Poland’s growth to slow down

By Sandy Guthrie26 May 2011

Poland's construction output will grow by around +11% this year, although growth there is predicted to be slower over 2012 and 2013, according to a report by research company PMR.

In the 21st edition of PMR's Polish report, Construction Sector in Poland, H1 2011 - Development forecasts for 2011 to 2013, the company said it expected that on the back of an excellent start to 2011, the full year's construction output would increase by around +11%.

It said this would mostly be driven by dynamic implementation of large civil engineering projects. PMR found that according to contractors, the appeal of residential and railway construction segments was boosted over the past year, while the attractiveness of road construction, environmental construction and sports facilities construction declined.

Poland's construction industry was up by nearly +20% in the first quarter of 2011, partly as a result of a low base of comparison. However, the authors of the report expected that the pace at which the construction segment would grow in the remaining part of the year would steadily fall. The full year's growth is expected to be around +11% - the highest result for the construction sector since 2008.

Construction output growth will slow slightly in 2012 and 2013, predicted PMR, principally in the wake of a reduced number of new civil engineering projects.

The report's authors said that civil engineering construction would continue as the driving engine for the construction sector in Poland in 2011 and 2012, mainly as a result of the implementation of large civil engineering projects for the Euro 2012 football competition hosted by Poland.

Solid growth is also forecast be fuelled by capital expenditure on water supply and sewage discharge infrastructure projects, in both small and large urban areas, and by railway construction projects, especially those concerning the Warsaw to Gdynia and Katowice to Rzeszow lines.

The power sector is also expected to accelerate. The number of planned investment projects in this branch has steadily grown, but they will be implemented over extended periods of time and will start to yield substantial revenue only after 2013, when proceeds from road construction projects are set to decline.

The outlook for non-residential construction has improved considerably in the last few months, according to PMR. As a result of a low base of comparison and driven by the renewal of numerous commercial construction projects, non-residential construction accelerated significantly in the second half of 2010. It ended the year on a positive note after a 4% decline recorded in 2009.

In a survey of the 200 largest construction companies, road construction was named by 59% respondents as the most attractive sector of the construction market over the next two years. This was expected, but is a much lower proportion than March 2011 (76%) and September 2010 (81%).

The decline is said to be a direct result of the government cutting back plans for national road construction projects, reduced spending by local governments, and the approaching end of the local road reconstruction plan.

Residential construction recorded the strongest growth in the past year, being mentioned by 40% of respondents, compared to less than 20% in 2010. The number of dwellings started by developers jumped by +42%.

Power construction (including facilities for the power, gas and fuel industries) was ranked third in terms of sector attractiveness, garnering 23% of responses. In March 2010 it was 27%, and 30% September 2010.

Railway construction was considered to be the most attractive construction segment by 17% of respondents, compared to 11% in March 2010 and 20% in September 2010.

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