Wood in Construction Industry in Russia: Present State, Challenges and Prospects

Russia’s wood construction industry is rapidly expanding with a growing demand for single houses and higher export capacity. However, there are several challenges that need to be addressed. Yet, there are many emerging opportunities. Russia has vast forest resources and tradition in wood construction, and the government is proposing amending the regulatory framework to incentivise the development of the industry. This short article provides a brief overview of the state of the art of the forest industry and future prospects.  

Overview 

Russia possesses 20% of all forests in the world forest resources, despite this, until recently, the construction of houses from wood was in demand only in individual buildings. At the same time, the use of wood materials in housing construction in Russia is only 0.003 m³ / m², which is 17 times less than in Finland, the USA, and Canada. 

Every year about 250-270 thousand individual houses are built in Russia with a total area of ​​36 million square meters - this is 40-45% of the total area of ​​housing being built. RosStat (Russian Statistics) announced this data in 2020.  

For example, the record for the last decade, the commissioning of wooden houses was noted at the end of 2019 by RosStat. During the year, 8,831.7 thousand square meters of such buildings were erected, which is 24% more than a year earlier, and 5.6% more than in 2014, when the previous record was set. 

There are more than 60 factories in 21 regions In Russia that are capable of producing wooden houses with a capacity of ​​up to 1.8 million square meters per year. The enterprises are concentrated in the Moscow region (45%) and in the Vologda region (20%). In the Tver region and the Khanty-Mansi Autonomous Okrug, LVL-beams (glued veneer beams) are being manufactured; it is planned to launch the production of CLT-panels (from cross-glued wood) in the Vologda and Leningrad regions. 

At present, wooden houses in individual housing construction occupy 22% of all construction technologies (this is 76 million square meters). The share of industrial wooden houses annually accounts for no more than 3%. At the same time, the dynamics of buildings made of wood is growing fast. In 2019, it increased by 24% (compared to 2018) and amounted to 8.8 million square meters. Also, the volume of production of prefabricated wooden houses increased by 6% in 2019. 

General information in numbers 

The Russian market of wood in construction today occupies the first place in the world in terms of the available forest resources - it has 815 million hectares, about 20% of the world, while the share of the timber industry complex in the country's GDP is only 0.7%. 

This figure, for example, is 1.5 times lower than in Brazil, and 10 times lower than in the USA. 

Russia accounts for 3% of the global timber industry output. In Canada, for example, this figure is 17.3%, the USA - 12.7%, Sweden - 10.1%, Finland - 8.4%. 

Currently, the annual volume of wooden housing construction in Russia is about 11 million m2, on average of which 3.7 million m2 are prefabricated houses.  

The most popular technology for the construction of wooden houses in Russia is frame (about 46%), in second place - from glued beams (about 21%). In Russia, wooden houses are being built only in the segment of low-rise housing construction. 

In recent years, the share of products of foreign companies has significantly decreased in the domestic market of wood in construction: from 17% to 1%. At the same time, the share of domestic companies and the export of their products abroad began to grow. Almost half (47%) of exports of domestic wooden house building products go to European countries. 

Challenges of the wood in the construction industry in Russia 

1. Imperfection of the regulator and technical base (state standards, enterprise standards, technical specifications, technical descriptions, building codes and regulations need to be updated). 

2. Low supply of wood in the domestic processing market. The paradox is that with the vast forest resources, the domestic market is experiencing a shortage of wood as a building material. For the suppliers of wood, the Russian domestic market is currently not attractive compared to the export market. Because of the closed auctions, Russian timber sells abroad at higher prices. 

3. Few specialists. The problem with specialists is especially acute in the use of new technologies for the construction of wooden buildings. There are very few professional architects and designers.  

4. In Russia, multi-storey wooden houses are not built so far. One of the main constraining factors for the development of multi-storey housing construction in Russia is an outdated fire safety regulation. Until recently at the legislative level, it was allowed to build only 3-storey wooden houses. The Federation Council sent a recommendation to the Ministry of Construction to develop new fire safety regulations for the construction of wooden houses. 

