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European Construction Forecasts - State of Play

An overview of the macroeconomic framework and construction trends in Europe, including sector outlooks and the dominance of renovation in housing. The article also highlights the impact of the European public debt crisis on construction investments.

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European Construction Forecasts - State of Play

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  1. STATE OF PLAY - FORECASTSFOR EUROPEAN CONSTRUCTION Michael Weingärtler michael.weingaertler@euroconstruct.org • European BuildersConfederation Annual Meeting 2014 20 June 2014 - Palermo,Italy

  2. OVERVIEW • Macro-economic Framework • Overall Trends in Construction • Construction Outlook by Sectors • Housing • Non-residential construction • Civil Engineering

  3. EUROCONSTRUCT NETWORK FI • EUROPE (EC-19)Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Nether-lands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, Czech & Slovak Republic, Hungary, Poland. BIG 5 CountriesFrance, Germany, Italy, Spain, United Kingdom Northern EuropeNorway, Sweden, Finland, Denmark, Ireland Smaller European Countries • Austria, Belgium, Netherlands, Portugal, Switzerland • Eastern EuropeCzech Republic, Hungary,Slovak Republic, Poland NO SE DK IR UK PL NL DE BE CZ SK AT HU CH FR IT ES PT

  4. DOUBLE DIP IN CONSTRUCTION Source: EUROCONSTRUCT (Oslo 6/2014).

  5. WHAT HAPPENED? (1) INCREASING WORLD TRADE (2) DYNAMICEXPORTS (3) MACHINERYINVESTMENTS EUROPEAN PUBLIC DEBT CRISIS (4) CONSTRUCTION INVESTMENTS 2010 2011 2012

  6. THREE STEPS OF ECONOMIC RECOVERY  InvestmentsConsumption   World Trade Exports Construction Time lag 2-4 quarters 2-4 quarters Source: EUROCONSTRUCT (OSLO 6/2014).

  7. HOW WILL IT GO ON? Source: EUROCONSTRUCT (Oslo 6/2014).

  8. EUROPEAN CONSTRUCTION 2014 Volume: construction output per capita in mill. Euro (horizontal axis)Activity: real annual average growth 2014 in % (vertical axis) lowvolumehighvolume averagevolume increasingactivity increasingactivity averagegrowth averagegrowth decreasingactivity decreasingactivity lowvolumehighvolume Source: EUROCONSTRUCT (Oslo 6/2014).

  9. RENOVATION DOMINATES WESTERN CIVIL ENGINEERING & NON-RESIDENTIAL EASTERN EUROPE European Construction – A 1.30 bn Euro Market (2013) EC-15 EC-4 TOTAL CIVILENGINEERING22 bill. € TOTAL CIVILENGINEERING263 bill. € NEW HOUSING218 bill. € NEW HOUSING11 Mrd. € 18% 16% 21% 32% 16% NEW NON-RESIDENTIAL 196 bill. € 30% 45% 22% NEW NON-RESIDENTIAL21 bill. € BUILDING RENOVATION15 bill. € BUILDING RENOVATION550 bill. € Source: EUROCONSTRUCT (Oslo 6/2014). – Western Europe: Belgium, Denmark, Germany, Finland, France, Ireland, Italy, Great Britain, Netherlands, Norway, Austria, Portugal, Sweden, Switzerland, Spain. Eastern Europe: Czech Republic, Hungary, Poland, Slovak Republic.

  10. SLOW RECOVERY IN CONSTRUCTION gdp and construction outputindex 2010 = 100 withoutPoland Source: EUROCONSTRUCT (Oslo 6/2014. – Western Europe: Belgium, Denmark, Germany, Finland, France, Ireland, Italy, Great Britain, Netherlands, Norway, Austria, Portugal, Sweden, Switzerland, Spain. Eastern Europe: Czech Republic, Hungary, Poland, Slovak Republic.

  11. SLOW RECOVERY IN CONSTRUCTION gdp and construction outputindex 2010 = 100 Source: EUROCONSTRUCT (Oslo, 2014). – Northern Europe: Denmark, Finland, Ireland, Norway, Sweden. Smaller Countries: Belgium, Netherlands, Austria, Portugal, Switzerland.

