Builders' boom on the cards for CEE
A new report by market-research firm PMR says that the construction market in Central and Eastern Europe (CEE) is set for growth of eight to 11 percent in the next year, and Poland will not be left behind.
The report looks at the construction sectors in Russia, Poland, Hungary and the Czech Republic. PMR expects the market to grow by EUR 32 (zł.133) billion in the next two years to reach EUR 109 (zł.452) billion at the end of 2006.
Russia is the regional leader, and its construction market is worth EUR 41 (zł.170) billion, nearly 14 percent larger than the other three countries' shares combined. Poland comes in at second place, followed by the Czech Republic. PMR's analysts say that this growth is stable and represents the start of an up-trend, which will reverse the recent downturn in the industry in Poland - in 2001-2004, the average annual change in construction output was -8 to two percent. PMR expects Russia to boom with 11 percent growth, with Poland, Hungary and the Czech Republic enjoying expansions of nine to 10 percent per annum.
This growth will be fueled by several factors. An influx of EU funds is set to boost infrastructure development and civil-engineering projects, particularly for road and rail networks. Residential housing in CEE is behind EU rates, when it comes to the quantity and quality of available housing, which creates great opportunities for builders to capitalize on. Office space and non-residential building will also contribute towards the growth.
"Though the CEE countries are no longer offering as attractive rates of return on capital invested in non-residential construction than even a couple of years ago, the sector will continue to expand with dynamism, especially in Russia," says Marzena Opalinska, an analyst with PMR. "Nevertheless, its percentage share in the value of the total construction market is in for a marked drop."
The report makes reference to the individual markets' strengths and weaknesses. It points out that although the Polish construction industry has been in something of a crisis in recent years, there are signs of a gradual improvement. "More is being invested in the sector and more construction permits are being issued for residential buildings. This translates into higher sales for construction companies. Poland has sizeable deficits both in housing and especially in infrastructure. The latter segment stands to benefit the most from the greater inflow of EU funds and, thus, will continue to be the main engine behind the expansion of the Polish construction market," it says.
It also says that in Russia the construction market is underdeveloped with serious deficits in housing, modern non-residential construction and civil-engineering projects. The Czech Republic has the most developed construction market in CEE, but still offers opportunities in residential property, whereas the Hungarian market leads the region in terms of new housing. Hungary also has the most developed housing loan and mortgage system and the best construction permit statistics. However, the market is somewhat unstable.
PMR reckons that CEE is behind its EU15 counterparts in the residential, non-residential and engineering construction sector, which leaves great scope for growth in the region.
The report looks at the construction sectors in Russia, Poland, Hungary and the Czech Republic. PMR expects the market to grow by EUR 32 (zł.133) billion in the next two years to reach EUR 109 (zł.452) billion at the end of 2006.
Russia is the regional leader, and its construction market is worth EUR 41 (zł.170) billion, nearly 14 percent larger than the other three countries' shares combined. Poland comes in at second place, followed by the Czech Republic. PMR's analysts say that this growth is stable and represents the start of an up-trend, which will reverse the recent downturn in the industry in Poland - in 2001-2004, the average annual change in construction output was -8 to two percent. PMR expects Russia to boom with 11 percent growth, with Poland, Hungary and the Czech Republic enjoying expansions of nine to 10 percent per annum.
This growth will be fueled by several factors. An influx of EU funds is set to boost infrastructure development and civil-engineering projects, particularly for road and rail networks. Residential housing in CEE is behind EU rates, when it comes to the quantity and quality of available housing, which creates great opportunities for builders to capitalize on. Office space and non-residential building will also contribute towards the growth.
"Though the CEE countries are no longer offering as attractive rates of return on capital invested in non-residential construction than even a couple of years ago, the sector will continue to expand with dynamism, especially in Russia," says Marzena Opalinska, an analyst with PMR. "Nevertheless, its percentage share in the value of the total construction market is in for a marked drop."
The report makes reference to the individual markets' strengths and weaknesses. It points out that although the Polish construction industry has been in something of a crisis in recent years, there are signs of a gradual improvement. "More is being invested in the sector and more construction permits are being issued for residential buildings. This translates into higher sales for construction companies. Poland has sizeable deficits both in housing and especially in infrastructure. The latter segment stands to benefit the most from the greater inflow of EU funds and, thus, will continue to be the main engine behind the expansion of the Polish construction market," it says.
It also says that in Russia the construction market is underdeveloped with serious deficits in housing, modern non-residential construction and civil-engineering projects. The Czech Republic has the most developed construction market in CEE, but still offers opportunities in residential property, whereas the Hungarian market leads the region in terms of new housing. Hungary also has the most developed housing loan and mortgage system and the best construction permit statistics. However, the market is somewhat unstable.
PMR reckons that CEE is behind its EU15 counterparts in the residential, non-residential and engineering construction sector, which leaves great scope for growth in the region.
