HVAC market of Samara

Distinctive features of the region, which influence the development of HVAC market

Samara was mentioned in chronicles for the first time in 1357, when Metropolitan Alexis stopped there on his way to the Golden Horde. Alexis predicted that a great town would be erected in that place. Town and river-jetty Samar was marked on the hand-made map of river Volga, drawn by Venetian merchants brothers Picigano in 1367.

Officially Samara was established later, in 1586. That year the tsar Fedor Ioannovich ordered to construct a fortress Samarskiy Gorodok near the river-jetty, and the construction started. In 1688 Samara obtained the status of town.

In 1737 boyar Vasiliy Tatischev, following the order of the tsar Peter the Great, established a new fortress Stavropol on the low left bank of the river Volga, in about a hundred kilometers from Samara. It became the second center of the region. In 1950 near that place was started the construction of hydroelectric power station. Old provincial town of Stavropol was in the zone of flooding and disappeared under the water. New Stavropol was established on the hills in few kilometers from the artificial lake. Soon it became the industrial center of the region. In 1964 Stavropol was renamed to Toliatty.

The Samara region is situated in the European part of the Russian Federation, in the Southeast of the Eastern European Plain, in the middle stream of the river Volga. Climate of the region is continental and droughty. The difference between average winter and summer temperature is 34 C, the difference between the absolute temperature extremes is 83 C. Average temperature of January is 13 C below zero, of July – 21 C above zero.

In the Samara administrative district live 1,158 million people, it is the 6-th position in the Russian Federation. Population of the double-center agglomeration Samara – Toliatty, including satellite–towns Novokuibyshevsk, Kinel, Chapaievsk and Zshigulevsk, is 2,3 million people.

Nowadays Samara is a big center of machine building and metal processing, of the space, aviation and food industries. There are around 160 big and medium industrial enterprises in the city. According to the data of Information Agency VOLGA-INFO, about a quarter of all bearings and two thirds of communication cables in Russia are produced in Samara.

Average salary in the Samara region grew last year by 24% and is now of about 15 thousand roubles.

Construction activity in Samara

Around 50 companies are engaged in construction in Samara. Three fourth of the market belong to ten biggest companies: Aviakor, VolgaTransStroy, Portal, Spektr Nedvizshimosty and others. Small companies usually deal with private customers or work as subcontractors to big companies.

Experts say that no big changes are expected in the trends at the construction market of Samara in the nearest years. The market would become more transparent after the Law of Self Controlled Organizations and Insurance of Their Responsibility is approved. Cottage construction is expected to develop rapidly, most of all the construction of economy class houses. It is determined by the level of income of population and some specific features of the nature of the region.

Almost all construction companies in Samara are members of the Samara Construction Guild.

Residential real estate

About 600 thousand square meters of residential real estate were commissioned in Samara in 2007. Individual construction was about 85 sq. m of this total square, it is the lowest level among all regional centers of Russia.

According to the data of the local branch of the state statistical enterprise FGUP Rostekhinventarizatsiya, the total square of living facilities of Samara is 25 million sq. m, or around 21 sq. m per one citizen of the city. Brick and panel blocks of flats compose 94% of all living facilities.

Commercial real estate

Research Group World Winning Cities has published recently a report, which places Samara into the group of cities with maximum investment attractiveness for those who is interest to invest into commercial real estate. For the last three years Samara became the leader in construction of trading centers among the cities of the Volga Federal District. Other types of commercial real estate also develop rapidly. Productions facilities of Coca-Cola, Nestle and Pepsi were constructed recently. Many new warehouses were built, among them are wholesale stores and “carry-and-cash” stores Metro and Castorama. The complex of IKEA is under construction.

Some big buildings, constructed in Samara in the last years, were equipped with the modern air processing systems. Many buildings with modern climate control systems are under construction or in design. Experts believe, it caused active development of the HVAC equipment market, and sharp growth of the segment of central air conditioning and ventilation systems.

Vitaliy Shustov, General Director of the company OOO Sreda Obitaniya, says that existing projects of rebuilding of premises of some industrial plants in the central part of Samara into trading and entertainment centers also help local HVAC business to develop.

The total square of trading facilities in Samara is assessed by experts in 250 thousand sq. m. Square of modern trading centers of classes A and B is assessed in 130 sq. m. The rest are trading premises of some intermediate type between classes B and C.

At the same time construction of trading facilities develops actively. Four big trading centers were built in Samara in 2006. In 2007 and in the beginning of 2008 more than 300 thousand sq. m of the office and trading facilities were commissioned. Realization of federal and international projects is under way. Among these projects are those with the participation of IKEA Mos, RosEvroDevelopment, RTM Development and ADM Group. More than 200 thousand sq. m of warehouses of class A were commissioned in 2007.

