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As per the latest EBI Construction Activity Report Hungary, in the second quarter this year started construction works barely exceeded HUF 400 billion – the lowest quarterly Activity-Start even at current prices since 2016. But due to the exceptional Q1 value, H1 2024 overall did not show a massive decline (only -11%) over H1 2023. Compared to 2021, however, the drop was 18%, and against the exceptionally good H1 2022, the decline was a whopping 45%. And at constant prices, Activity-Start was the negative record of the past 9 years.

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 Eltinga, Buildecon (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). For more details on how to obtain the full report, please contact us.

Lowest quarterly value of started building construction works since 2020

As per EBI Construction Activity Report Hungary, Q1 2024 saw a high Activity-Start but was followed by Q2 that recorded a decline in buildings as well. The value of started building construction works did not reach HUF 360 billion – the lowest quarterly figure since 2020. Overall, the subsector was characterized by a weaker Activity-Start even in the first half of the year: compared to H1 2023, the value of started construction works dropped by 11.8%, while over the same period of 2022 and 2021, at current prices, the decline was almost 30% and 21.5%, respectively. At constant prices, only H1 2014 was weaker than H1 2024.

Most of the decline occurred owing to the more moderate non-residential project starts. The decrease in multi-unit residential buildings was much smaller and the value of started construction works was roughly at the level of Q1. In non-residential buildings, Activity-Start was slightly higher than HUF 260 billion between April and June this year (a drop of almost 43% over Q1) but was also much lower than in the same period of the previous 3 years. Looking at individual quarters between 2021 and 2023, this year’s Q2 was the second lowest at current prices, and at constant prices, it was the lowest value since 2013. Due to the weaker Q2, Activity-Start in H1 2024 was also lower than in the same period of the previous 3 years at current prices. At constant prices, it was only H1 2014 that saw a lower value.

Biggest-league building construction projects launched in Q2 this year comprised the construction of MBH Bank HQ in Budapest, Phase I of BYD electric car factory in Szeged, and Huayou Cobalt-Bamo cathode factory in Ács. The construction of Moxy Budapest Downtown (hotel) and that of several multi-unit residential buildings also began.

The value of civil engineering project starts hit rock bottom in Q2

The stellar numbers in Q1 were followed by a massive decline in Civil Engineering Activity-Start of EBI Construction Activity Report Hungary between April and June this year. Q2 brought minimal civil engineering project starts, and the value of started works did not reach HUF 70 billion – the lowest quarterly value since 2016. However, comparing the first half of the year with previous years, 2024 is not exceptionally bad. The value of Activity-Start was 10.5% and 9% less than in the same period of 2023 and 2021, and it even exceeded that of 2020. There was a major drop only compared to the outstanding figures between January and June 2022. Within civil engineering, in H1 2024 road and railway construction works accounted for around 45% of Activity-Start and their value did not go up to HUF 200 billion.

It is very telling about the rock-bottom level of Civil Engineering Activity-Start that in the period between April and June this year no civil engineering project could make it to the top 10 biggest started construction projects.

Most construction works continued to start in the capital city

Looking at the past 4 quarters, the largest share of construction works again started in Budapest. The capital city’s share in the nationwide Activity-Start even surpassed 40%. Northern Great Plain had the second largest share, but its 13% was a great drop compared to the 20%-30% of the previous quarters. Pest County came third with 12%, while the smallest share of projects started in Southern Transdanubia with only 5% of launched construction projects in the last 4 quarters.

Practically no change in the value of started multi-unit residential projects

The latest EBI Construction Activity Report Hungary has found that after Q1 2024, in Q2 the value of multi-unit residential construction works started during 3 months was almost unchanged with a total of slightly more than HUF 90 billion. In the first half of this year, Activity-Start in the segment was less than HUF 200 billion, roughly corresponding to the level of the same period in 2021. At constant prices, although in H1 2024 the Activity-Start of multi-unit residential construction exceeded the one in H1 2023, it fell short of the one registered in the January-June period of previous years. It was only in H1 2015 when it was lower. Nevertheless, compared to other construction segments, multi-unit performed much better in Q2: the 10 largest-scale projects entering construction phase included several multi-unit ones, even with just over 100 flats.

