Constructionshows
The construction industry is now just bucking the downhill trend after declines recorded in 2012 and 2013. Provided that the pace of work on ongoing and new construction projects remains constant, 2014 will see growth in the single-digit range, according to PMR’s latest projections. 2015 is expected to bring the continuation of the upward trend as the market is expected to expand by an additional 8% that year. The main cause of these developments will include the accelerating projects in the power and railway industries and the stabilisation in road construction.
Despite the approaching end of the 2007-2013 budgetary framework – projects eligible in this programming period must be financially settled by the end of 2015 – construction sites across Poland continue to buzz with activity, according to PMR’s latest report entitled: “Construction Sector in Poland H2 2014 – Development Forecasts for 2014-2020”. The railway industry is by far the best example of how to effectively handle delays in project implementation. The value of construction output generated in the segment in the first half of 2014 recorded a rise of more than 50% over the corresponding period of 2013. A similar pace of growth was reported by hydro technical installations (49%) and power facilities.
Power plants and CHP plants (industrial construction segment), the construction of most of which has started only recently, contributed to a rise of nearly 20% in output in the first six months of 2014. The category is unlikely to see such rapid growth again, but the segment will continue to grow at a positive rate, but less exponential than to date, in the coming years and its output is also expected to be high. This scenario will be helped by new contracts awarded within the power sector and the decision to build a new petrochemical complex by Grupa Azoty and Lotos, which is expected for 2015. When the project is finally given the green light, it will lead construction companies to bag approximately PLN 12bn in orders.
While all sub-segments of civil engineering construction report positive growth, non-residential construction is a little more varied in this respect. The most rapid growth has been shown by industrial construction companies, which, recently, have been highly active in the construction market. There are numerous halls and plants under construction, which is the outcome of the fact that special economic zones in Poland will continue to exist in the years to come. In the short term, the decision will have a major influence on the volume of construction output, but its effect will likely be limited to a single year only. As time passes, the economic efficiency of new projects in special economic zones will be falling as companies will be using tax exemptions for a shorter time.
There are basically two sub-segments, i.e. hotel construction and office construction, which see declines in construction output. Whereas a high vacancy rate for office space justified a slightly limited activity on ongoing projects, a high demand for new facilities in the hotel segment is partly met by large hotel chains taking over small, family-run businesses, which are unable to compete against specialised companies effectively. Besides, the falls seen by the hotel sector are also to some extent the effect of a slowdown after two years of rapid growth in the segment.
The increases in construction output, which have continued for most of the year, contractors facing fewer financial problems, acceleration in the power construction industry and a new round of road construction tenders are reflected in the latest results of a survey of high-level professionals from the management and operating divisions of the top 200 Polish construction companies.
The nineteenth wave of the survey has revealed continued improvement in construction confidence in Poland, though the acceleration was not as pronounced as in the year before. In September 2014, PMR Business Confidence Indicator for the construction industry had a value of 2.4 pts, reaching a level close to that of 2010. Accordingly, following a panic that sent the market down in 2012, construction companies now present a more optimistic outlook on their current and future market situation. PMR researchers suggest that a more positive outlook on the construction market has been driven by a number of factors which included the improving conditions in the Polish economy and significant increases in the construction industry in H1 2014. Furthermore, on the back of the EU’s budget for 2014-2020, the survey has identified the power construction, road construction and railway construction sectors as offering the best prospects, as indicated by 44%, 43% and 30% of respondents.
This press release is based on information contained in the latest PMR report entitled: „Construction sector in Poland, H2 2014. Forecasts for 2014-2020”.