Valeriy Martynov, General Director of construction company El-Trust, says: “ share of local developers in the segment of office real estate reaches 90%. Last years this trend started to change. Offers to local construction companies to become co-investors of big federal players become more often”.

Specific features of local HVAC market

According to the expert’s estimation, there were sold around 20 thousand split-systems and some 130 VRF-systems in Samara in 2007. Each year the volume of sales grows by about 15%. At the same time the market is far from being mature.

A breakdown of Samara market data shows that economy-class equipment composes 35% of the market, equipment of medium-class segment – 43%, luxury equipment – 22%. Local market players note that there is a trend at the market: on the one hand, demand for cheap equipment goes down along with the growth of well-being of population; on the other, appearance in the market of decent models of medium-class causes DROP in interest to luxury equipment.

Players of HVAC market of Samara

Around 100 HVAC companies work in Samara. At the same time, each year with the summer selling season comes, many so called “one-day” companies appear at the market. Their share of the market is usually not more than 10%.

There are some big companies who work in the segment of industrial HVAC equipment and in retail segment. In Samara in the industrial segment work IBL, Ventindustriya, Soliton-Klimat; in the retail segment work IBL, Microclimat, Samaraventiliatsiya, Elves. In Toliatty with industrial HVAC equipment work Parus-Servis, Spetsservis; in the retail segment – Microclimat, Rusclimat, Saton-S.

Medium-size companies control the main part of the market of the region. Their personnel can make calculations for choice of equipment, organize delivery and install equipment. Medium-size companies work mainly with private customers, small business and state organizations. Experts say, these types of customers make 60-70% of total sales of HVAC equipment.

Small companies, who offer RAC to private customers, form the most numerous group of market players. At the same time the share of the market of this group is rather small. As a rule, small companies cannot carry out more or less complicated installation work, neither offer a post-guarantee service. In the summer selling season the number of such suppliers and installers increases, so even assess their number is almost impossible. It’s also reasonable to include into this group so called “wild brigades” who are formed to carry out some small orders during the summer season.

Apart stay big chain stores, such as M-Video, Mir, Satellite, Technosila, Expert, Eldorado. They are big retailers of electronic home appliances, including climate equipment of some international brands: Daewoo, DeLonghi, Elenberg, LG, Panasonic, Polaris, Sharp, Samsung. The majority of chain stores, in contrast to previous years, offer installation service to the buyers of their equipment. To carry out installation works chain stores have their own installation personnel, or subcontract specialized HVAC companies.

There are different opinions about influence of chain stores on the HVAC market of Samara region. On the one hand, chain stores are not competitors for big companies, who deal with heavy equipment and work with corporative customers. On the other, chain stores make life more difficult for the companies, who are engaged in retail of room split-systems. Ilya Spiridonov, Director of the Samara representation of OOO Supervent Holding, says: “Prices of chain stores make the margin of distributors of split-systems lower. Trading houses catch the biggest part of the market of splits with capacity from 2 to 4 KWT, mainly because of their active advertising”.

After sale service compensates the season factor, brings additional profit and helps to gain the loyalty of customers. The majority of professional HVAC companies, who plan to be in this business for a long time, offer after sale maintenance service. Many companies, who started their activity as installers, with a time become suppliers of equipment in order to obtain more serious positions in the market.

HVAC companies, based in other regions of Russia, actively work at the market of Samara region. First of all, it concerns representations and regional stores of Moscow and Saint Petersburg based companies – suppliers of air conditioning and ventilation systems: Haier (Haier-Volga), McQuay (United Elements), Panasonic, Hitachi, LG (Cherbrok-Volga), Daikin, Kentatsu, Hualing (Daichi-Volga), Mitsubishi Heavy (Znak vozdukha — Beaufort), AEG, Ballu, Mitsubishi Electric (Saton-S, Rusklimat), Mitsubishi Electric, Polar Bear, Arktos (Arktika).

Main brands of HVAC equipment

A big variety of HVAC equipment is represented in Samara region. Among room air conditioners there is a good demand for equipment of such brands as AEG-Electrolux, Akira, Ballu, Chigo, Daewoo, Daikin, Dantex, DeLonghi, Elenberg, Fujitsu General, Gree, Haier, Hitachi, Hualing, JAX, Kentatsu, LG, MB, McQuay, Midea, Mitsubishi Electric, Mitsubishi Heavy, Panasonic, Polar Bear, Samsung, Sharp, Shivaki, Supra, Toshiba, Vectra.

In the local market are represented industrial air conditioners and PAC Daikin, Denco, Fujitsu General, Gree, Kentatsu, LG, LMF, McQuay, Midea, Mitsubishi Electric, Mitsubishi Heavy, Panasonic, Samsung, Sanyo, York; multi-zonal systems Daikin, Gree, Kentatsu, Mitsubishi Electric, Mitsubishi Heavy, Sanyo; chillers and fan-coils Carrier, Climaveneta, Clivet, Daikin, Galletti, McQuay, Polar Bear, Wesper, York.

