukOil Company, Vnesheconombank, African
    Development Bank, KFW Development Bank, Clean
    Technology Fund, European Investment Bank, World
    Bank, SK Most, AO Institute Stroyproekt, Jsc
    Bamstroymekhanizatsia, VTB, Rosmorport, Uralkali,
    Suek, United Grain Corporation, Global Ports
    Investments Plc, Metalloinvest MC LLC, Sberbank,
    Power Construction Corporation of China, SUE
    Moscow Metro, Mosinzhproekt, CRCC, China
    International Fund Management, COMEX Holding,
    Classic Group Ltd, RDI Group, DON Story Invest
    etc.

6
  • Realizing the inconsistent and changing dynamics
    of the infrastructure industry, it is becoming
    important to have access to an accurate and
    comprehensive infrastructure market data that
    helps in strategic business decisions. The market
    assessment report from BrikStats, "Russia 2016
    Construction Outlook Growing Market with USD 300
    Billion of Infrastructure Mega-Projects Pipeline"
    provides a detailed lens on the infrastructure
    and construction industry with a thorough
    sub-sector level assessment. It includes market
    sizing of upcoming project pipeline at a more
    granular level and provides forward-looking
    analysis on top clients, contractors,
    consultants/ PMcs, other civil contractors /
    suppliers with their respective working or
    partnership model. Furthermore, it shows the new
    and recent trends in the industry and how it may
    impact the business decisions of the involved
    companies.

7
  • The weak performance of the industry over the
    last few years is expected to continue in 2016 as
    well with a slight further contraction of the
    construction industry on account of worsening
    business environment and capital outflows due to
    Russia-Ukraine conflict. However, the growth
    momentum will be steadily regained through
    expanding infrastructural construction over the
    coming years. Also, increased investment in
    brownfield projects are expected as the country
    focuses on improving its existing assets.
    Industry competitiveness is also anticipated to
    increase on account of influx of foreign and
    domestic players in the industry as a result of
    PPP and low interest rates on loans.
  • Some key factors that will be driving the growth
    of Russian Construction Industry in coming years
    include
  • Recognition of Infrastructure construction as a
    major contributing factor to countrys long term
    growth
  • Huge investment by the govt. under various
    socio-economic development plans such as Energy
    Strategy 2030 and Strategy for Developing Rail
    Transport in the Russian Federation to 2030
  • Rising disposable income boosting the residential
    construction in the country
  • Fifa World Cup, 2018, expected to generate
    increased demand for infrastructure construction
    in related areas such as hospitality and
    transportation, along with attracting investment
  • Growing number of PPP projects in Russia low
    interest rates charged on loans
  • However, international sanctions and low oil
    prices will continue to challenge the growth of
    the Russian Construction Industry over next few
    years.

8
  • To know more on coverage, click on the link
    below
  • https//www.kenresearch.com/manufacturing-and-cons
    truction/infrastructure/russia-construction-outloo
    k/38143-97.html
  •  
  • Related Reports
  • https//www.kenresearch.com/manufacturing-and-cons
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    ok/38145-97.html
  • https//www.kenresearch.com/manufacturing-and-cons
    truction/infrastructure/saudi-arabia-construction-
    outlook/38144-97.html
  •  
  • Contact
  • Ken Research
  • Ankur Gupta, Head Marketing Communications
  • query_at_kenresearch.com
  • 91-124-4230204

9
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