Governmental support 

Today in the country there are a number of programs and support mechanisms that directly or indirectly contribute to the larger use of wood in construction. 
In 2019, the State Program "Comprehensive Development of the Rural Areas" was approved (Resolution of May 31, 2019 No. 696)]. Within the framework of the program, a number of measures are aimed both at improving the living conditions of the population and at the development of engineering, transport and municipal infrastructure in rural areas. 
Recently the Deputy Prime Minister of the Russian Federation Victoria Abramchenko announced that the Russian Government is preparing proposals for the launch of mortgages for the wooden houses. For example, already in December 2020, “Dom.rf” Bank launched its own pilot program for individual housing mortgages for families with children. A loan can be obtained at a rate of 6.1%. It is expected that the loans for a total of 2.2 billion rubles will be given within the framework of this pilot project. 
Subsidising schemes and crediting organisations for providing mortgage loans to citizens are created. This measure is being taken in 80 regions this year. Thus, 38 thousand loans were issued for the construction of almost 2 million square meters of housing. In addition, it is not the first year that measures have been taken on social payments to improve housing conditions]. 
It should be noted that these measures are aimed at solving housing problems in general, and not specifically at the construction of wooden houses. However, they can also boost the use of wood in the rural housing market. And, as they believe in the Department of Rural Development of the Ministry of Agriculture of the Russian Federation, synchronisation of the rural mortgaging with the support mechanisms mentioned, can significantly stimulate the demand for wooden houses].  


In 2019, the State Program "Comprehensive Development of the Rural Areas" was approved (Resolution of May 31, 2019 No. 696)]. Within the framework of the program, a number of measures are aimed both at improving the living conditions of the population and at the development of engineering, transport and municipal infrastructure in rural areas. 
Recently the Deputy Prime Minister of the Russian Federation Victoria Abramchenko announced that the Russian Government is preparing proposals for the launch of mortgages for the wooden houses. For example, already in December 2020, “Dom.rf” Bank launched its own pilot program for individual housing mortgages for families with children. A loan can be obtained at a rate of 6.1%. It is expected that the loans for a total of 2.2 billion rubles will be given within the framework of this pilot project. 
Subsidising schemes and crediting organisations for providing mortgage loans to citizens are created. This measure is being taken in 80 regions this year. Thus, 38 thousand loans were issued for the construction of almost 2 million square meters of housing. In addition, it is not the first year that measures have been taken on social payments to improve housing conditions]. 
It should be noted that these measures are aimed at solving housing problems in general, and not specifically at the construction of wooden houses. However, they can also boost the use of wood in the rural housing market. And, as they believe in the Department of Rural Development of the Ministry of Agriculture of the Russian Federation, synchronisation of the rural mortgaging with the support mechanisms mentioned, can significantly stimulate the demand for wooden houses].  

Timber Industry Development Strategy 2030 

At the recent meeting of the Prime Minister of the Russian Federation Mikhail Mishustin with the ministers, the recent update on the Forestry Development Strategy 2030 was announced: 

1. Increase in the transparency of the industry by digitalisation. Introduction of  information systems. In a single state information system, all the chains of timber production will be connected to an electronic document system - from harvesting at a logging site and storage to processing and to export outside the Russian Federation. 

2.  Implementation of federal forestry supervision to prevent forest violations. Chief federal-state forest inspectors will be appointed in the municipalities of the Russian Federation. 

3. Sustainable forestry model. This means that we are improving the economy of timber harvesting not by the involvement of new forest lands in felling but by efficiently organising selective felling and forest maintenance. 

4. Transfer the functions of forest management to the federal level, increase the intensity of forest management work, establish requirements. 

5.  Restoration of forests. We have already accumulated more than 35 million hectares that have not been reforested, and every year the number grows by 450 thousand hectares. The strategy envisages strengthening the role of regional state forestry institutions, which should enhance work on compensatory reforestation. 

6.   Control over forest use and access to the resource base. 

7.  Infrastructure development. Support measures for the construction of infrastructure, such as forest roads. 

8.  Re-orientation for domestic demand for wood products. Creation of products with high added value to use  round timber in the local market. Development of wood in the construction sphere by the increase of construction of residential buildings and social and cultural facilities using wooden structures not less than 20% from the whole building capacity.  Development of alternative energy and green economy by the use of forest waste as bioenergy raw materials. In remote regions, this will facilitate the conversion of municipal boiler houses from fuel oil and coal to alternative wood-based biofuels, such as pellets. 

9.   Scientific and technical modernisation of the forestry complex. 

Prospects 

According to the estimates of the industry, from 2020 the demand for wooden houses will increase by 30%. This growth was undoubtedly influenced by coronavirus infection. Due to the restrictions imposed, the population freed up certain funds that were previously spent, for example, on recreation. In addition, after the spring lockdown, many people thought about changing locations and moving from a city apartment to country houses. 
The development of wood in the construction sphere is considered a strategically important national task that has a multiplier effect on the economy. This is increasingly important especially today when there is a significant slowdown in economic growth in Russia, and it is necessary to increase demand for industrial products and create new jobs especially in rural areas.  

Further sources: 

http://rk.karelia.ru/politics/law/pravitelstvo-podderzhalo-initsiativu-edinoj-rossii-predostavlyat-ipoteku-na-chastnye-derevyannye-doma/