Az iroda a negyedév pozitív meglepetése, minden idők második legnagyobb Aktivitás-Kezdését mértünk ebben a szegmensben (folyó áron). Ezzel szemben az ipar már két negyedéve nem hoz kiemelkedő számokat. A társasházi lakásépítésben még mindig nincs fordulat, de valahol a gödör alja körül lehetünk. A mélyépítés Aktivitás-Kezdése egyelőre extra alacsony a 3. negyedévben, a legnagyobb projekt az 1-es vasútvonalon megkezdett felújítás.
A vizualizációt (18 szegmens adataival) havonta frissítjük, és negyedévente az EBI Építésaktivitási Jelentésben is elmondjuk, hogy mit látunk a piacon.
The office is the positive surprise of the quarter, we measured the second largest Activity-Start of all time in this segment (at current prices). In contrast, the industry has not produced outstanding numbers for two quarters. There is still no turning point in multi-unit residential construction, but we could be somewhere around the bottom. Activity-Start of civil engineering is currently extra low in the 3rd quarter, the biggest project being the renovation started on railway line 1.
The visualization (for 18 segments) is updated monthly and the EBI Construction Activity Report, summarizing what’s happening in the market, is published in each quarter.
Press Release on EBI Construction Activity Report Hungary Q2 2023
Q2 brought an improvement over Q1 in the Activity-Start of EBI Construction Activity Report: between April and June construction works started in the value of HUF 754 billion in Hungary, a more than 30% increase over Q1. It was an expansion compared to H2 2022 as well. The rise against the previous quarter was visible even at constant price, although Activity-Start was still behind the quarterly figures of 2021 and H1 2022.
The value of started building constructions keeps registering a drop
In Q2, construction works started in building construction at an even lower value than in Q1, so Activity-Start has been decreasing for the third consecutive quarter. The value of started works was barely more than HUF 400 billion; it fell by 16% in Q2 over Q1. The lag is even bigger compared to the outstanding second quarters of 2021 and 2022. At constant price, the value of building construction works started in one quarter has not been this low since 2015.
The decrease at current price was typical for non-residential constructions. Multi-unit housing recorded a minimal improvement in Activity-Start, although the indicator here stayed very low. In non-residential, the total value of works started was nearly 20% lower in Q2 than in Q1. At constant price, it was in Q3 2016 when Activity-Start was lower than this value.
The biggest projects launched in Q2 this year were the Correctional Facility in Csenger, Inpark metalworking plant in Debrecen, Boysen electric car battery plant in Nyíregyháza, HelloParks Logistics Hall in Páty, the next building of Weerts Logistics Center, and several larger multi-unit residential projects.
EBI Construction Activity Report Hungary analyses the construction industry on a quarterly basis, including the volume of newly started construction works and the value of projects completed in each quarter in aggregate and by segment as well. It is prepared by Buildecon, Eltinga (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). EBI Construction Activity Report Q2 2023 has been published and can be purchased at email@example.com.
Civil Engineering Activity-Start sees a considerable expansion
The Q2 2023 Civil Engineering Activity-Start of EBI Construction Activity Report posted a more than 30% growth against the corresponding period a year earlier. And compared to Q3 and Q4 2022, as well as Q1 2023, the increase was exceptional. The last time Activity-Start in the segment was higher than this was in Q1 2022. In April-June 2023, the value was close to HUF 350 billion and the increase was noticeable even at constant price: in comparison with Q1 2023, the value of started construction works nearly quadrupled. But compared to previous years, this Activity-Start at constant price cannot be called an outlier.
Written by Tünde Tancsics and Dóra Barát – ELTINGA-EECFA Research
The European Commission’s 2023 Spring economic forecast for EECFA countries was showing some changes in outlook in comparison with Autumn 2022.Economic growth prospects improved in most countries in Spring 2023, excluding Serbia where growth expectations slightly fell against Autumn 2022. The EU and the Euro area growth prospects were outperformed in all countries surveyed – apart from Russia.
Projected economic growth in 2023-2024 was positive in all countries, although to varying degrees. It was over 3% in Türkiye and Romania (3.75% and 3.35%, respectively), but also above 2% in Serbia (2.45%) despite the downturn in expectations since Autumn 2022. GDP growth in other EECFA countries and Hungary (which is a Euroconstruct member) was projected to be between 1.5% and 2%, above both the EU and the Euro area averages of 1.35%. In Russia, growth forecast turned from negative to positive, but it was still close to zero: at just 0.2%.
