The Poland Construction Market is estimated to grow at a CAGR of approximately 4.5% during the forecast period, driven by the government’s plans to upgrade infrastructure.
Poland had the largest growth in the construction market in the EU between July 2019 and August 2019. The sector grew by 2% compared to the EU average which saw a 0.5% decline. This development ended a five-month slide in the value of the construction segment in Poland. Construction output in Poland increased by 1.50% in March of 2020 over the same month in the previous year. As per the data from Statistics Poland, the output of construction and assembly works increased by 2.6% in 2019. The average sector growth over the past 3 years is at 5.2 % while the average sector growth over the past 5 years is at 5.9 %. The Polish construction industry has seen a decline in the sector value-added growth in 2019 which is at 4.5% as compared to that in 2018 which is at 17.2%.
The value of output produced by the Polish construction industry has arrived at an unequaled significant level on the back of several years' upswing in the year 2019 and it is relied upon to reach USD 67.02 billion in 2020. The expansion will probably be fueled by the increasing expense of wages in Poland however there is an expected USD 81.28 billion worth of projects at the planning stage.
In the commercial development segment, new buildings of business expanded by about 15% in 2019. Low vacancy rates energize new ventures, particularly in bigger urban communities. The number of retail-related structures finished expanded 6% year-on-year among January and September 2019. Nonetheless, showcase immersion of malls is as of now high, prompting lower development in 2020. The demand for distribution centers (up 8% in 2019) is driven by logistics administrators (predominantly because of expanding online business), with consistent growth expected in 2020. Infrastructure development was the biggest market in the Polish Construction industry during the audit time frame, representing 31.8% of its total value in 2018. Development in the area is required to be bolstered by the administration's plan to overhaul the nation's transport infrastructure.
The impact of COVID '19 on the poland construction industry is very huge . The change in the construction production during the pandemic is highest among the sports and recreational buildings where it has seen a dip of 44% in March'2020 as compared to that of March' 2019. Commercial buildings have seen a fall by 20% year - on - year as of March' 20. Activities which are supported by the EU funds such as buildings and tunnels, roads and railways were least affected by the pandemic.
Key Market Trends
Ongoing Demand for Infrastructure to Boost the Construction Sector
The construction sector in Poland is expected to grow during the forecast period, the main contributors being ongoing road and railway infrastructure projects, residential housing, office, and warehouse construction. According to the data from Statistics Poland, the number of residential buildings finished increased more than 11% year-on-year between January and November 2019, together with a 4.5% increase in construction permits. There is currently a need for 2-2.5 million dwellings in Poland. Infrastructure development is ongoing, especially railway and road construction. The total construction project pipeline in Poland –including all mega projects with a value above USD 25 million – stands at USD 172.5. The pipeline, which includes all projects from pre-planning to execution, is well balanced, with 50.9% of the pipeline value being in projects in the pre-planning and planning stages as of April 2019. Planned expenditures for road construction in 2020 amount to USD 6.25 billion. The government plans to invest USD 11.1 billion to develop a high-speed rail network and USD 9.7 billion to construct a new hub airport under the Central Communications Port (CCP) project by 2027.
The Mazowieckie and Pomeranian voivodeships are leading the investments with each planning projects totaling about USD 12.5 billion. Mazowieckie’s largest investments are planned in transport infrastructure whereas the Pomeranian region has large projects in energy construction and water structures.
Low Interest Rates to boost the Poland Construction Sector
The construction sector in Poland is expected to grow during the forecast period given the low-interest rates. Interest Rate in Poland averaged 6.57 percent in the last 2 decades till 2020, reaching an all-time high of 24 percent in March of 1998 and a record low of 0.10 percent in May of 2020. The mortgage interest rate in Poland decreased overall during the period under observation, reaching a value of 4.4 percent as of the third quarter of 2019. The largest mortgage interest rate during this period was found in the first quarter of 2016 when a mortgage interest rate of 4.5% was recorded. The annual average interest rate of new residential loans has decreased overall from a height of over eight percent to 4.1 percent in 2014. Between 2016 and 2018, the annual average interest rate on new residential loans in Poland stayed constant at 4.4 percent.
The report covers the major players operating in the Poland Construction Market. Poland's market is highly competitive with a few players occupying the major share. The market is fragmented, and the market is expected to grow during the forecast period due to the increase in the construction investments and up-coming major projects in the country and other few factors are driving the market.
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