A challenging 2012 for the Czech construction industry

The revised Czech government strategy on transport infrastructure construction released in January 2012 indicates that the decline in civil engineering construction may continue in 2012 due to the postponing or freezing of major constructions in the road and rail sector. A return to growth is expected in 2013-2014.
As a result of economic problems and budget cuts, civil engineering construction, the most resilient construction sector in the country during the economic crisis, saw a significant slowdown in 2011, according to PMR’s latest report entitled “Construction sector in the Czech Republic 2012 − Development forecasts for 2012-2014”.
In 2011 the Czech government struggled with a shrinking budget and as a result cut a series of investments involving civil engineering constructions. Transport infrastructure construction suffered particularly in 2011 and will continue to slumber in 2012. A return to growth is expected in 2013-2014 and will be generated mostly by projects that were frozen or delayed indefinitely in 2010-2011.

In 2011 road construction in the Czech Republic witnessed an abrupt decline in the context of the economic crisis, forcing the Czech government to put a stop to its spending on construction. A total of 34 km of motorways are planned to be delivered in 2012. There is currently no expressway construction planned to be completed in 2012.
Railway construction has also been badly hit by the economic crisis. In fact, in recent years it has been the civil engineering sector that has suffered the most from the budgetary cuts. Railway construction in the Czech Republic is expected to see a similarly slow development in 2012. The government’s revised strategy on transport infrastructure construction to 2020 foresees only three major railway reconstruction works being completed in 2012 and no firm plans for the years to come. All these three constructions had been started in previous years. There are no concrete plans at the moment to invest in fast-speed railway lines in the country.
After a few years of decline non-residential construction is expected to grow slightly in 2012 and will counterbalance the situation in the engineering sector. The surging demand for office and logistics space is expected to drive non-residential construction in 2012 and subsequent years. Also, the retail sector continues to develop, though at a much lower pace.
Although the stock of unsold flats was high at the end of 2011, residential construction is expected to return to relatively healthy growth in the coming years. Thanks to the planned residential construction and some positive factors such as a surge in the mortgage market which triggered growing demand for residential space, PMR analysts expect residential construction output in the Czech Republic to follow several years of growth, albeit still at modest levels, much below the annual rate of decline in 2009-2010.
This press release is based on information contained in the latest PMR report entitled “Construction sector in the Czech Republic 2012 − Development forecasts for 2012-2014”.