In Samara region is actively sold ventilation equipment 2VV, Amalva, BEHTC, Clivet, DEC, LMF, Ostberg, Polar Bear, Rosenberg, Ruck, Systemair, Swegon, VTS-Clima, Wolf, Wesper, Arktos, Veza, Korf.

Among other types of HVAC equipment there are represented heat guns and heat curtains 2VV, Frico, Konforma, Master, Pyrox, Thermoscreens, Arktos, Tropik; air humidifiers Ballu, Boneco Air-O-Swiss, Polar Bear, Polaris, Venta, Walter Meier; air cleaners Boneco Air-O-Swiss, Daikin, Walter Meier; heaters, convectors, electric fire-places 2VV, Atlantic, Nobo, Noirot, Polaris, Tesy, Thermor.

Special events, advertising and marketing

No specialized HVAC exhibitions are held in Samara region. At the same time air conditioning and ventilation systems are often represented at the exhibitions “Construction Week” (February and August), “Stroyindustriya” (middle of March), “Construction” (October and April).

Companies – suppliers of HVAC equipment regularly organize advertising campaigns, seminars and representations of new equipment.

Difficulties and prospects of HVAC market in Samara region

Companies, who work at the Samara HVAC market, encounter difficulties common of all HVAC business in Russia. The main one is lack of qualified personnel. Each company has to cope with it itself. Vitaliy Shustov, General Director of the company OOO Sreda Obitaniya, says: “Manpower training takes a lot of time and resources. We organize theoretical education and professional training of our personnel ourselves. Doing it, we use specially selected literature and our own professional experience”. Practically the same thing say other SEO of HVAC companies in Samara.

As far as prospects are concerned, the situation in Samara is not exactly the same as at the markets of other cities. Common opinion of the majority of businessmen is that the market of the Samara region has not been saturated yet. There is still some space for new players. Almost all companies connect their prospects with the increase in the number of corporative customers.

Based in Samara companies also don’t forget about introduction of new equipment. Ilya Spiridonov, Director of the Samara representation of OOO Supervent Holding, says: “We should be ready for the increase of demand for forced draft units with heat recuperation. The main reason for it is growing price for electric energy”.

Yuriy Kobzar, Director of OOO Kompaniya IBL explains: “Samara based companies are already familiar with all technologies, which are used in the climate control systems, and work with them. Appearance of new directions of activity depends on appearance of new construction objects with their own peculiar requirements”.

Editors of magazine “The World of Climate” sincerely acknowledge help and assistance of the top managers of Samara based HVAC companies:

Yuriy Kobzar, OOO Kompaniya IBL, Director:

- The specific feature of our company is that we offer the complete complex of services for engineering systems: from design to commissioning and maintenance.

I believe that one of the specific features of construction business of our region is sharp competition between companies, who can carry our works on the highest level.

Aleksandr Paramonov, Regional Representation OOO Daichi-Volga, Director:

- Our company works not only in Samara, but also in some other regions, such as Saratov, Orenburg, Ulianovsk. I would like to note, that the market of Samara is distinguished because of its good organization and good technical preparation of companies – participants. There is also sharp competition between companies – installers, as well as between companies – suppliers of HVAC equipment. Recent years construction activity in different fields is very active in Samara region. In construction of big objects, such as MEGA, CASTORAMA, METRO, LENTA, take part not only local, but also companies from other regions, and even from abroad. Samara based companies, in their turn, work with big construction objects in other regions of Russia.

Ilya Spiridonov, Samara representation of OOO Supervent Holding, Director:

- Nowadays ventilation systems, composed of different elements, are gradually forced out from the Samara market by compact forced draft units. More and more customers realize the importance of good ventilation, quality of equipment becomes the main criterion of choice.

The main problem of HVAC business is lack of qualified manpower. So, one of the lines of our work is preparation and professional training of specialists, not only for our company, but also for our partners.

Vitaliy Shustov, OOO Sreda Obitaniya, General Director:

- Samara is a green city, surrounded with parks and natural reservations. In the regions close to old tree plants, where dominate poplars, HVAC equipment work under very tough conditions.

The most prospective line of development of Samara HVAC market is the work in the segment of equipment and services for corporative customers.

Aleksandr Nuyashkin, Cherbrooke-Volga, Director:

- Last years the number of cultural, entertaining and trading centers noticeably increased in Samara. Some new centers are under construction, some are reconstructed. This trend would be actual for some years more. So, it’s not difficult to forecast the growth of demand for effective supply of HVAC equipment with competitive price. Both private and corporative customers don’t want to wait when equipment is delivered from Moscow. Equipment should be within easy reach, and be delivered rapidly from the regional store. Growing well-being of citizens of Samara causes the growth of demand for quality and efficient HVAC equipment of the premium class.