The Russian construction industry experienced volatile growth during the last five-year period. The sector is expected to remain somewhat unstable and grow at a moderate pace.

The construction industry is strongly correlated with the building materials and housing markets, which means that the growth of the construction industry increases when the cost of building materials is low. This is the case when there are not enough houses or apartments on the market and there is a high demand but low supply, so that new residential or commercial properties need to be built. The market is influenced by numerous factors, including inflation, unemployment, and GDP (gross domestic product). The construction market in emerging economies is more likely to boom, as consumers become wealthier and the demand for housing increases, which would increase the demand for building materials, or in countries where a large proportion of exports are construction materials.

In 2019, the Russian construction industry recorded total revenues of USD193.1 billion, which equates to an average annual growth rate (CAGR) of 0.6 percent between 2015 and 2019.

The non-residential segment was the most lucrative in the industry in 2019 with total revenues of USD118.1 billion, representing 61.1 percent of the total value of the industry. The residential real estate segment contributed USD75.0 billion in 2019, representing 38.9 percent of the total value of the industry.

The segment of non-residential homes for the construction market was the most successful, mainly due to the size of the buyers. Non-residential buyers tend to be large, have strong financial clout, and represent a wide range of businesses. This type of buyers will require the construction of large non-residential buildings, including industrial factories, large warehouses, office buildings, and many other structures. These types of properties are much larger and more complex than residential properties, require more time and money to build, and are therefore more valuable to the home improvement market.

The industry is expected to accelerate, with an expected compound annual growth rate (CAGR) of 1.2 percent for the five years from 2019-2024, pushing the industry to USD205.1 billion by the end of 2024.

The COVID-19 outbreak at the end of 2019 and 2020 is expected to lead to severe disruption in the industry in the long term. With quarantine measures and travel restrictions in many major economies, the supply shock from the virus is expected to dampen economic activity, and construction is already directly affected.

Major construction projects are now being halted in cities and regions facing total closures. Even in areas where there is no restriction on travel, limited supplies of essential materials and equipment are disrupting construction. More broadly, the construction industry will be badly affected by the expected widespread disruption of economic activity and a likely decline in investment. Planned projects, especially in the commercial and industrial construction sectors, are delayed or canceled as companies review their expansion plans. The uncertainty of some end-users is likely to harm the entire value chain, with construction companies being the worst affected. To offset these effects, the government is stepping up plans to speed up the disbursement of funds for infrastructure investment to support the industry and the economy. However, many companies are likely to stop projects and postpone them for the foreseeable future.