Gross fixed capital formation data shows that growth projections for 2023-2024 were rather mixed, both in terms of direction and in the magnitude of change. Expected GFCF growth in Spring 2023 was by far the highest in Romania (7.5%), while in the Euroconstruct member Hungary, it was anticipated to decrease by 0.7%; a larger decline than the 0.2% contraction estimated in Autumn 2022. In Russia, a 0.4% growth was forecasted in Spring 2023, instead of the drop projected in Autumn 2022. In case of Türkiye, Slovenia, Croatia, and Bulgaria, expected GFCF growth was around 3%-4%. It doubled in Türkiye and quadrupled in Slovenia, while in Bulgaria it fell by less than half. In Serbia, GFCF prospects were similar to those of the EU and the Euro area, but slightly higher (1.7%).
In Slovenia, predicted construction growth rate almost doubled to close to 6% from Autumn 2022 to Spring 2023. For Romania and Croatia, projections were 6.55% and 3.05%, respectably. In Bulgaria and Hungary, the outlook significantly deteriorated. The same was true for the EU and the Euro area where expected GFCF into construction growth was barely above zero. Thus, the surveyed EU member countries outperformed the projected construction growth in both the EU and the Euro area. Hungary was the only exception where a decline was anticipated.
This above is the European Commission’s opinion. EECFA’s opinion, on Eastern European construction markets and forecast on submarket and segment level can be found in the latest EECFA reports. Sample report and order: eecfa.com. Türkiye and Croatia could be top performer, Romania, Russia and Serbia are foreseen to shrink.
Our approach is different from that of the Commission, as we provide forecast for each segment of construction. That is, we have a bottom-up approach, where forecast is computed separately for residential, office, retail, industrial buildings, roads, railways, utility etc. segments.
Press Release on EBI Construction Activity Report Hungary Q4 2022
The latest EBI Construction Activity Report has found that after the weak Q3 2022, Q4 2022 saw a slight nominal expansion in Activity-Start in Hungarian construction. Nonetheless, the value of started construction works was still very low; between October and December 2022 they totalled roughly HUF 650 billion.
This time, though, for better comparability, the analysts of EBI Construction Activity Report also looked at the development of Activity-Start in Q4 2022 at constant prices. This shows that Q4 witnessed a considerably lower construction value, a bit more than Q3 (the negative record in recent years). Yet, whole-year-figures were high thanks to the higher Activity-Start in the first two quarters of 2022 and projects entered construction on more than HUF 3600 billion. Although it was a new record at current prices, it did not approach the highest values of 2017 and 2018 at constant prices and was at the level of 2019 and 2021. Annual change compared to 2021 at current prices was about +21%, while at constant prices it meant a drop of 0.6%.
EBI Construction Activity Report Hungary analyses the construction industry on a quarterly basis, including the volume of newly started construction works and the value of projects completed in each quarter in aggregate and by segment as well. It is prepared by Buildecon, Eltinga (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). The EBI Construction Activity Report Q4 2022 can be purchased at firstname.lastname@example.org.
Expansion in value of started building construction works
The modest rise in Activity-Start at current prices was mostly coming from the expansion of building construction with the value of started construction works being HUF 500 billion in Q4 2022. Overall, the entire 2022 brought high numbers. Projects worth more than HUF 2000 billion entered implementation – the highest ever registered.
In Q4 the improvement over Q3 was evident in building construction even at constant prices. But the value of started works, except for 2020, was lower than the quarterly values of the past years. At constant prices, the Activity-Start indicator dropped during 2022 (-16.8%) and was roughly at the level of 2019. The better last three months were also typical for multi-unit housing and non-residential buildings, whether we look at current or constant prices.
In 2022, non-residential construction works were launched at a value of more than HUF 1800 billion, the highest amount so far. Thanks to the good first half of the year, even at constant prices, last year was considered a strong year: constant-price Activity Start of EBI Construction Activity Report was the third highest after 2018 and 2021.