The value of completed multi-unit residential construction works shrank in Q2 against Q1, but it stayed high, outstripping HUF 200 billion in H1 2024, making it the strongest first half year recently. Activity-Completion in H1 2024 was almost 42% higher than in the same period of 2023 and even surpassed the record H1 2020 by more than 22%. Further on, Activity-Completion may continue to be high, and, based on expected completion dates, this year may break a new record.

During the last 4 quarters, the largest share of multi-unit residential construction works continued to start in Budapest whose share also grew compared to the previous quarter with two-thirds of Activity-Start. Eastern Hungary’s share was 15.5%, while in Western Hungary 16.6% of such works began.

Southern Great Plain saw some growth in half-yearly Activity-Start

Southern Great Plain also saw some expansion in construction during the first half of this year, even though Q2 brought a decrease after Q1 – as per the latest EBI Construction Activity Report Hungary. Activity-Start here amounted to HUF 126 billion between January and June 2024. Building construction projects contributed most to the Activity-Start of this region: the value of started construction works in H1 2024 was HUF 110 billion – the level of H1 2023. But it was also true for regional building constructions that the higher Q1 values pushed up the half-yearly ones and Q2 brought a more moderate Activity-Start. Within buildings, multi-unit residential buildings represented a minimal level in the region, as in previous years, only 6% of such projects nationwide started here in the first half of the year.

Among the biggest non-residential projects entering construction phase in H1 2024 in the region were Benepack’s packaging materials factory in Makó, Mercedes-Benz battery assembly plant in Kecskemét, and Phase I of BYD electric car factory in Szeged. These projects were also considered large in terms of works started in recent years: in value, between 2021 and 2024 they ranked second, third and fifth, respectively.

Hardly any civil engineering project began in Southern Great Plain this year. Activity-Start in civil engineering in H1 2024 was less than HUF 16 billion – one of the lowest half-yearly results in recent years. Civil engineering works in the region reached an outstanding value in late 2021 and in early 2022 that saw the construction start of the Békéscsaba-Lőkösháza railway line, the Soroksár-Kelebia section of the Budapest-Belgrade railway line, and the Kecskemét-Szentkirály section of M44 expressway whose total value was hundreds of billions of Hungarian Forints and whose construction is still ongoing.

Article: Tünde Tancsics (ELTINGA); English version: Eszter Falucskai (Buildecon)

The value of construction works launched in three months rose in Q1 2024, Activity-Start hasn’t been so high in the last six quarters. EBI Construction Activity Report Hungary Q1 2024 measured the total value of started construction works at HUF 807bln. Looking at the period between 2018 and 2023, there were very only five quarters when Activity-Start surpassed this number. At constant prices, Q1 2024 was also considered good when looking at the period since June 2022. Nevertheless, when compared to the period between 2018 and H1 2022, it fell into the lower range.

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 Eltinga, Buildecon (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). For more details on how to obtain the full report, please contact us.

Building construction failed to improve in Q1 2024

Building construction could not regain senses in early 2024: Activity-Start was at the level of the last quarter of 2023. The value of started construction works was slightly more than HUF 400bln, almost the same as between October and December last year, but 17%-26% lower than in the first quarters of previous years. At constant prices there was a decline in the value of started building projects: last time Activity-Start was lower was in Q4 2015.

The Activity-Start indicator of non-residential buildings slightly grew in the first three months of 2024 compared to Q4 2023, thus exceeding HUF 350bln. Yet, examining individual quarters between 2021 and 2023, Q1 2024 was the second lowest. At constant price, the last time Activity-Start was lower than in Q1 2024 was in 2015. In case of housing construction, 2024 started better than 2023, but the value of started construction works continued to drop after Q4 2023.

Biggest building projects launched in the first three months this year mainly included logistics and industrial buildings, like the construction of Mercedes-Benz battery integrating plant (Kecskemét), Weerts Ebes logistics hall (Ebes), Benepack packaging materials factory (Makó), Phase I of Evoring electric car parts factory (Jászfényszaru), building C of VGP Park logistics center (Győr), and the storage hall and HQ of Rossmann (Üllő). Large office projects such as Zugló-Városközpont Office7 and several multi-unit residential projects also started, as well as the construction of Hilton Garden Inn Hotel (mixed-use) and the development of Hungaroring Paddock.

