5 September 2024

Prospects for the development of housing construction in the Arctic

The Arctic is a region of strategic importance for Russia. However, it currently suffers from an acute shortage of high-quality housing. Deteriorating infrastructure, underinvestment in science, a lack of new technologies, and a shortage of organizations willing to work in extreme conditions are all hindering housing construction. A comprehensive set of support measures is needed to revive the construction industry in the Arctic, and there also needs to be increased investment in science and new construction technologies. That was the conclusion reached at a session entitled Prospects for the Development of Housing Construction in the Arctic, which took place as part of the Eastern Economic Forum (EEF).

 

KEY CONCLUSIONS

 

The Arctic is a strategic interest of the Russian state

“The Arctic is a strategic interest of the Russian state. It is an economic issue of security. To develop and maintain the Arctic, people are needed. <...> And for people to come, the requisite conditions need to be put in place,” Alexander Levintal, Managing Director for the Far East, DOM.RF.

“When we talk about why we need the Arctic, the numbers speak for themselves: 1.5% of Russia’s population [living in the Arctic – ed.] produce 10% of the GDP,” Andrey Grachev, Vice President for Federal and Regional Programmes, Norilsk Nickel.

 

 

To develop the Arctic, improvements must be made to infrastructure and people’s quality of life

“There are several unresolved issues that have accumulated with regards the housing that already exists, utilities, and so on. However..., step by step, we will resolve them using funds from all levels of the budget, as well as from other sources. <...> In addition, there are national project programmes in place for improving public spaces, building a comfortable urban environment, and modernizing utility infrastructure. That is because the main aspect is the utility networks that need to be built. <...> The Ministry of Construction’s priorities include attaining positive migration, improving people’s quality of life, and attracting specialists by putting the necessary infrastructure in place. This is all with the view to ensuring development in the Arctic,” Nikita Stasishin, Deputy Minister of Construction, Housing and Utilities of the Russian Federation.

 

 

New construction technologies and state support for developers are needed to address the housing issue

“Demand for housing in the Arctic is growing. Therefore, new solutions, new construction technologies, and state support for developers willing to work in Arctic conditions are all required. In this regard, we are on the same page as the government,” Andrey Grachev, Vice President for Federal and Regional Programmes, Norilsk Nickel.

 

“The key question I would raise is... whether we need to build everywhere... on a scale we would like, and whether we can afford it. <...> I doubt we have enough [resources – ed.] to be able to offer the same living standards as in large cities. <...> We need to invest primarily in new technologies and to increase these investments,” Pavel Volkov, State Secretary – Deputy Minister for the Development of the Russian Far East and the Arctic.

 

PROBLEMS

A lack of high-quality housing in the Arctic, including for young specialists

“If we look at the Strategy for the Development of the Russian Arctic, we will see that the low availability of decent housing is listed among the main threats to national security in the Arctic,” Andrey Grachev, Vice President for Federal and Regional Programmes, Norilsk Nickel.

 

“There is enormous demand for higher-quality housing. People in Murmansk, for example, earn money... but look south when buying property – to St. Petersburg or Moscow, for example. They invest elsewhere because they cannot purchase anything in Murmansk. <...> There is pent-up demand, and for us, that is a challenge,” Aleksandr Prygunkov, Managing Partner, Samolet Group of Companies.

 

“The Arctic is now... a priority. We need to have young specialists moving there... They should be offered high-quality services across all areas, including high-quality housing,” Nikita Stasishin, Deputy Minister of Construction, Housing and Utilities of the Russian Federation.

 

A shortage of personnel and new technologies in residential construction

“When virtually nothing is built for 30 years, the personnel are not there. That is a fact. Therefore, any team we assemble there includes technical staff and management personnel who are local. However, the workers will mostly be brought in from outside,” Aleksandr Prygunkov, Managing Partner, Samolet Group of Companies.

