Buildings to be a driving force of the Slovak construction industry in 2012

In the coming years residential and non-residential construction are expected to be the major drivers of the Slovak construction market. The engineering sector is likely to feel the consequences of the delays and the lack of proper preparation and planning for civil engineering investments, particularly in the road construction field.
According to PMR’s latest report entitled “Construction sector in Slovakia 2012 − Development forecasts for 2012-2014”, in the years to come non-residential construction will witness a rising trend and will be the most stable segment of the Slovak construction market. In 2012 the industrial, logistics and retail sectors will come out of the painful slump they experienced in 2010-2011 as several major constructions are expected to be completed in 2012. Office construction is also to be a larger growth contributor. Still, there is major potential for development in both the industrial and office sectors outside Bratislava, which has yet to be exploited.
An improvement is also expected in residential construction, which in 2011 went down to low levels not seen since 2006, the year before the residential boom in the country. However, in 2011 it also saw some signs of recovery as a spate of developers announced new projects or decisions to resume older projects that were postponed during the economic crisis.

Although the Slovak mortgage market is still underdeveloped, it has grown constantly in the past three years from €5.2bn in 2009 to over €6bn in 2011. With interest rates going down and increased certainty arising from the country’s switch to the euro currency (compared to neighbouring countries, where the currency risk has played a role in restraining further growth of the mortgage markets), the Slovak market has not experienced any decline in the mortgage market during the past three years.
As a result of these new developments, PMR analysts expect a return to growth in the coming years. However, this will not push up the Slovak residential construction market to very high levels as they add to a very low level of output. Residential output in the country is therefore not likely to reach the record high of 2007’s €1.7bn before 2014.
In 2012 the civil engineering sector is likely to feel the consequences of the delays and the lack of proper preparation and planning for civil engineering constructions, particularly in the road construction field. However, due to its vast size, road infrastructure construction is expected to remain the major segment of civil engineering construction in Slovakia for the following years. Nevertheless, it has to be noted that even in the most optimistic scenario, where most of the planned road constructions begin this year, total output in this segment is expected to suffer a decline. Many tenders are still to be organised, most of the constructions are yet to be started and a mere 5 km of motorways are to be completed in 2012.
As more of the transport infrastructure orders kick in, recovery is expected to help this sector return by 2015 to the value of output it registered in 2008, before the crisis erupted.
This press release is based on information contained in the latest PMR report entitled “Construction sector in Slovakia 2012 − Development forecasts for 2012-2014”.