Russia economy impact sectors part 3
February 18, 2008 – 3:31 amRegional View of Home Construction
(Moscow & the surrounding areas-mainly new dwellings)
According to Moscow city government, there is sufficient construction land available in Moscow, and 70 million square meters of dwellings can be built by 2020. a total construction volume of roughly 5 million square meters is expected for 2005 (dwellings of 2.6 million square meters were already complete from January to June 205) of these, approximately 1.5 million square meters are accounted for by social home building (council houses/flats).
An average price of US$ 1.500 per square meter is forecasted for the remaining 3.5 million square meters. The average rate of profitability in project development is 20 per cent. In 2004, a record 5.7 million square meters of floor space were built in Moscow. Official forecast for 2005 is 6.2 million square meters.
Development of the Russian Furniture Industry & Furniture Market
The development of the Russian furniture market is to be taken as a jump-off point for reviewing the situation in the kitchen and the bathroom sphere. In this connection, current framework data are analyzed, the major domestic manufacturers and suppliers of international product range listed, typical marketing methods examined and an attempt to draw a picture of regional distribution.
Russian Furniture Production – framework Data
In recent years, the Russian furniture industry has oriented itself on market condition and achieved steady development. According to official statistics, the number of furniture manufacturers doubled in the period between 1999 and 2003, from 2.820 to 5.770 companies. Reflecting the rise of smaller companies, the percentage of large and medium-sized companies as dropped. Sixty one per cent people of working the furniture industry (98.000) are employed in large and medium-sized companies. The share of smaller firm in overall production is estimated at 18.6 per cent, and continuous to rise steadily.
Sales by Local Producers Continue to Rise
According to state statistics, furniture to a value of US$ 1.26 billion was produced in Russia in 2004, a significant increase from US$ 540 million in 1999. However, the Russian association of furniture manufacturers, APMDPR, is of the opinion that details supplied by the State Committee for Statistics in connection with the volume of furniture production differ quite considerably from the real facts. Taking the figures provided for the amount of wooden board processed by Russian furniture companies into account, the actual volume production must be at least double what’s listed in the statistics. Furthermore, it is estimated that 15 to 20 per cent of furniture sold is produced by unregistered, so called “garage” firm. Bearing this in mind, one can reasonably assume that the approximate overall production volume is US$ 2.6 billion.
Shift in Regional Distribution
There has been a shift of furniture production recently to location close to regions with higher consumer demand, cheaper labour and sources of raw materials. By far the largest proportion of furniture continues to be produced in the Central Federal District, which accounts for 45.1 per cent of total Russian furniture production. Moscow and its surrounding area account for more than 31 per cent, while the North West and the Urals have shares of 11.2 per cent and 7.5 per cent, respectively.
These districts showed a drop in overall production volume over the past 3 years. Above all, a fall in production was registered in Moscow, St Petersburg as well as in the areas of Ivanovo, Tula, Twer, perm and Kemerovo. One can conclude that these markets are saturated. On the other hand, growth has been established in the following territories:
- Volga area (Privolshaki) – 17.7 to 19.4 per cent
- -Southern Russia (Jushny) – 7.6 to 10.6 per cent
- Siberia (Sibirski) – 3.4 to 4.2 per cent
- Far East (Dalnevostotschny) – 1.4 to 2 per cent