Building construction projects launched in Q4 2022 included the CATL battery factory, the BMW plant, and the EcoPro BM electric battery cathode manufacturing plant in Debrecen. Construction also began on the CTP warehouses in Szigetszentmiklós, the University of Veterinary Medicine and the Siemens Energy M2B gas and steam turbine parts manufacturing plant in Budapest, as well as the logistics hall of HelloParks in Fót.
Press Release on EBI Construction Activity Report Hungary Q3 2022
EBI Construction Activity-Start recorded a sharp falloff in Q3 2022. Between July and September, construction projects started at a value of less than HUF 480 billion – the lowest amount since Q3 2020.
The recent years have seen a considerable price rise in the Hungarian construction industry. In order to filter this out, the analysts of EBI Construction Activity Report compared the value of started construction works at constant prices, using Q3 2022 prices. Based on this, at constant prices, an even greater decline is seen in case of started construction works. In Q3 2022 they have registered their lowest value since 2015. At the same time, thanks to the successful first quarter, the drop was not yet visible based on the figures of the first 9 months, which even at constant prices exceeded the same periods of 2020 and 2021.
EBI Construction Activity Report Hungary analyses the construction industry on a quarterly basis, including the volume of newly started construction works and the value of projects completed in each quarter in aggregate and by segment as well. It is prepared by Buildecon, Eltinga (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). The EBI Construction Activity Report Q3 2022 has been released and can be purchased at email@example.com.
Value of building construction works down
The decline in Activity-Start witnessed in the construction industry as a whole was observed in building construction, too. The total value of started construction works was around HUF 300 billion, far below the typical first and second quarters. Looking at constant prices, the drop is even more visible. One needs to go back to Q1 2015 to find a lower value than this year’s third quarter. Yet, it is also true in case of buildings that the better first and second quarters pushed up annual figures.
The decrease was also true to residential and non-residential. For the latter, the Activity-Start of EBI Construction Activity Report was around HUF 260 billion, which, at current prices, fell short not only of the figures of the first two quarters, but also of most of the levels of quarters between 2018 and 2021. At constant prices, it was the lowest since Q1 2015.
Building construction projects launched in Q3 2022 included the W-Scope separator film factory in Nyíregyháza, and ParkSide Offices, RTL HQ, Zugló-Városközpont Offices 1 in Budapest. Work also began between July and September on Phase 2 of Campus in Kecskemét, Panattoni Park Budapest City West logistics center in Törökbálint, and the Hungarian University of Agriculture and Life Sciences in Gödöllő.
Press Release on EBI Construction Activity Report Hungary Q2 2022
Hungary’s high construction Activity Start in Q1 2022 was followed by a slowdown in Q2. The Q2 2022 EBI Construction Activity Report has found that between this April and June construction works started at a value of around HUF 800 billion. Although the value of projects entering construction decreased in Q2, these are not low numbers at all as Activity Start has been the 5th highest (on a quarterly basis) of recent years. It should be added, though, that recently construction costs have dramatically increased, massively pushing up the Activity Start indicator calculated at current prices, while at constant prices the volume would be lower.
Press Release on EBI Construction Activity Report Q1 2022
The Hungarian construction industry started off this year with an exceptionally high Activity Start indicator: nearly HUF 1,300 billion worth construction works started in Q1 2022. The Activity Start of EBI Construction Activity Report in the first quarter is a new record (construction works have never started in such a high value in one quarter) and exceeded the level of Q2 2021 (the highest so far) by almost 37%. Yet, this spike is mainly thanks to the launch of two major projects: 1) the Soroksár-Kelebia section of the Budapest-Belgrade railway corridor and 2) the road section between Kecskemét and Szentkirály on M44.
EBI Construction Activity Report Hungary analyses the construction industry on a quarterly basis, including the volume of newly started construction works and the value of projects completed in each quarter in aggregate and by segment as well. It is prepared by Buildecon, Eltinga (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). The EBI Construction Activity Report Q1 2022 has been released and can be purchased at firstname.lastname@example.org.
Stagnant building construction
The value of started building construction projects was slightly more than HUF 430 billion in the first 3 months of 2022; a good start to the year. The Activity Start of EBI Construction Activity Report was a bit below the value of the same period of the previous year but compared to the last two quarters of 2021, there has been no major change in the Activity Start of building construction. And the first 3 months of 2022 were considerably better than the period between April and December 2020.
