Housing Construction Opportunities in Russia

Not only will the government of BC?s Forest Revitalization Plan open up new opportunities for entrepreneurs and forestry businesses in BC, but it will also open up new housing construction opportunities in Russia.

On January 23, 2004, a seminar on Opportunities in Russia: Housing Construction was held in Prince George, BC. Ms. Mietka Zieba, a senior trade consultant with the Canada Mortgage and Housing Corporation, was a keynote speaker at this information seminar. Zieba talked about the specific opportunities available in the stick-frame housing market in Russia. ?Areas of opportunities include establishing regional distribution centers for Canadian construction materials in selected Russian regions where Canadian light frame housing is being introduced; establishing joint venture manufacturing of construction materials, OSB panels, asphalt shingles, and insulation materials utilizing local labor force; expanding participation of Canadian construction companies in the residential sector including land development and urban planning; and participating in industrial projects funded by international financial institutions such as the World Bank and the European Bank of Reconstruction and Development,? said Zieba. Currently, the CMHC is focused on projects in the Russian Far East and Western Siberia, including Omsk, Nakhodka, and Primorye.

Since 1993, the CMHC has been supporting Russia?s housing industry reform. In 1995, the CMHC signed a Memorandum of Understanding (MOU) with the Russian Ministry of Construction (Gosstroy) which identified areas where Canada and Russia could work together for the benefit of reforming the Russian housing market. These areas have included the creation of mortgage lending systems, the harmonization of building codes, the building of demonstration homes, providing technical training and country exchanges, and the promotion of Canadian housing exports. The CMHC provides matchmaking services to bring together Canadian companies with housing developers in Russia.

The most active Canadian housing exporters working with the CMHC in Russia include Nascor and Connex of Calgary, Alberta, Ferguson Simek Clark of Edmonton, Alberta, the CanStory Group of Toronto, Ontario and the Thomas Cochren Homes of Hamilton, Ontario, and Canada North Projects of Yellowknife, NWT. ?Statistics indicate that as the Russian economy continues to recover from its financial crisis of 1998, exports of Canadian building products, vinyl window frames, vinyl siding, pre-fabricated structures, hardwood flooring, insulation materials, OSB panels, and asphalt shingles have stabilized. Dollar figures for the first four years of the millennium are $40.5 million for 2000, $36.6 million for 2001, $24.4 million for 2002, and $26.48 million for 2003. This makes Russian Canada?s 22nd largest export destination,? said Zieba.

There are inherent obstacles in conducting business with any foreign country and there are many obstacles prevalent in Russia. ?Besides the obvious obstacles of finding a good partner with good connections to the Russian government, there are obstacles related to cultural issues of doing business in Russia, having a long-term commitment to the market, and Russia?s procedures for financing imports. There are also local procedures that must be followed which means certain Canadian construction materials must have certification (this is a Certificate of Conformity based on local state standards), and approval must be obtained for new imported material or technology,? said Zieba.

Notwithstanding the typical obstacles, it might appear easy to capitalize on the new housing opportunities in Russia, but Zieba warns there is a lot of learning, hard work, and extensive travel involved, which is not for everyone. ?For those who have limitless ambition and are not afraid of hard work, the combination of the government of BC?s Forest Revitalization Plan and the CMHC and Russia?s MOU could provide BC entrepreneurs and forestry companies with many new opportunities in Russia?s burgeoning housing market,? said Zieba.

For more information on housing construction opportunities in Russia, please contact. Mietka Zieba at mzieba@cmhc-schl.gc.ca or (403) 515-2956.