60Tile International 1/2016

The Russian economy is in rough waters, al-

though in the wake of a turbulent 2015 that saw GDP fall by 3.8% by the year’s end, the situation is now slowly stabilising. How-ever, according to World Bank forecasts, the upturn (+1.5%) will not arrive before 2017, and 2016 is expected to see a further contraction, of around 0.6%.Against this macroeconom-ic backdrop, the construc-tion industry is also going through a difficult patch, and

continued to shrink through-out 2015, in line with a down-ward trend that dates back to December 2013. Accord-ing to preliminary figures re-leased at the beginning of January by Rosstat (Russia’s National Statistics Institute), the country’s construction output fell by 7% year-on-year in 2015. This indicates that the pace of decline ac-celerated compared with the previous year, when the industry reported a 2.3% fall on 2013 (Graph 1).By value, construction out-put dropped from 6,125.2

billion roubles (€71.52 bil-lion) in 2014 to 5,945.5 billion roubles (€69.42 billion) last year, which represents a fall of 2.9%.More detailed analysis re-veals that, while the industry saw average year-on-year falls of 2.5% in each quar-ter of 2014, the first quarter of 2015 showed a downturn in construction output of 6.8% on the same period in 2014. The speed of this down-ward trend increased in the two subsequent quarters, to -11.1% and -12.5% respec-tively, before slowing to -4.4%

in the last quarter.The devaluation of the rouble also took its toll on the con-struction industry’s health, by increasing the price of raw materials and machin-ery. Between January and September 2015, accord-ing to Rosstat, the composite price index for the construc-tion industry rose by a sub-stantial 8.4% compared with the same period in 2014 (the previous year’s increase was 3.8%). In the same period, the cost of machinery rose by 13%, while the average retail prices of building ma-

Economy & markets

Rough waters for Russian construction market

Graph. 1 - Construction output in Russia (billions of roubles) and real year-on-year change, 2014-2015

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terials were 10% higher than the previous year.

Residential building holds the line

Despite substantial shrinkage in the mar-ket as a whole, residen-tial building enjoyed con-tinued growth in 2015, albeit at a slower pace than the pre-vious year, in a sign that difficul-ties are beginning to spread to this segment too. After a flying start, with first half growth of 15.3% on the same period

Graph .2 - Construction output in Russia (% change year on year) for the period January 2014 – December 2015

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in 2014, equating to 34.3 mil-lion sq.m of housing comple-tions, output in the segment dropped by 6.2% (Graph 3) compared with the same period in 2014 (equating to 17.7 million sq.m of hous-ing completions). In the first nine months of the year, a total of 52 million sq.m of floor space reached com-pletion, which still equates to +7% compared with the same period in 2014. The lat-est data released by Ross-tat covers the period from January to November 2015, and points to a further slow-down in growth to just +3.4% (Table 1). Although positive,

this figure indicates how res-idential building is also los-ing the vigour it showed last year, when growth was run-ning at +18.2%. It’s worth not-ing, however, that 2014 was a record year for residential building in Russia, in terms of new housing completions, with total floor space of 84 million sq.m commissioned – the highest figure since 1990.Moscow was the top-per-former in residential building in 2015, with 3.8 million sq.m of new housing completions, representing a rise of 14.4% on 2014 (3.3 million sq.m) and the best result since 2007. According to a repre-

sentative of the Moscow De-partment of Construction and Urban Policy, however, the figure should be treat-ed with caution because it derives from the comple-tion of numerous projects launched several years ago, when the city council imple-mented a new urban policy and issued a large number of building permits.In St Petersburg, by contrast, residential building dipped by 7%, with 3 million sq.m of completed floor space.The trend in the residential segment remained broad-ly stable in the Krasnodar region, where 3.82 million