Civil engineering getting back to life

After several weak quarters, civil engineering seems to have improved and Activity-Start in Q1 2024 was nearly HUF 400bln, an increase of roughly 70% against Q1 2023. The improvement was visible in non-road and non-railway constructions and in road and railway ones alike. The former saw a 180% growth over the first quarter of last year, but Activity-Start was more than 50% higher than in the last quarter (which was also stronger). The value of non-road and non-railway projects at current price was last higher in Q1 2017 than in Q1 2024, but even at constant price, it has been the fourth highest Activity-Start since 2020.

In road and railway constructions, the recovery was mainly due to the Ferencváros-Kelenföld railway line 1 project, considered to be the highest-value work started in Q1 2024 in the entire construction sector. The Southern Industrial Park in Nyíregyháza and the flood protection facility in Esztergom were also among the biggest started civil engineering projects.

Budapest took the lead again

Looking at the construction works started in the last four quarters, the highest value ones were in Budapest whose share in total Activity-Start was 36% (the 20%-30% in the last quarters). Northern Great Plain, the leader in previous periods, slipped back to the second place (21% of works started here). Southern Transdanubia had the lowest Activity-Start (its share barely exceeded 5%), Western Transdanubia had a share of 5%, while Northern Hungary had 6%.

Multi-unit residential building still stumbling

Although this year started better than the last one in multi-unit residential construction, the value of such started projects dropped further and was lower than in the last two quarters of 2023. Starting from Q2 2016, the segment registered the fourth lowest Activity-Start in Q1 2024 at current price. Looking at constant price, the value of works started in early 2024 has been the third lowest since 2016.

Yet the market outlook improved compared to the previous year. Mortgage rates sank greatly by end 2023 and continued to do so in 2024, while the economic outlook also became better. The rosier environment has lured buyers back to the residential market with the revival already noticeable in the first quarter of this year, both in the secondary and primary markets. Good news: the reduced VAT rate for new homes has been extended, so instead of end 2024, building permits can be obtained by end 2026 and homes can be sold at 5% VAT until 2030.

Many multi-unit residential projects were completed in the first three months of this year with their value exceeding HUF 120bln, the highest quarterly Activity-Completion since 2021. Many units are expected to be completed this year, too, however, in the long run, the value of completions is set to decrease due to previously shrinking construction works.

Looking at the past four quarters, Budapest accounted for 63% of multi-unit residential projects entering construction phase, and slightly more than 64% of the value of such projects was concentrated in Central Hungary. Eastern Hungary accounted for 14.8% of the Activity-Start, while Western Transdanubia’s share was 20.9%.

Northern Hungary in focus

Although the year started well in the construction industry nationally, it is not true to Northern Hungary where the total value of started construction works did not reach HUF 22bln. It was the lowest quarterly amount in 2018-2023.

In Northern Hungary, both building construction and civil engineering shrank in the first quarter of this year. Building Construction Activity-Start was one of the lowest in the quarters of recent years with the drop clearly attributed to non-residential buildings. Although the value of the started multi-unit residential constructions grew at the beginning of 2024, the region still has a very low willingness to build such buildings (its share in the national multi-unit residential Activity-Start was less than 3% in the last 4 quarters). Low activity in multi-unit residential works is well illustrated by the fact that, despite the improvement, no project made it into the largest construction projects in the region in Q1 2024.

Among non-residential buildings, the biggest regional projects launched between January and March 2024 include Phase II of Horváth Rudolf logistics centre in Hatvan. In recent years the largest ones comprised the logistics hall of Robert Bosch Power Tool MC301 in Miskolc (starting in 2023), the manufacturing plant of GKN Automotive in Felsőzsolca (starting in 2022), Chervon manufacturing plant and the reconstruction of Diósgyőr Castle in Miskolc (starting in 2021).

In early 2024 Civil engineering Activity-Start in Northern Hungary continued to drop. Looking at the period of 2018-2023, the total value of construction works started in Q1 2024 was the third lowest: Activity-Start did not reach HUF 4bln. In Q1 civil engineering projects were not even among the largest started ones. The value of civil engineering projects started in the region was higher in Q2 2023, in Q2 2022 and in Q3 2021 when such projects entered construction phase as the Szentdomonkos-Borsodnádasd section of main road 25, the Sajószentpéter-Berente bypass 260, and the Gesztely-Szerencs section of main road 37. The peak so far in regional civil engineering Activity-Start was Q2 2019 when the construction of sections A, B and C of M30 expressway began.