 

“We really did once have the best institutes for urban planning, construction technologies, and research in humanitarian areas such as human health and other aspects. <...> These need to be revived. We must piece things back together from what remains,” Natalya Trunova, Auditor, Accounts Chamber of the Russian Federation.

 

“Our investment in science is non-existent. <...> We are now reaping the consequences of having virtually nothing new in this environment. Thats why we still [build – ed.] concrete apartment buildings there,” Pavel Volkov, State Secretary – Deputy Minister for the Development of the Russian Far East and the Arctic.

 

The expense and difficulty involved in housing construction due to challenging climatic and geographic conditions

“The challenges surrounding construction are well-known. These primarily relate to technological aspects, limited timeframes for delivering building materials... and the need for significant financial investment. <...> There is a shortage of construction companies capable of working in the harsh conditions of the Arctic, and there are difficulties in conducting tenders, as well as challenges in meeting construction requirements. On top of this, there are the weather conditions... Contractors lose an average of 20% of time due to blizzards and snowdrifts,” Andrey Grachev, Vice President for Federal and Regional Programmes, Norilsk Nickel.

 

SOLUTIONS

Investing in modernizing the utilities infrastructure

“Consider the city of Murmansk. <...> It was very difficult to attract developers to enter its market and build housing not as part of programmes for relocating people from dilapidated housing or... providing housing for certain categories of citizens, but as an investment in and of itself. Finally, a developer has emerged thanks to the allocation of funds for modernizing the utilities infrastructure and building social facilities in these regions,” Nikita Stasishin, Deputy Minister of Construction, Housing and Utilities of the Russian Federation.

 

 

Leveraging the Arctic mortgage programme to drive demand for housing and stimulate the market

“Housing construction has started to revive, particularly since the end of 2023 and into 2024... The number of apartment buildings under construction increased by 30%... compared to the first seven months of last year, with new project launches up by around 25%. <...> The Arctic mortgage programme was launched at the end of 2023... and it is acting as an excellent driver for new projects. <...> Demand is picking up, and the supply will follow,” Alexander Levintal, Managing Director for the Far East, DOM.RF.

 

“Arctic mortgages have now entered the lexicon, and are known for offering the best terms. They offer a huge incentive to invest in housing. Currently, there are 3,800 mortgages worth over RUB 120 billion. We also have the Far Eastern Arctic Quarter in places with advanced special economic zones. This is an initiative aiming to facilitate the construction of supply infrastructure. <...> And of course, rental housing is another tool to boost housing construction,” Pavel Volkov, State Secretary – Deputy Minister for the Development of the Russian Far East and the Arctic.

 

Developing human resources for the construction industry

“We have taken on Murmansk Construction College, and invested in refurbishing the facilities to make it a better place for young people to study. That is because we appreciate that unless we have a new generation coming through in the construction sector, things will be quite difficult, and in any case, we must foster the growth of the sector,” Aleksandr Prygunkov, Managing Partner, Samolet Group of Companies.

 

 

Making greater use of infrastructure bonds

“Infrastructure bonds are... a very effective [tool – ed.] in the Infrastructure Menu. […] In the Arctic, only one region is currently using them. This is not remotely sufficient. They offer an option when there is a budget deficit – infrastructure bonds can be used to address issues,” Alexander Levintal, Managing Director for the Far East, DOM.RF.

 

Monitoring the thawing of permafrost and conducting checks on the condition of buildings and structures

“The Arctic is warming three times faster than the rest of the continent. Permafrost thaw can lead to incidents… Therefore, at present, about 1,000 buildings and structures in the region are being fully monitored by the company’s system… and we will very soon extend monitoring to 1,500 sites, including residential buildings and structures. We have established a rapid response system, and have learned how to strengthen the foundations of buildings,” Andrey Grachev, Vice President for Federal and Regional Programmes, Norilsk Nickel.

 

 

* This is a translation of material that was originally generated in Russian using artificial intelligence.

 

For more information, visit the Roscongress Foundation’s Information and Analytical System at roscongress.org/en

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