Within building construction, the Activity Start of residential construction was modest: the value of started construction works stayed below HUF 90 billion. The Activity Start indicator of non-residential buildings was almost HUF 350 billion in Q1 2022, lower than the very strong first 2 quarters of 2021, but almost the same as the values of Q3 and Q4 2021.
The biggest started building projects in Q1 2022 included Kovács Katalin National Kayak-Canoe Sports Academy in Sukoró, eMAG logistics centre in Dunaharaszti, and ActiCity Event Center in Veszprém. In Budapest, the construction of BEM Center office building and Kimpton Hotel (District 2), as well as Phase 2 of Corvin 7 office building (District 8) entered construction phase.
Big numbers in civil engineering
Construction start on the Budapest-Belgrade railway line between Kelebia and Soroksár, and the section of M44 between Kecskemét and Szentkirály brought an outstanding Activity Start indicator for civil engineering. The total value of launched projects went up to an unprecedented HUF 850 billion between January and March 2022; twice the previous record value of Q1 2018. The Activity Start of civil engineering in the first 3 months of 2022 exceeded the full annual value of both 2020 and 2021.
The total value of road and railway construction works within civil engineering was almost HUF 800 billion thanks to these two large-scale projects. It is indeed the highest value of the last decade. But non-road and non-railway civil engineering projects, similarly to the last two quarters of 2021, started in a low value again.
In addition to these two big-volume projects, key civil engineering projects include the Phase 2 of main road 33 (Debrecen).
Press Release on EBI Construction Activity Report Q4 2021
2021 as a whole saw expansion in the Hungarian construction industry. Compared to 2020 and 2019, the total value of started construction works also rose. Last year, the Activity Start indicator of EBI Construction Activity Report reached a total of more than HUF 2,500 billion, an increase of almost 18% against 2020 and of more than 6% against 2019. It is true, however, that last year’s growth was mainly due to the outstanding numbers in Q2 as Q4 brought a particularly low Activity Start. It was in 2016 last when there were 3 months with lower value of construction works started.
EBI Construction Activity Report Hungary analyses the construction industry on a quarterly basis, including the volume of newly started construction works and the value of projects completed in each quarter in aggregate and by segment as well. Prepared by Buildecon, Eltinga (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). The EBI Construction Activity Report Q4 2021 has been released and can be purchased at email@example.com.
Building construction: drop at end 2021, but still a record-setter
Q4 2021 registered a weaker Activity Start in building construction works, mainly owing to the loss of momentum in non-residential building works. Overall, however, the lower numbers of H2 were offset by the higher values of H1, particularly in Q2. Thus, thanks to a successful first half of the year, building construction works have never started at such a high value as in 2021. As per the latest EBI Construction Activity Report, the value of construction works started last year reached more than HUF 1,800 billion with the growth over 2020 being close to 30%, and the growth over 2019 being more than 20%.
The Activity Start of multi-unit housing constructions saw an increase in Q3 and Q4 2021. In the full year of 2021, despite a weak Q4, the value of non-residential construction works set a record; such a high value of construction works has not yet started in the subsector. The Activity Start indicator of EBI Construction Activity Report amounted to more than HUF 1,500 billion in total, an increase of about 27% over both 2020 and 2019.
In Q4 2021, the biggest building construction projects entering construction phase comprised Alba Arena sports hall (Székesfehérvár), Chervon Auto automotive metal parts plant (Miskolc), Jedlik Ányos Grammar School (District 21, Budapest) and the Innovative Technical School and Grammar School (Biatorbágy).
Civil engineering: not the top performer of 2021
Since 2016 civil engineering works had not commenced at such a low value as they did in 2021. The Activity Start of EBI Construction Activity Report was slightly more than HUF 700 billion, meaning a further decline of 5% over the weak year of 2020, and a falloff of more than 18% over 2019. The Activity Start of road and railway construction works showed a 6% rise compared to 2020 due to the low base; but compared to 2019 the drop was close to 15%. In other than road and railway civil engineering works, the decline was almost 14% in 2021 against 2020, while the value of started construction works fell by 22% against 2019.