  12. RECOVERY OF NEW HOUSING IN EUROPE housing outputindex 2013 = 100 NEW HOUSING TOTAL HOUSING RENOVATION Source: EUROCONSTRUCT (Oslo 6/2014) .

  13. LONG TERM HOUSING IN EC-19 total housing outputin billion Euro at 2013 prices – 25% + 6% Source: EUROCONSTRUCT (Oslo 6/2014).

  14. BACK TO 2010 total housing outputin billion Euro at 2013 prices Source: EUROCONSTRUCT (Oslo 6/2014).

  15. TOTAL HOUSING IN BIG-5 COUNTRIES volume change in billion Euro Source: EUROCONSTRUCT (Oslo 6/2014) .

  16. HOUSING TRENDS – NORTHERN EUROPE total housing outputin billion Euro at 2013 prices – 28% + 16% Source: EUROCONSTRUCT (Oslo 6/2014). – Northern Europe: Denmark, Finland, Ireland, Norway, Sweden.

  17. TOTAL HOUSING IN NORTHERN EUROPEAN COUNTRIES Volume change in billion Euro Source: EUROCONSTRUCT (Oslo 6/2014).

  18. HOUSING TRENDS - Smaller Countries total housing outputin billion Euro at 2012 prices – 11% + 4% Source: EUROCONSTRUCT (Oslo 6/2014). – Northern Europe: Denmark, Finland, Ireland, Norway, Sweden. Smaller Countries: Belgium, Netherlands, Austria, Portugal, Switzerland.

  19. TOTAL HOUSING - SMALLER COUNTRIES volume change in billion Euro Source: EUROCONSTRUCT (Oslo 6/2014).

  20. HOUSING TRENDS – EASTERN EUROPE total housing outputin billion Euro at 2012 prices – 24% + 9% Source: EUROCONSTRUCT (6/2014). – Eastern Europe: Czech Republic, Hungary, Poland, Slovak Republic.

  21. TOTAL HOUSING – EASTERN EUROPE volume change in billion Euro Source: EUROCONSTRUCT (Oslo 6/2014).

  22. SIGNIFICANT GROWTH DIFFERENCES average housing permits per 1000 inhabitants 2013-20163.5 permits per 1,000 inhabitants Source: EUROCONSTRUCT (Oslo 6/2014).

  23. RENOVATION DOMINATES HOUSING OUTPUT IN WESTERN EUROPE shareofnewconstructionandrenovation in europeanhousingmarkets in 2013 in % New Housing HousingRenovation Source: EUROCONSTRUCT (Oslo 6/2014).

  24. EU Public DebtCrisis World Financial Crisis ‘Oil-Crisis‘ PUBLIC RENOVATION MEASURES AS REACTION TO THE LONG TERM ENERGY PRICE TREND 2003 vs2012+430% 2009/10+30% Crudeoilpricetrend 1960 – 2013 2004/05 +45% S: TECSON (www.tecson.de)

  25. TOTAL HOUSING PRODUCTION FI averagegrowth2013-2016: 2.0% NO SE Western Europe: 2.0%Eastern Europe: 2.8% DK IR UK NL PL DE 4% andabove BE CZ SK 2% tolessthan 4% AT HU CH 1% tolessthan 2% FR below 1% IT shrinkingmarket PT ES Source: EUROCONSTRUCT (Oslo 6/2014) .

  26. MINOR RECOVERY IN EUROPEAN NON-RESIDENTIAL CONSTRUCTION non-residential construction outputindex 2013 = 100 Source: EUROCONSTRUCT (Oslo 6/2014).

  27. BEST OUTLOOK:NEW INDUSTRIAL CONSTRUCTION new non-residential construction outputindex 2013 = 100 Source: EUROCONSTRUCT (Oslo 6/2014).

  28. POOR NON-RESIDENTIAL PERFORMANCE gdp & non-residential construction Outputindex 2010 = 100 Poland,excluded Source: EUROCONSTRUCT (Oslo 6/2014). – Western Europe: Belgium, Denmark, Germany, Finland, France, Ireland, Italy, Great Britain, Netherlands, Norway, Austria, Portugal, Sweden, Switzerland, Spain. Eastern Europe: Czech Republic, Hungary, Poland, Slovak Republic.

