Még sok új infó jön majd be az első negyedévről, de ami egyelőre látszik a frissen megkezdett kivitelezésekről, az nagyon negatív.
A magasépítésen belül egyedül az ipari épületek és raktárak szegmens tartja magát.
Jellemző, hogy egyetlen nagyobb szállodaprojekt elég volt ahhoz, hogy a szálloda szegmens Aktivitás-Kezdése ugyanakkora legyen, mint a társasházi lakásépítésé.
A mélyépítésen belül is nagy a csend egyelőre; a legnagyobb megkezdett projekt az Oroszlányi Erőmű zagyterének rekultivációja. Tehát nem út vagy vasút.
További részletek a friss adatviz-ben. Ha érdekli, kérem a ebi@ibuild.info címre írjon.
És mivel év eleje van, egy tippet is megosztanánk, hogyan lehet csak éves adatokat megnézni a vizben. Ez egy beépített Tableau funkció, amit talán kevesen ismernek:
Main findings on Q1 2023:
Although there will be a lot of new information coming in about Q1, as of now, what we can see about newly started construction works is rather negative.
Within building construction, it is only the industrial buildings and warehouses segment that is doing rather well.
It is typical that a single big-volume hotel project was enough for the hotel segment to register the same Activity Start as that of multi-unit housing construction.
For the time being, civil engineering is also quiet. The biggest project started is the land recultivation around the Oroszlányi Power Plant. So neither road, nor railway.
The above video is a tip on how to view only annual data in the visualization.
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 ebi@ibuild.info.
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.
EECFA’s 2022 Winter Construction Forecast Report was released on 5 December. Full reports can be purchased. Discounts and sample reports: info@eecfa.com. EECFA (Eastern European Construction Forecasting Association) conducts research on the construction markets of 8 Eastern-European countries.
Yet another downward revision characterizes the forecast for both regions. Southeast Europe could see shrinkage on the horizon. This, however, comes after a great period of construction in between 2016 and 2021, so the market is foreseen to come down from a peak level. In this respect, the 3% decline until 2024 is no drama, in EECFA’s view. The drama is in East Europe where the peak was reached in 2018 and the market was around 10% below that peak level even before the Ukraine war began. Since then, EECFA has paused issuing forecasts in Ukraine and a status report has been prepared. Without Ukraine, the region is expected to reach its bottom in 2023.
In Southeast Europe, almost all countries have been revised downward. Three out of them, however, could see expansion until 2024. The foreseen contraction in Romania and Serbia pulls down the region to negative. Romania is quite pessimistic; the market could shrink by almost 10% by 2024. Serbia is expected to witness a sizeable drop, too, before growth returns in 2024. As the region saw much construction in 2016-2021, the market will likely decline from the peak, making the 3% drop on the forecast horizon not-so-drastic.
Bulgaria:
Under the projected economic slowdown, construction will increasingly be affected by the ongoing political instability that is likely to undermine reforms within the Recovery and Resilience Plan, and delay implementation of the EU’s operational programmes.
Тotal construction output is estimated to have grown in 2022.
For 2023-2024 civil engineering is forecasted to increase at a more accelerated pace.
Croatia:
Residential construction output held up in 2022, impervious to war and disease. But it’s likely residential’s rapid growth will over time succumb to rising prices and a falling population.
Rail construction output will rise as more rail projects come online. Some new high-cost road projects may yet be undertaken for political reasons.
Energy prices will fuel building of oil/gas port facilities, pipelines and storage in 2022-2023, construction that the EU’s green-energy push may quench in favor of renewable energy and power grid projects.
Romania:
The Romanian construction market is set to shrink slightly in 2023 and 2024 as internal and external factors conspire to make building materials more costly.
Inflation-induced lower purchasing power and growing mortgage interest rates are making loans more expensive, and few people can afford to buy a home in cash.
On the one hand, Romania could benefit from the current global instability and attract more foreign investment to grow its economy. On the other, increased energy costs translate to higher operating and construction costs and discourage investment.
Serbia:
The challenging economic situation will undoubtedly have negative effects on construction outputs. But how negative is the question of external factors and the coming events.
The domestic market is strong, with high public and foreign investments, as well as record employment. The highest economic risk comes from inflation and the expected recession in the EU.
The current economic slowdown could deepen the contraction in case of a prolonged crisis.
Slovenia:
Slovenia has experienced expansion in construction output on the back of the strong overall economic growth.
However, risks for the future include high inflation, large construction cost increases, and overheating economic growth. And increased interest rates will depress residential output in the future.
Supply chain constraints might jeopardize the completion of large civil engineering projects.
In East Europe, 2022 could be the 4th consecutive year of drop in Türkiye, and no quick recovery is foreseen on the horizon. We have turned somewhat optimistic in Russia, but only from 2024 on. Without Ukraine, the region will likely hit bottom in 2023. The region reached its peak in 2018 and just before the war in Ukraine started, the market was around 10% below this 2018 level. Owing to the war, Uvecon, the Ukrainian member institute of EECFA, has prepared a status report for the second time instead of the forecast report.
Russia:
Direct and indirect effects of sanctions hammered the construction market that declined faster in 2022 than previously expected.