Among the biggest civil engineering projects that began in Q4 2021 were the railway section between Szeged-Transfer Station and Röszke, the Halimba-Szőc Solar Park, and the construction of the irrigation plant and irrigation system in Mezőhegyes.
Dropping share of Central Hungary
Q4 2021 saw a further drop in the share of Central Hungary in terms of started construction works. For the whole year, 34% of the value of construction works started in the region; lower than in 2014-2020 (38%).
The share of Eastern Hungary in Activity Start also lagged behind that of previous years, while that of Western Hungary went up to 35% from the previous 28%, according to the latest EBI Construction Activity Report.
Last year, after Budapest, the highest value of construction works started in Central Transdanubia.
Multi-unit housing construction getting off
Thanks to the favourable VAT rate, there was an increase in the value of started multi-unit construction works in 2021. A bit more than HUF 300 billion worth of construction works commenced in the segment, an increase of more than 40% over 2020 in the Activity Start of EBI Construction Activity Report. But the numbers were almost 4% lower than in 2019. Compared to 2018 and 2017, the difference was even more striking: more than 30%. The growth that started in Q3 and Q4 2021 is set to continue in 2022 with developers earlier this year announcing the launch of several major projects, as well as higher building permit numbers last year.
The biggest projects launched in Q4 2021 included several multi-unit housing projects in Budapest such as Phase I of New Palace, Ferdinand Garden, Balance Garden, Metrodom River building B and Westside Garden.
Even though the total value of projects completed in 2021 did not reach the 2020 level, it remained high. HUF 300 billion worth of multi-unit homes were completed in 2021, which, after 2020, was the second highest Activity Completion registered ever. According to preliminary data, 2022 is expected to set a record for completion again if projects planned for this year do reach completion.
Various parts of Hungary did not have the same share last year in the increase of multi-unit housing construction. A Bigger Activity Start was registered in Budapest, which dropped least in 2020, as well as Pest County and the Southern Great Plain region (starting from a low base due to the large drop). Overall, Central Hungary had a much higher share of the value of started multi-unit home construction works in 2021, more than 70%, compared to the average of 60% in previous years. The share of Eastern and Western Hungary in 2021 lagged behind their share in the period between 2014 and 2020.
Northern Great Plain
Compared to pre-2017, construction works in the Northern Great Plain region in recent years have been starting at a much higher value. 2017 and 2018 saw an exceptionally high construction Activity Start, but it also stayed high in 2019 and 2020. Although in 2021 started construction works had a lower value than in 2020, the Activity Start indicator still surpassed the 2019 level, and was much higher than pre-2017.
Even though the Activity Start of multi-unit housing construction somewhat grew in the region in 2021 over 2020, it still lags far behind the figures of 2016-2019; for instance, by more than 30% over 2019. Between 2016 and 2019, works began on larger projects in the region such as Phases 2 and 4 of Paris Courtyard (Párizsi udvar) or Ispotály residential park (both in Debrecen) and János-hegy residential park (in Nyíregyháza). Despite the low numbers in 2021, larger multi-unit residential projects were also launched in the region like the Debrecen project (in Hajdúböszörmény) or Phase 1 of Platanus residential park (in Debrecen).
Based on data available for the first 9 months of 2021, 2022 might see a further major expansion in the Activity Start of the region. The number of permitted homes hiked between January and September last year and 90% more permits were issued in the region than in the same period of 2020. For comparison, the country-wide growth was only 30% between the two periods.
The value of non-residential construction works launched in the Northern Great Plain region increased greatly by 2021, and even exceeded the highest value of 2018. Thus, overall, the Activity Start of building construction reached a record high in the region in 2021. For example, construction started on the East-West Gate intermodal logistics centre (Fényeslitke), on Phase 3 of Lego injection moulding plant and on Phase 3 of the packaging plant and warehouse (both in Nyíregyháza). Last year also saw the start of construction works on Semcorp foil production plant (Debrecen) and on Tiszakavics Hotel (Szolnok). The growth is striking despite that the construction of the BMW plant did not eventually start last year. And Activity Strat is expected to remain high this year as rumour has it that the first building works at the BMW plant (central office building and training centre) could begin in 2022.
