Russia’s construction industry is losing companies just as the cost of keeping projects alive is rising. By 1 October 2026, 362,300 construction firms were operating in the country — 16,400 fewer than a year earlier — while 31,100 companies had been liquidated during the first nine months of the year.
The figures, reported by Russian media on 19 October and drawn from SPARK, an information and analytical system used to assess companies and financial risks, show a sector caught between weaker housing demand, expensive credit and declining support for subsidised mortgages. A further 30,400 firms were in bankruptcy or liquidation procedures, while 41,700 had been placed in a high-risk category after operations on their accounts were suspended.
That last figure is a warning of possible failure, not proof that every company listed will go bankrupt. Taken together, however, the figures point to a broad liquidity problem rather than a handful of isolated corporate collapses.
Residential developers lose their cushion
The contraction is most severe in the parts of construction that depend directly on private buyers. The number of companies involved in building construction fell by 4.8% year on year, to 188,100. Firms carrying out specialised construction work declined by 4.4%, to 140,400.
Engineering construction has held up better. The number of companies in that segment fell by only 0.7%, to 34,100. Its relative resilience is linked to public infrastructure contracts, which provide a steadier source of demand than the housing market.
Housing developers, by contrast, are exposed to household incomes, mortgage availability and buyers’ willingness to take on debt. The government has ended its subsidised mortgage programme with an interest rate of 8% and tightened the terms of other supported schemes. The effect has been to reduce the pool of potential buyers at the same time as developers are relying more heavily on borrowing.
Mass-market housing margins were estimated at 8% to 12% in September 2026, down from about 25% a year earlier. That leaves far less room to absorb higher interest payments, discounts offered to attract buyers, rising costs and delays on building sites.
Evelina Ishmetova, director of consulting and development at Key Capital, says the industry has been living off financial reserves since 2024 and that those reserves are now almost exhausted. Analysts have identified negative trends since 2025, alongside a fall in new company registrations.
How a sales slowdown becomes a funding crisis
Construction projects tie up large amounts of money in land, materials, wages and unfinished buildings. In 2025, the share of borrowed capital in current assets exceeded 60% for most construction companies. Their day-to-day financial base therefore depended heavily on outside funding.
That structure becomes particularly vulnerable when apartments sell slowly or only with a discount. The escrow accounts used to hold buyers’ money then fill more slowly. Banks may reassess project-financing terms and increase the cost of credit, even as developers continue to pay contractors, staff and suppliers.
The result is a mismatch between the money a project needs and the money arriving from sales. A development may still appear viable over its full lifetime but lack enough cash to maintain construction on schedule. Developers can be forced to postpone completion dates, triggering penalties to customers and further increasing their financial burden.
Smaller and medium-sized developers have less room to absorb that shock. They generally hold smaller reserves and have fewer projects whose profits might offset losses elsewhere. A temporary delay in payments can therefore become a solvency problem before a project’s underlying assets have lost all their value.
Escrow arrangements protect buyers’ money in certain circumstances, but they do not guarantee that an apartment will be delivered on time. If a developer enters liquidation or bankruptcy, land, contracts, permits and financing may have to be transferred through complicated procedures. A construction site can remain idle while a replacement developer is found and the project’s obligations are reconstructed.
For households that have committed savings or taken out expensive loans, the consequences can arrive well before a final legal resolution. They may be left without the promised home, while any money eventually returned can have lost real value through inflation.
A market becoming smaller and more concentrated
The number of operating construction companies has fallen through a combination of increased liquidations and fewer new registrations. That change matters beyond the balance sheets of individual developers. When distressed firms sell land, projects or other assets under pressure, larger companies with stronger access to finance are better placed to buy them.
This does not by itself prove that the industry is becoming a monopoly. It does create a clear route towards a narrower market, particularly in regions where only a few developers are able to finance large projects. Fewer competitors could eventually reduce pressure on prices, although the immediate issue for buyers is whether existing developments will be completed at all.
The stress is also likely to be felt across the construction supply chain. Building sites generate orders for steel, cement, bricks, finishing materials, transport services and specialised machinery. If developers run short of working capital, orders can be delayed or cancelled. Subcontractors and suppliers may then face their own cash-flow problems, even when they have no direct involvement in a developer’s insolvency proceedings.
Construction has traditionally supported a wide network of industrial and regional jobs. A reduction in building activity can therefore weaken demand well beyond the companies counted in the SPARK figures. The impact will depend on how quickly banks, public bodies and larger developers can take over troubled projects and keep payments moving.
Three pressures arriving together
The available figures do not establish that every corporate failure was caused by a single government decision. Nor do they prove that all companies placed in the high-risk category will collapse. They do show three pressures converging: less generous mortgage support, weaker private demand and more expensive financing.
The contrast between housing construction and engineering projects suggests that public orders are providing some protection where they remain available. It also underlines how dependent parts of the private building market have become on state-backed credit and government spending.
The decisive question for the coming months is whether troubled developments can be transferred quickly enough to prevent a liquidity crisis from becoming a crisis of unfinished homes. If financing, land and customer contracts remain tied up in lengthy procedures, the damage will spread from developers to buyers, suppliers and the wider industrial economy.
Source: Kommersant.
