Construction work prices continue to fall in Russia

2010-04-19

As a result of declining construction activity in Russia and shrinking demand for construction services, construction price rises slowed markedly in 2009 and this has continued in 2010.

Before 2009, prices for construction and assembly work increased by 15-20% per annum, much more rapidly than the prices of the machinery and equipment used in construction. This changed dramatically in 2009 as a result of the downturn in construction. Equipment prices continued to rise, albeit at a much slower rate, whereas prices of construction work fell by 2.4% at the end of the year in comparison with December 2008 levels. As a result, the aggregate price index in construction remained unchanged last year.

At the beginning of 2010, the trend continued, with machinery prices rising slightly and construction work prices falling in comparison with December 2009. At the end of March, construction work prices were 0.4% lower than at the end of 2009.

Among the federal districts, the steepest fall in construction work prices has recently been seen in the Urals Federal District, whereas in the Far East Federal District prices were still on the increase. This is associated with the large construction projects being carried out in the Primorsky Territory as part of the preparations for the 2012 APEC Summit to be held in Vladivostok. In the first quarter of 2010, construction work prices in the Primorsky Territory increased by 11.1%, which is the second most substantial increase among all of the Russian federal subjects, after the 13.9% increase noted in the Nenets Autonomous District. On the other hand, construction work prices saw their steepest fall in Q1, of about 7% in comparison with December 2009, in the Karachay-Cherkessia and the Smolensk, Bryansk, and Orenburg provinces.




Robert Obetkon
Senior Construction Analyst
PMR Publications