In recent years works on road M4 and projects related to the BMW project fuelled the Activity Start of civil engineering in the region (for the latter, for example, Phases I and II of the North-West Economic Zone infrastructure development and Phase 1 of the Debrecen-Füzesabony railway section started). But last year the value of started civil engineering works sank massively in the Northern Great Plain and it had not been so low since 2015. Biggest projects in 2021 included the civil engineering works of the above-mentioned East-West Gate intermodal logistics centre and the City Stadium project in Nyíregyháza.
Original article in Hungarian: Tünde Tancsics, ELTINGA
After a significant expansion in Q2, the value of started construction works in the Hungarian construction industry marked a major drop between July and September. Yet overall, the Activity Start indicator remained high for Q3 due to the exceptionally good Q2.
Based on the projects listed in iBuild construction project information and company database, a total of more than HUF 2 billion worth of construction works started in the sector. The Activity Start indicator of EBI Construction Activity Report for the first 9 months of the year exceeded not only 2020, but also 2019, the former by 24% and the latter by 4%.
EBI Construction Activity Report Hungary analyses the construction industry on a quarterly basis, including the volume of newly started construction works, and the value of projects completed in each quarter in aggregate and by segment as well. Prepared by Buildecon, Eltinga (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database), it can be purchased at firstname.lastname@example.org.
Smaller-scale building construction activity in July-September 2021
Similarly to the construction industry as a whole, building construction registered a weaker Q3. The Activity Start indicator of EBI Construction Activity Report was below the level of the first two quarters, but construction works in the sector started in a higher value than in the corresponding period of 2020. Thanks to the successful H1, in the first 9 months of the year the value of the Activity Start indicator was close to HUF 1,500 billion, marking a 24% increase like-for-like and also significantly higher than in the same period of previous years.
Multi-unit and non-residential also recorded a feeble Q3. However, in the latter, the value of started construction works in January-September exceeded the one in 2020 (by 31%) and the one in 2019 (by 36%) thanks to the high Activity Start of Q2 2021.
In Q3 2021 projects entering construction phase included the renovation of the new North Buda Unified Hospitals. In addition to the construction of several office buildings and industrial warehouses which will be described in detail later, the construction of Hotel Aria Residences and of the Szekszárd Knowledge Center also started.
In the multi-unit housing segment, after the weak Q2, Q3 saw an even lower Activity Start. The value of launched construction works in the first 9 months was only 14% more than in the same period of the already poor 2020, and well below the level of previous years.
Frailing civil engineering in Q3 2021
Civil engineering also posted a reduction in Q3 2021. The Q3 2021 EBI Construction Activity Report has found that following an outstanding Q2, a rather low value of construction works started in the subsector. This was also true to road, railway, as well as non-road and non-railway segments. In the first 9 months, the Activity Start indicator of Civil Engineering exceeded the like-for-like indicator of 2020 (+15%), but it was much lower than in previous years.
The biggest launched civil engineering projects were the construction of the Sajószentpéter-Berente bypass on main road 260 and the works of the Gesztely-Szerencs stretch on main road 37.
Started construction works more evenly balanced regionally
In Q3 2021, the biggest share of construction works started in the eastern regions, but overall, in the first 9 months of the year the western regions had the largest proportion of the total value of started construction works which exceeded the value of previous years.
On the whole, East Hungary registered the fewest started construction works in January-September, in spite of the growth in Q3.
Multi-unit housing construction works slow to kick off
Despite the drop of VAT rate on new homes down to 5% from 1 January 2021 (from 27% in 2020), there is no visible growth in multi-unit housing construction. In Q2 fewer multi-unit construction projects started than in Q1 and Q3 also saw a further decline. Yet due to the better Q1, the value of Activity Start of EBI Construction Activity Report for multi-unit housing construction in the first 9 months of 2021 was still 14% higher than in the same period of 2020.
Despite the VAT reduction, multi-unit home constructions are slow to start. According to the housing permit statistics of the CSO, ‘simple declarations to build a home’ played the main role in the growing number of permits this year. This may be due to the fact that since last fall’s announcement to lower the VAT, developers haven’t had the time to prepare for large-scale projects and permits have not yet been obtained (which is the prerequisite to start construction works). But overall, as a result of the VAT reduction, we still expect the Activity Start of multi-unit housing construction to pick up in the future, especially because the recently launched ‘green loan’ might also boost demand for new homes.