  29. BIG-5 EUROPEAN COUNTRIESMINOR GROWTH IN NON-RES. CONSTRUCTION new non-residential construction outputindex 2013=100 BIG-5 United Kingdom Germany Italy France Spain Source: EUROCONSTRUCT (Oslo 6/2014) .

  30. NORTHERN COUNTRIESaverage growth 2013-2016: +2.6% new non-residential construction outputindex 2013=100 Denmark Finland Ireland Norway Sweden Source: EUROCONSTRUCT (Oslo 6/2014) .

  31. SMALLER WESTERN EUROPEAN COUNTRIESaverage growth 2013-2016: +1.0% new non-residential construction outputindex 2013=100 Netherlands Portugal Austria Switzerland, Belgium Source: EUROCONSTRUCT (Oslo 6/2014).

  32. CENTRAL EASTERN EUROPEAN COUNTRIESaverage growth 2013-2016: +2.5% new non-residential construction outputindex 2013=100 Poland Hungary Czech Republic SlovakRepublic Source: EUROCONSTRUCT (Oslo 6/2014).

  33. NON-RESIDENTIAL OUTLOOK FI NO averagegrowth2013-2016: 1.2% SE Western Europe: 1.1%Eastern Europe: 2.6% DK IR UK PL NL DE 3% andabove BE CZ SK 1.2% tolessthan 3% AT HU FR CH 0.6% tolessthan 1.2% below 0.6% IT shrinkingmarket ES PT Source: EUROCONSTRUCT (Oslo 6/2014).

  34. CIVIL ENGINEERING OUTLOOK gdpandcivilengineeringoutputindex 2010 = 100 Poland,excluded Source: EUROCONSTRUCT (Oslo 6/2014). – Western Europe: Belgium, Denmark, Germany, Finland, France, Ireland, Italy, Great Britain, Netherlands, Norway, Austria, Portugal, Sweden, Switzerland, Spain. Eastern Europe: Czech Republic, Hungary, Poland, Slovak Republic.

  35. CIVIL ENGINEERING OUTLOOK gdpandcivilengineeringoutputindex 2010 = 100 Source: EUROCONSTRUCT (Oslo 6/2014). – Northern Europe: Denmark, Finland, Ireland, Norway, Sweden. Smaller Countries: Belgium, Netherlands, Austria, Portugal, Switzerland.

  36. ROAD SECTOR DOMINATES CE STRUCTURE IN CIVIL ENGINEERING PRODUCTION OUTPUT 2013 EC-19 EC-4 TELECOM & OTHER CE2 bn. € TELECOM & OTHER CE43 bn. € ROADS 84bn. € ROADS 9bn. € WATER4 bn. € WATER31 bn. € ENERGY 40 bn. € ENERGY 3 bn. € RAILWAY 3 bn. € RAILWAY 42 bn. € OTHER TRAFFIC 1 bn. € OTHERTRAFFIC 20 bn. € Source: EUROCONSTRUCT(Oslo, 6/2013).

  37. ENERGY SECTOR AS GROWTH DRIVER total civil engineering outputindex 2010 = 100 Source: EUROCONSTRUCT (Oslo 6/2014).

  38. CIVIL ENGINEERING OUTLOOK IN BIG-5 EUROPEAN COUNTRIES total civilengineeringoutputindex 2013 = 100 Source: EUROCONSTRUCT (Oslo 6/2014).

  39. CIVIL ENGINEERING OUTLOOK FI averagegrowth2013-2016: 1.5% NO SE Western Europe: 1.3%Eastern Europe: 4.5% DK IR UK PL NL DE 4.2% andabove BE CZ SK 2% tolessthan 4.2% AT HU CH FR 0.5% tolessthan 2% below 0.5% IT shrinkingmarket ES PT Source: EUROCONSTRUCT (Oslo 6/2014).

  40. SUMMARY Economic recovery is mainly driving • European Housing • Civil Engineering HIGHEST RISK SLOW AND UNSTABLE OVERALL ECONOMIC DEVELOPMENT

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