Article: Tünde Tancsics (ELTINGA); English version: Eszter Falucskai (Buildecon)

Hungary’s construction sector failed to improve in the last quarter of last year; the total value of started construction works shrank against previous quarters. Overall, 2023 registered low numbers and the Activity-Start indicator of EBI Construction Activity Report did not reach HUF 2,500 billion. This means that the total value of projects entering construction phase dropped by a respective 19% and 34% compared to 2021 and 2022, and Activity-Start in 2023 was roughly the same as in 2019. But if we look at the rate of decrease at constant price, it is even more significant: 43%-44% over 2021-2022. The last time the value of Activity-Start at constant price was lower than last year was in 2015, but even 2013-2014 exceeded last year’s.

Building construction works declined in Q4 2023

Even at current prices, the subsector has not produced such a low quarterly Activity-Start as in October-December 2023. Thus, the lower numbers of the first 9 months did not improve, and for the whole year, building construction works started at less than HUF 1,750 billion: 19% down from 2021 and 23% down from 2022. At constant price, the Activity-Start indicator for 2023 was 44% and 34% lower than in the previous two years. Only 2015 witnessed a lower Activity-Start than 2023.

Within building constructions, Activity-Start decreased in multi-unit residential buildings and in non-residential ones, too. In the latter, Q4 lagged dramatically behind the quarterly numbers of previous years. Last time the value of non-residential buildings entering construction phase in a quarter at current price was lower than that was in 2016. For the whole year, the Activity-Start indicator of non-residential buildings sank by 17% and 22.5%, respectively, over 2021 and 2022. Filtering out the change in prices, the lag is even greater: the level of Activity-Start at constant price in 2023 was 42% and 33% lower than in the previous two years. It was only in 2015 when lower numbers were registered.

The biggest building construction projects launched in Q4 2023 were several logistic facilities and warehouses (HelloParks Páty PT3 logistics hall; Phases 1 and 2 of LG Magna manufacturing plant in Miskolc; ZF Chassis Modules Hungary vehicle assembly plant in Kecskemét; ZF Chassis Modules Hungary manufacturing plant and warehouse in Debrecen). In addition, the project of the Hódmezővásárhely Military Secondary School and Dormitory, the renovation works of the Chemistry building of the Faculty of Science of Debrecen University, as well as Phase 1 of the renovation works of buildings B1, B2 and C of the University of Veterinary Science in Budapest started.

Civil engineering stagnated at a low level

Although there was no further drop in civil engineering, its Activity-Start was very low in Q4 2023 with about the same value of started constructions as in Q3. Thus, Civil Engineering Activity-Start in 2023 massively dropped against 2022 (a year considered an outlier), but the value of the started works did not reach the 2021 level either; and it turned out to be somewhat lower than in 2020. In 2023, there was a 17% drop in the subsector against 2021, and a 50% shrinkage over 2022. The constant-price decrease was even greater: almost 60% over 2022 and more than 40% over 2021. Between 2013 and 2023, at constant price, only the Activity-Start of 2015 was lower than that of 2023.

Hardly any road and railway construction works started in Q4 2023, while much more other civil engineering works entered construction phase. In 2023, road construction works started at a higher value than in 2020-2022, but railway construction works fell greatly last year: here Activity-Start at current price was only lower in 2015. Thus, overall, during the year, the Activity-Start of road and railway constructions was around 19% lower than in 2021, while it was almost 60% less than in 2022 (a year considered outstanding).

The largest civil engineering projects in Q4 2023 were mostly related to water and sewerage in Tolna and Bács-Kiskun counties, in Adony and Ercs regions, in Tamási and vicinity, in Várpalota and vicinity, as well as in Csemő, Cibakháza, Nagykőrös, Tiszafüred, Jászszentandrás, Tápiószőlős and Kengyel.

