The massive commissioning of new buildings led to an increase in furniture production by a third

The massive commissioning of new residential buildings this year has led to an unexpected result for furniture manufacturers. By the end of 2023, output in physical terms will increase by 33%, and companies in the industry will be able to collectively earn 23% more. However, experts do not expect such growth rates next year.

The fact that by the end of 2023, furniture production in Russia will increase in physical terms by 33% year-on-year, to 66.7 million units, and in physical terms – by 23%, to 438 billion rubles, is stated in the documents available to Kommersant. ” according to the calculations of the Association of Furniture and Woodworking Industry Enterprises (AMDPR). They indicate that the industry has not had such record figures since at least 2005.

General Director of the First Furniture Factory and President of AMDPR Alexander Shestakov attributes this to the restoration of demand for such products due to the increase in the commissioning of new residential buildings. According to the unified information system “Our.Home.RF”, in January-November 2023, 40.9 million square meters were commissioned throughout the country. m of housing, which is 10% more year on year. In addition, after a pause in 2022, an increase in furniture purchases in the state segment began, Mr. Shestakov adds.

Despite the conservatism of the furniture market, unlike other retail sectors, in 2023 this segment has undergone a major transformation, says Irina Bolotova, a partner in the service for organizing the retail space Pro.Story. “Against the background of a significant reduction in furniture imports to Russia (at the end of 2022, it decreased by 44%, to 103.4 billion rubles— “Kommersant”) local players expanded their assortment, increased the area of ​​retail stores, and updated the design of their products,” the expert notes.

Although the demand for furniture remains, there is a gradual decrease in the average purchase price, says Denis Egorov, general director of the furniture company Lazurit. Mr. Shestakov says that the growth in demand was influenced, among other things, by stable prices for furniture in the first half of the year, which did not grow, and in some cases even decreased compared to 2022. However, already in the second half of 2023 the situation changed. Due to the noticeable depreciation of the ruble, imported components and materials have become more expensive, the share of which in the cost of production can reach up to 40%, notes Alexander Shestakov.

Prices for raw materials were stable for many months, confirms Denis Egorov, but in the fall a wave of price increases began in the range of 7–10%, and by the end of this year, producer costs increased by more than 15%. For the entire outgoing year, the purchase cost of materials and accessories increased by 13.5% year-on-year, adds Angstrem executive director Vadim Chernushkin. According to Mr.Doors CEO Sergei Shikhov, in 2024 furniture prices will continue to rise “with an eye on inflation and the situation in the world as a whole.”

General Director of Infoline-Analytics Mikhail Burmistrov, although he recognizes the continued expansion potential of the furniture market in 2024, believes that in monetary terms the industry will not grow as much as this year. Demand for furniture will decline due to a possible decrease in the issuance of mortgages for new buildings due to tightening requirements of the Central Bank, as well as an increase in loan rates for the secondary housing market. Thus, according to forecasts by the ACRA rating agency, in 2024 the mortgage market in the country will grow by a maximum of 10–15%, which is half as much as in 2023 (see Kommersant on December 25).

In this situation, manufacturers may switch to corporate sales of products to developers who offer buyers complete finishing and furnishing of housing after putting it into operation, Mikhail Burmistrov does not rule out. But in the short term, tightening the conditions for issuing preferential mortgages for new buildings will not have a significant impact on the market, says Sergei Shikhov. According to him, the furniture industry always reacts late to changes in the real estate market. And Vadim Chernushkin expects that even in such conditions, Russians will strive to improve their living conditions – if not through the purchase of a new apartment, then through the renovation of an existing one.

Alina Savitskaya