Central European Road Construction Market to Exceed €15bn by 2013

Capital expenditure on the road infrastructure is poised to considerably increase in Central Europe in the coming years. However, due to the magnitude of the planned projects, not all of the tasks expected to be financed from the EU budget for 2007-2013 will be executed. Thus, the final shape of the EU budget for 2014-2020 is crucial for the countries in the region.

In the latest report entitled “Road construction market in Central Europe 2010 − Development forecasts and planned investments”, the market research company PMR estimates that after a 2% decline in 2009, the road construction market in Central Europe will develop at the average nominal rate of 5% in the coming years, with its value exceeding €15bn annually in 2012 and 2013.

According to PMR’s report, Poland will exert the strongest influence on the situation in the region’s road construction market; this country represents 40% of the market’s value and currently prepares road infrastructure for the approaching Euro 2012 football championships. Thanks to sizeable investments in motorways and expressways, unprecedented in Poland’s history, the Central European road construction market is expected to report positive rate of growth. “Currently, the construction of almost 1,300 km of expressways and motorways in Poland, worth over €14bn, is already contracted. These projects have already commenced or will begin soon. Moreover, calls for tenders concerning projects with the total length of over 600 km have already been announced and these projects should be contracted in the coming months”, says Bartlomiej Sosna, Senior Construction Analyst at PMR and the author of the report.

More importantly, procedures related to the preparation of the expressway network construction gained pace; in Poland, the expressway network is expected to be twice as dense as the country’s motorway network. Thus, in 2010-2013, Poland will account for a steep two-thirds of the 1,200 km of new expressways in the region. As far as motorways are concerned, the other countries in the Central European region perform significantly better, thus the proportions in the regions will be maintained – almost 60% of the 1,700 km new motorways expected to be constructed in 2010-2013 will be built in the five smaller countries of the region (Bulgaria, the Czech Republic, Hungary, Romania, and Slovakia).

While it is true that each of the countries described in the report faces its typical problems, there are some common denominators all the countries in the region share such as rising effectiveness of administration preparing road investments, difficulties in obtaining funding for public-private partnership contracts on time, growing competition in the road construction sector evidenced by a greater number of foreign market players, companies formerly specialising in the construction of buildings entering the road construction sector and lower asking prices in public tenders.

Romania has the least developed road network among all the EU countries, which covers a little more than 320 km of motorways. The Romanian government will first focus on road projects within the European transport corridors. In addition to completing the construction of A1, A2 and A3 motorways, there are plans to construct A4 and A5, but neither of them stands a chance of being completed in the current EU budget perspective.

The Hungarian road market peaked in 2006, while in 2007-2009, its value was around 70% of the one reported for 2006. Hungary is crossed by four trans-European road corridors which are over 2,000 km in total length. A priority for the Hungarian government is now to continue the construction of these corridors.

The main objective for the Czech government is to build missing sections of motorways of ca. 900 km in length and at least 1,000 km of expressways. However, as the Ministry of Transport admits, the construction of the full expressway and motorway network may be completed only in 2025, and the total cost of these projects can be up to €20bn. To compare, less than 100 km of motorways, expressways and Class I roads, worth €1.4bn, will be completed for use in 2010.

In terms of road network expansion, the key tasks for the Slovak government are to complete the construction of D1 and D3 motorways and to develop the expressway network. Of all the countries in the region, Slovakia relies the most on public-private partnership arrangements, under which 105 km of D1 motorway and over 50 km of R1 expressway will be built.

Bulgaria plans to build over 200 km of motorways and approx. 370 km of lower classified roads in 2010-2013 using the available EU funds. The highest priority is A1 motorway linking Sophia and Burgas, to which €350m has been allocated for building part of the missing 115 km of the motorway. The construction of the missing 70 km of A3 will consume over €200m, and €250m has been allocated to a section of A6. A4 will be constructed after 2013 using the funds from the next EU budget perspective.

In this respect, the situation in the other countries in the region, including Poland, is similar. Therefore, Central European countries will seek sources of funding to continue the extension of road infrastructure in the EU budget for 2014-2020, the shape of which will be the subject of an apparently tough battle.

This press release is based on information contained in the latest PMR report entitled “Road construction market in Central Europe 2010 − Development forecasts and planned investments”.

For more information on the report please contact:

Marketing Department:

tel. /48/ 12 618 90 00

e-mail: [email protected]

About PMR

PMR (www.pmrcorporate.com) is a British-American company providing market information, advice and services to international businesses interested in Central and Eastern European countries as well as other emerging markets. PMR’s key areas of operation include business publications (through PMR Publications), consultancy (through PMR Consulting) and market research (through PMR Research). Being present on the market since 1995, employing highly skilled staff, offering high international standards in projects and publications, providing one of most frequently visited and top-ranked websites, PMR is one of the largest companies of its type in the region.


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