Most project starts are still in Eastern Hungary

In the past four quarters the biggest share of construction projects started in Eastern Hungary with the region’s share in Activity-Start being 42%. Budapest accounted for 26% of the value of projects entering construction phase. After Budapest, Northern Great Plain had the second highest share, 25%, followed by Central Transdanubia and Pest County with 10% alike. In the last 4 quarters, 21.5% of construction works started in Western Hungary, and 36% in Central Hungary.

Sunk interest in building multi-unit homes

After the promising numbers of Q2 and Q3 last year, there was another decrease in the Activity-Start indicator of multi-unit residential buildings. During the whole 2023, the value of such started constructions did not reach HUF 300 billion (-28% against 2022 and -30% against 2021). If we look at the period of 2017-2022, it only exceeded the level of 2020, however, at constant prices, the value was lower in 2023 than in 2020 (a year when the pandemic hit and VAT on new residential units was set back to 27% from 5%). It was only in 2015 when the value of started multi-unit residential constructions was lower. Compared to 2022, at constant prices, the decrease was 38%, and compared to 2021, it was more than 50%, as per the latest EBI Construction Activity Report.

This year brought major changes in state subsidies for home purchases. From 1 January, in cities only those planning to have additional children can receive CSOK+. Those who do not have additional children are only eligible for the village CSOK in beneficiary settlements. The so-called Baby Loan, although it remains available for married couples having a child, have more stringent rules. The new CSOK+ does not include a direct non-refundable support at the time of purchase, a bigger discounted loan can be applied for, and non-refundable support can only be obtained upon the birth of the 2nd and 3rd children when part of the outstanding debt is released. The new system does not differentiate between the purchase of used and new homes, making the previous advantage of new homes disappear. In addition, in case of CSOK+, one can no longer use VAT refund when buying a new home.

On a positive note, the money to be claimed has been raised, so it can be of great help in case of higher-priced new homes. Also, this year interest rates on market loans have greatly decreased compared to the beginning of last year, and it is expected to continue, so demand may recover in the new market, which may also improve the prospects of developers, encouraging the start of more projects this year than last.

In 2023 the value of Activity-Completion indicator in multi-unit housing exceeded HUF 350 billion, representing an increase of almost 28% compared to 2022, and surpassing the level of 2021 by 23%. This year also expects to see high numbers.

Although the biggest share of such constructions still started in Budapest, the capital city’s share in Activity-Start in 2023 slightly dropped over 2022. In total, around 60% of constructions started in Central Hungary, slightly more than 15% in Eastern Hungary, while the share of Western Hungary was a bit over 24%.

Western Transdanubia

Last year around 6% of started construction works concentrated in the Western Transdanubia region, the same as in 2022. Although due to the declining Activity-Start countrywide this meant a much lower value of started constructions than the year before, the drop was 34%. In 2023 Activity-Start in the region was lower than in previous years (-34% compared to 2021 and almost -44% below the 2020 value). The previous peak in the region was in 2018 when several large-scale projects were launched: M85 highway, M8 highway, and the section of main road 76 between M7 highway and Keszthely, and a stretch of M15 highway between M1 and Rajka.

The value of started building constructions in Western Transdanubia shrank last year; over 2022 there was a 34% drop, while compared to 2021 the decrease was 41%. The projects launched in 2023 included warehouses and factories, for example, the Nestlé Purina pet food production plant and warehouse in Bük or the Velux GP4 production hall in Fertőszentmiklós.

Civil engineering works were also at a low level in 2023 (-32% against 2022, but only an 8% drop compared to 2021). In 2023, only one regional civil engineering project made it to the larger projects; Phase 3 of the Zalaegerszeg vehicle test track. The last time a hike was registered in civil engineering was in 2018 thanks to large road projects.

Recent years have seen a declining Activity-Start in building construction works in Western Transdanubia. At the same time, Activity-Completion has exhibited growth; for instance, 2023 was a record year for the value of completed building construction projects. Projects that reached completion last year comprised several plants of Nestlé Purina, the Water Adventure Park in Győr, Sirius Hotel in Keszthely, and Buildings A1, A2, A3 of VGP Park Győr Béta.

Original article: Tünde Tancsics, ELTINGA – English version: Eszter Falucskai, Buildecon

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 ebi@ibuild.info.

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.

Continue reading Q2 2023 sees better Construction Activity-Start in Hungary than Q1