Graph 3. - New housing completions in Russia (in million sq.m) and annual change, Q1 2013 – Q3 2015

sq.m of floor space was completed in the period January-October 2015, rep-resenting a slight fall on the 3.99 million sq.m reported the previous year. The num-ber of new housing units brought to completion was 47,900.The segment also showed strong performance in Yeka-terinburg, the capital of the Sverdlovsk region, and the country’s third largest city. 1.9 million sq.m of floor space were completed there be-tween January and Octo-ber 2015, representing a rise of 19.6% on the same peri-od in 2014. The bulk of the in-

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crease was concentrated in January, when the volume of housing completions was six times higher than the equiv-alent figure for January 2014.Lastly, in Novosibirsk, the largest metropolis in Sibe-ria, residential floor space completed in the period January-September 2015

Table 1. Housing completions in Russia, by volume and floor space (period 2011 – January-November 2015)

amounted to 1.78 million sq.m, equating to a 30% in-crease on the same period in 2014 (1.37 million sq.m).

Production of building materials

The downturn in the industry also had adverse effects on

the production of building materials. According to Rosstat, pro-duction fell by 7.4% year-on-year in the period January-November 2015, whereas figures for 2014 show a year-on-year rise of 1.1% com-pared with the previous year. The worst-hit materi-

al was cement, which saw an 8.9% fall in production over the first 11 months of the year (Table 2). Brick pro-duction also fell, by 6.9%, to 6.3 billion units. Ceramic tiles bucked the trend, however, to see year-on-year growth in production of 3.2% (158 mil-lion sq.m)

Table 2. Production of building materials in Russia (November 2015 and January-November 2015)

Economy & markets

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The ceramic tile industry

Ceramic tile pro-duction went against this trend, growing by 3.2% un-til November and then stabilising at a lower lev-el of +2.2% at 31/12/2015, equivalent to 170.4 million sq.m.This positive year-end result was mainly attributable to the wall tile segment, which expanded from 70.8 million sq.m in 2014 to 75.1 million sq.m in 2015 (+6%), while the floor tile segment contracted slightly (-0.7%) to 95.3 million sq.m in spite of the growth in output on the part of Kera-ma Marazzi.Imports dropped sharply to an estimated 46 million sq.m (-36.4%).

With the excep-tion of Belarus which managed to limit the de-cline, all the other exporter countries suffered between 30% and 60% losses by vol-ume (Table 3). 5

2005 2006 2007 2008 2009 2010 2011 2012 2013 20142015 %

share% Var. 2015/14Est.

1. Belarus 8.2 7.7 9.2 11 10.9 14 14.1 12 14.4 15.8 15.3 33.0 -3.2

2. Ukraine 1.3 1.9 2.8 5.7 6.2 10.1 13.8 17 20.5 15.2 10.9 23.5 -28.3

3. Spain 7.9 10.1 11.2 13.9 7.1 9.3 10.4 13 13.1 13.1 7 15.1 -46.6

4. China 6.8 11.7 12.5 13.9 4.8 7.4 10.6 10.8 14.9 12.8 5 10.8 -60.9

5. Poland 4.4 4.6 7.4 5.5 2.7 3.4 3.9 4.6 4.9 4.5 3.3 7.1 -26.7

6. Italy 4.9 5.6 6.1 6.3 3.5 4 4.7 5.8 5.6 5.1 2.8 6.0 -45.1

7. Germany 0.4 0.5 0.6 0.9 0.5 0.6 1.2 1.5 1.7 2 0.8 1.7 -60.0

8. Turkey 1.7 1.3 0.8 1 0.4 0.7 1.3 2 1.8 1.5 0.5 1.1 -66.7

Other countries 3.3 2.8 4.8 4.6 2 1.9 2.9 5.5 3.6 3 0.8 1.7 -73.3

TOTAL 38.9 46.2 55.4 62.8 38.1 51.4 62.9 72.2 80.5 73 46.4 100.0 -36.4

Table 3 - Russian imports of ceramics tiles

Values in million sq.m Source “World Production & Consumption of Ceramic Tiles”, Acimac November 2015 and estimates for 2015