No end in sight fo rising tender prices

Demand on the market and capacity shortages caused by labor migration are forecast to remain strong in 2007 and 2008. As a result, building-tender prices will continue to climb, but analysts believe the rise will be less sharp than in 2006. The forecasts are eight percent in 2007 and five percent in 2008.

"With GDP growing strongly at 5.5 percent for 2006, and a stable macroeconomic situation in Poland, demand for construction has risen 17.5 percent on 2005," says Alexander McMillan, CEE deputy president of Europtima Group, an international construction and real-estate consulting company. "Poland experienced one of the strongest rates of demand growth in the European market. As a result, building-tender prices have risen by 15 percent with contractors and suppliers improving margins and labor rates and material prices increasing. Contractors are clearly being more selective in choosing to tender," he adds.

Polish workers migrating to Western Europe have caused a shortage of labor and sub-contractors n the Polish market, leading to sharp increases in labor rates of between 50-80 percent.

According to McMillan, the construction industry expects labor shortages to continue. Price lists for materials and equipment from many suppliers were revised upwards twice in 2006, and the industry anticipates more modest increases in 2007.