Between July and September the value of completed multi-unit projects was roughly at the level of Q2, falling short of previous expectations due to delays. In the first 9 months of the year, a total of HUF 208 billion worth of multi-unit housing projects reached completion.
Like in the first half of the year, most multi-unit construction works started in Central Hungary in the first 9 months. Although the rest of Hungary had a proportionately higher Activity Start in Q3, they still lagged behind their previous years’ share. Between January and September only 10% of construction projects started in the eastern regions and 18% of them in the western regions against the 72% share of Central Hungary.
Office projects in 2021
Compared to the sharp decline in 2020, office projects have accelerated in 2021. The Activity Start of EBI Construction Activity Report for the first 9 months of the year surpassed the total annual value of the record year of 2018.
The reconstruction works of the former Joseph Archduke’s Palace, the former Red Cross Headquarters and the buildings of the Ministry of Finance and the Hungarian National Bank have started. Also, the construction works of phase 4 of Madarász Office Park, phase 1 of BakerStreet Office Building, phase 1 of Dürer Park Office Building and Richter Gedeon Headquarters have been launched.
This year there have been fewer completions. As per iBuild construction project information and company database, office construction works were completed on less than HUF 90 billion. For example, BudaPart City office building reached completion this year and in the last quarter we might see further office building completions such as Aréna Business Campus B, Green Court Offices and OTP M12. This could greatly increase the value of this year’s Activity Completion indicator.
Warehouse projects in 2021
The construction of industrial buildings and warehouses has also been showing a strong upswing this year. The value of started works, after 2020, is hitting another record in 2021. The value of construction works started in the first 9 months of the year in the segment has already significantly exceeded last year’s total Activity Start.
This year has seen the construction start of SK Innovation battery plant in Iváncsa, Semcorp separator film production plant in Debrecen, Phase 2 of Mercedes-Benz K1 press plant in Kecskemét and East-West Gate intermodal logistics center in Fényeslitke.
Several completions have already taken place and more are expected in the last quarter, possibly making 2021 a record year for completions as well. For example, this year has seen the completion of phase 2 of SK Innovation battery factory in Komárom and the M0-M31 warehouse in Nagytarcsa. Nestlé Purina pet food plant in Bük and LIDL’s logistics center in Ecser are also set to be completed yet this year.
After a relative stagnation in previous quarters, Q2 2021 saw a considerable expansion in the Activity Start indicator of EBI Construction Activity Report. It was the first three months of 2018 last that witnessed a higher value of construction works to start in a quarter. In H1 2021, projects entered construction phase on a total of HUF 1,398 billion, marking a significant increase of 20% and 18%, respectively, against the same period of the previous two years.
EBI Construction Activity Report examines the situation of the Hungarian construction industry on a quarterly basis, including the volume of newly started construction works, and the value of projects completed in each quarter in aggregate and by segment as well. It is prepared by Buildecon, Eltinga (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). Full publications can be purchased at email@example.com.
Compared to Q1 2021, Q2 2021 registered a continued growth in the Activity Start indicator of EBI Construction Activity Report for building construction. Overall, HUF 558 billion worth of construction works started in this submarket: the highest quarterly value in recent years. Due to the high figures for the first and second quarters of this year, the total value of construction works started between January and June grew by 19% like-for-like. And when compared to the same period in 2019, the rise amounts to 34%.
Within building construction, the Activity Start indicator of non-residential construction grew in H1 2021, 25% up from H1 2020. The expansion is mainly due to the particularly high Q2 figures. Projects entering construction phase include the SK Innovation battery plant in Iváncsa and the renovation of the headquarters of the Ministry of Finance and the MNB (Hungarian National Bank) in Budapest. The construction of several office buildings also began in Budapest, like Phase I of Dürer Park Office Building and Phase IV of Madarász Office Park. In Dunavarsány the first construction phase of Dunapack plant (paper packaging) also started.
The multi-unit housing segment witnessed a significant decline in Activity Start Indicator between April and June compared to the first three months of the year. However, Activity Start in H1 2021 shows only a minimal decrease over H1 2020 due to the stronger first quarter.
