Page 100 - RusRPTApr20

propped up by the intercalary year effect. Construction activity is susceptible to significant revisions. The most recent revision came in January, see our Output & Demand December; revised construction data boosts 2018, leaves 2019 unchanged, of 29 January.
Construction activity in 201920 decouples from our index of construction activity for the same period, as proxied by the construction related item level data. We expect construction activity for 2019 to be revised upwards.
According to Vedomosti, the Ministry of Construction sees housing completions flat y/y at 80mn sqm in 2020. On a separate note, DOM.RF estimates that 27% of housing was sold in line with the new escrow regulations in the Moscow Metropolitan Area (as of January). In 2019, residential completions were up 6% y/y to 80mn sqm after three years of declines. The volumes reflected a pick-up in sales after 2016 and the stabilised consumption backdrop. Last year, individual construction (up 13.5% y/y) outperformed industrial (up 0.6% y/y), with volumes at 36.8mn and 43.5mn, respectively. From 1 July 2019, the sector switches to escrow regulation and DOM.RF’s estimates imply that the transition is going at a solid pace. Under the new rules, access to capital is vitally import and this could jeopardise the operations of smaller developers. The complete transition implies sizable sector consolidation and might cause downside risks to housing completions in the medium term. Large developers are in a more favourable position due as they have better access to capital, a sizable pool of projects and balanced cash flows.
100 RUSSIA Country Report April 2020 www.intellinews.com