Page 123 - RusRPTNov21

remained at +30%. In our view, domestic traffic growth has reached its saturation, so for a further recovery we need to see a reopening of new international destinations. Aeroflot Group carried 5mn PAX, -13% (vs. -11%), with Pobeda continuing to show growth of 45%. We note that one of the main risks for airlines over the last month was growing oil prices, which even activated the Russian fuel damper (for the first time since its inception in 2019). At spot oil prices, Aeroflot’s effective fuel (with the damper) is to be RUB 45k/t in October and RUB 50k/t in November (vs. RUB 45k/t 2019 average). We think the company will manage it by increasing fares on international flights.
9.1.4 Construction & Real estate sector news
Construction activity decelerated to +6.2% y/y in August from +9.3% y/y in July and +15.7% y/y in June. The June pickup in construction activity could be traced back to the completion of construction and commissioning of the Moscow Central Ring Road.
Real Estate residential completions up 30% y/y to 63mn sqm in 9mo21 – we anticipate sector cooling in the short-term. Residential commissioning in Russia increased 30% y/y to 63mn sqm as of 9mo21, according to Rosstat. We attribute such strong results to the low base of the previous year, when construction activity was impacted by lockdown-related freezes, and to the recent upbeat sales on strong support from the subsidised mortgage programme. Recently, the Ministry of Construction stated a target for residential completions of 85mn sqm for 2021 (up 3.4% y/y), which matches the record high of 2015. As YTD completions already account for 75% of the annual target, we note upside risks to the ministry's guidance. The sector’s prime objective remains the same: increasing completions to 120mn sqm and improving the housing conditions for the general population. We note that the real estate sector is entering a period of near-term cooling, since the high support previously provided by the subsidised mortgage programmes was downsized from July, interest rates have been raised, and consumption is soft.
The Ministry of Construction has presented the draft 2030 construction strategy, with the document to be finalised by 1Q22, according to Kommersant.
The forecasts are based on two scenarios, base and aggressive, with the latter implying an improvement in the economic situation in the country and additional financing for the industry. The key risks lie in the growth of mortgage rates, administrative barriers, outdated regulations and the low level of digitalisation in the industry.
The key targets for the industry are as follows.
· Completions of 85.6mn sqm this year and 90mn sqm in 2022, with a
target of 120mn sqm by 2030.
· The share of construction in GDP is to grow from 5.1% in 2020 to
5.8% by 2030.
· Investments are to surge twofold to RUB 1.6tn by 2030.
· The accumulated mortgage portfolio is to reach 15% of GDP by
2030 vs. 10% last year.
· By 2030, no less than RUB 2.3tn of mortgages will be issued per
123 RUSSIA Country Report November 2021 www.intellinews.com