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Construction and Infrastructure in Russia
The Russian construction sector is going through a difficult period at the moment being affected by the global economic crisis in the same way as in many other economies. The specific feature of the Russian construction industry, however, is that it had been enjoying an extremely buoyant period just recently until the effects of crisis became felt in autumn 2008. This was due to the continuing economic growth that Russia had for seven consecutive years when all major economic figures showed greater growth each year.
Despite the negative dynamics, the sector is operating, and has some very good opportunities in specific areas. Below are some of the important projects at different stages of development in major Russian cities. It should be understood that some of them are postponed for the moment, some continue, at any case, they give a good picture of the Russian construction sector, and expertise required in various fields - engineering, architecture, management consulting.
The construction industry was one of the fastest growing sectors of the Russian economy with a 20.6% Y-o-Y increase in 2007 of housing construction only. 18% of all foreign investments went into Russian real estate (about USD 18 billion), which was about 250% more than in 2006. Total amount of investments into real estate hit record of USD 1.05 trillion in 2007. As a result of these trends the number of recently announced projects (many of which are currently at the planning stage or at the early stage of construction) is huge and the scale of these projects is enormous. Below will be examples of some of the projects in major Russian cities – Moscow and St. Petersburg
Moscow
As the biggest Russian city, Moscow is leading the construction developments and is the centre of investment for Russia. It has been witnessing a greatest boom in retail and office space with a huge number of developments done and planned. Key foreign architects, engineers, designers, and real estate consultants are present in the market. "Moscow City" is one of the most ambitious projects in Russia planned to be the equivalent of the world-famous business districts like the Canary Wharf in London and La Defense in Paris. Currently there is no other district in Moscow comparable to it in terms of central location, opportunities for large development and central planning of the territory. The entire project takes up 1 square kilometre. Before construction began, most of the buildings in the area were old factories and industrial complexes that have been closed or abandoned. These are being replaced by a number of towers acting as office, retail, hotel, and entertainment facilities. The total cost of the project is estimated at USD 12 billion, and the planned completion date is 2012 (subject to change now).
The number and scale of other office, warehousing, and hotel projects in Moscow is significant. Major transport projects include use of Private Public Partnership (PPP) to finance the fourth ring road, the Moscow to St Petersburg toll road, development of the 3 airports with associated land development and land transport improvements and construction.
St. Petersburg
St. Petersburg follows the major trends in the construction sector very closely after Moscow with a big number of ambitious housing, warehousing, retail, and urban regeneration projects. Major projects include:
The Okhta Centre - a mixed-use development designed to accommodate the headquarters of Russia's state-owned gas company Gazprom. Designed by Scottish architects RMJM, the 77ha centre will include a 396m-tall glass tower – set to become Europe's tallest building. It is named after the River Okhta and the area in which it will be built – the Okhta Valley – a rundown industrial zone situated on the edge of the city centre. Construction began in May 2008, and completion is set for 2016, with construction costs projected at $2.5bn. The project is fully funded by Gazprom.
The European Embankment is a multifunctional complex in the city centre to accommodate elite residential and commercial/office buildings, a hotel and the Dance Palace for the Ballet Company of Boris Eifman. The area is also to have extensive underground parking facilities, a pedestrian zone and a harbour for river trams, yachts and motorboats. The total cost of the project is about $2.5 billion. The project is to be completed by 2016.
Nevskaya Ratusha - a community and business centre to provide office space to the Government of St. Petersburg and businesses keen to locate in the area. The project also envisages the development of retail spaces, restaurants and cafes, a hotel, a fitness centre and a parking. Total area of the complex - around 400 000 sq.m. The total cost of the project is about $400 -500 mln.
Seafront (sea façade) project - reclamation of 450 hectares of land and construction of a modern seaport terminal with traffic capacity of 2.5 million passengers per year and a mixed-use development on 350.9 hectares (budget USD 1.042 million)
Baltic Pearl – mainly residential development on 205 hectares of land in the South-western part of St.Petersburg to be completed by 2013 (worth over USD 1.300 million)
Major transport infrastructure development projects include Western High-Speed Diameter Motorway (USD 3,000 million), Orlovsky Tunnel (USD 981 million), new high-speed light rail transit system (USD 420 million), construction of the new airport terminal with an overall area of 174,432 square meters and annual transit capacity of 22 million passengers (USD 1.180 million).