The civil engineering Activity Start indicator of EBI Construction Activity Report registered a substantial growth in Q2 2021 against Q1 2021. It was also the highest value in recent quarters. In the first six months of 2021, projects entering construction phase accounted for HUF 423 billion. Within civil engineering, both road and rail, and non-road and rail sub-markets saw a considerable growth in Q2 against Q1. The biggest civil engineering projects comprise the Bóly-Ivándárda section of M6 motorway and the construction of the new Danube bridge and related road network in Kalocsa-Paks.
The share of the total value of construction works launched in H1 2021 was the highest in the Western regions (39%), more than 10 percentage points higher than the average share of the region in previous years.
Yet, both the regions of Eastern and Central Hungary saw a lower share of started construction works in the first 6 months of this year than in previous years with Eastern Hungary recording the lowest share (27%).
After an exceptionally high Activity Start value in Q1 2021 over previous quarters, Q2 data showed a major decline in the multi-unit housing segment. The value for the first half of the year is thus slightly lower overall like-for-like.
As of 1 January 2021, new homes can again be sold at the reduced VAT rate of 5% (those that obtained a valid building permit until 31 December 2022 and will be sold until 31 December 2026). The higher value of construction works to start at the beginning of the year is no surprise; given the low VAT rate, developers can now start the plans previously parked due to the 27% VAT. This may have contributed to the spike in the Activity Start of EBI Construction Activity Report.
At the same time, there was little time left for investors to react to the VAT change announced last autumn, and it may take longer to plan and approve a completely new project. As a result, the actual start of construction works may be delayed, which may partly explain the weaker Q2 numbers. As the number of building permits rose in the first half of this year against last year (CSO data), the future may see an increase in the Activity-Start indicator of multi-unit housing construction as well. In addition, the ‘green loan’ effective from this autumn and the interest-free CSOK loan (Family Housing Support Program) for modern newly built homes may have a positive impact and increase demand for newly built homes.
When it comes to the Activity Completion indicator of multi-unit housing construction, it sank in Q2 2021 compared to Q1 2021. It may be related to the delay of construction projects as we can still expect many new multi-unit buildings to be completed in the following periods. In the first half of the year, projects worth a total of HUF 138 billion were completed.
Almost three-quarters of the total value of multi-unit construction projects that started in H1 2021 realized in Central Hungary, but this is mainly thanks to the high numbers in Q1. In the already weak Q2, the share of launched construction projects was slightly higher than in previous years in case of Central Hungary. The share of western and eastern regions was much lower in H1 2021 than in previous years, with the lowest share of multi-unit housing projects launched in the eastern regions.
Road and railway
Q2 2021 registered a major rise in the Activity Start indicator of EBI Construction Activity Report for the road and rail construction segments over the previous quarters. It was last in Q3 2019 when we saw a higher number than this one. Although construction works started on HUF 140 billion between April and June, data for the first half of the year are not outstanding due to the weaker first quarter, so the figures for the first six months were similar to those for the last half years, only showing a slight increase. The high Activity Start value in Q2 is attributable to the outstanding road construction numbers as rail construction works barely started.
Between April and June, far more road and rail construction works reached completion than in the first three months of the year. Within road and railway construction, the improving Q2 value can be attributed to railway construction, with projects worth HUF 74 billion completed between April and June, which is the highest number in recent years. In comparison, the value of completed road construction works amounted to only HUF 16 billion, after the already low value of HUF 9 billion in Q1.
Despite the high Q2 figures, the Activity Completion indicator in H1 2021 was lower than in H1 and H2 2020. It was last in in H1 2019 when a lower value of projects got completed than in the first 6 months of this year. In the coming quarters, however, road and railway construction projects may be completed in a significant value. And based on the expected completion date of projects, the value of Activity Completion indicator may be one of the highest in recent years.
Section A of M30 expressway between Miskolc and Tornyosnémeti already reached completion in the summer, and sections B and C are also set to be completed yet this year. It is also expected that the stretch between Szentkirály and Lakitelek of M44 expressway and the section between Körmend and Rábafüzes of M8 expressway will be completed.
In case of railway projects, Phase 2 of the Kelenföld-Pusztaszabolcs section was completed in the summer and they plan to complete the reconstruction works of the Rákos-Hatvan section of railway line 80.