Forced acceleration of projects in transport and energy, in response to export and import structure changes due to sanctions, will spur growth in civil engineering.
Many targeted programs and national projects will support the construction sector throughout the forecast horizon.
Türkiye:
The construction industry has been trying to deal with high inflation that has led to 120% yearly rise in construction cost and 189% increase in housing prices.
There has been some deficit between produced and needed home numbers since 2000, augmented by the influx of refugees from Syria and neighbouring countries (3,920 million registered; unknown unregistered).
The low-cost housing project of the government as of September is expected to stop the current slump in the construction sector.
Ukraine:
Prospects for construction depend on the existing situation on the market as a result of the destruction of residential, non-residential and engineering infrastructure, and the end of hostilities with the possible economic recovery.
Total area of damaged or destroyed housing is 74.1 million sqm (7.3% of the total area of Ukraine’s housing stock), a number which, unfortunately, grows every day. Restoring the housing stock will become a key issue for Ukraine after the war ends.
Energy infrastructure remains the top priority for recovery, as nearly 40% of the energy system has been destroyed.
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 ebi@ibuild.info.
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.
EECFA’s 2022 Summer Construction Forecast Report was released on 27 June. Full reports can be purchased. Discounts and sample reports: info@eecfa.com. EECFA (Eastern European Construction Forecasting Association) conducts research on the construction markets of 8 Eastern-European countries.
Our earlier optimism over the Southeast European region of EECFA has gone. The current forecast is foreshadowing almost no growth until 2023 and contraction in 2024. The main reason behind is the worsening climate for construction due to the consequences of the Russian invasion of Ukraine. In the Eastern European region, we have turned pessimistic. The market of Russia and Turkey together is projected to stay below its 2021 level until 2024. We haven’t been able to provide our standard forecast for Ukraine in this summer round, but a status report has been compiled. We will resume providing forecast as soon as construction-related data collection of Ukrstat returns to normal.
Forecast for Romania, the largest Southeast European construction market, has been revised downward. Instead of expansion, shrinkage is our current scenario. Serbia, which was the fastest growing market in the past 7 years, has an even more pessimistic outlook than in the previous forecast round. In Bulgaria, a whole different trajectory of spending EU funds is the reason behind the revision. We are negative on Russia all the way over the horizon and in Turkey the start of the recovery is expected to be postponed for yet another year.
Bulgaria. Owing to several external and domestic factors, outlook for Bulgaria’s economy to grow faster in 2022 has been reduced. And this year the construction market has entered a period of increasing unpredictability and heterogeneous performance. Residential construction has benefited from favourable financing conditions, and residential property has been used as a hedge against inflation. However, this will not last forever. EECFA is not optimistic in non-residential construction, while civil engineering could expand over the forecast horizon. Total construction output is prognosticated to be in the black with low, but positive growth rates in 2022-2024.
Croatia. The picture for Croatia’s construction sector is mixed, both from sector to sector and within sectors. Sector-to-sector, the output growth rates of Croatian construction sectors are decoupling, as some come close to completing the post-transition catch-up growth phase, while others are not nearly so far along. Within sectors, the strength of crucial output drivers, e.g., tourism season results, construction cost inflation, interest rate evolution, is uncertain and very dependent on events and policymakers’ reactions to them. Overall, the picture looks bright now, especially for residential construction, but the fight against inflation or a serious new COVID-19 outbreak could darken it rapidly and considerably.
Romania. As the short-term effects of the pandemic dissipate, the economy faces new challenges such as inflation and global trade disruptions. GDP is set to grow by 2.9% in 2022, in real terms, down from the previous prediction, but by 2023 (+4.4%) and 2024 (+4.8%) growth could accelerate (source: the National Forecasting Commission). Construction showed signs of recovery, so total construction output is to nominally grow, but slightly decrease in real terms this year. Material and energy prices have battered infrastructure projects hardest as seeking extra financing can be lengthy and difficult. Threats to construction growth in this forecast horizon are evidently increased costs of materials and energy, counter-inflationary policies, and the instability caused by the neighbouring war to regional and global trade networks. Countering these are the positive outlook for wages, employment, investment, and the overall economy. The availability of EU programs for co-financing, including the Recovery and Resilience Facility, could also help certain construction segments.
Serbia. In these challenging times, it will be a real endeavour to keep the pace and level of construction activity, even for a heated and growing Serbian economy. Unfortunately, economic and political developments in Europe are threatening to forcefully subdue the growing cycle in construction and the economy as a whole. So far, the economy is showing a relative resilience and construction activity has only slightly decreased compared to its expected performance in 2022, while permits are still keeping the good tempo. Nevertheless, the risks are still there, and a prolonged instability could produce a much deeper downturn and longer recovery. The strong performance of civil engineering and residential will assist this year’s output levels, but prospects for the rest of this forecast period are still quite conditioned by external factors. The ongoing economic crisis in the EU could easily escalate and produce further adjustments for 2023 and 2024 figures.
Slovenia. Construction output increased fast in 2021 as the pandemic subsided. With rapid economic growth following in 2022, total construction output will likely exceed EUR 4 billion for the first time since 2008. Real growth will be slower, though, as construction cost index has also increased with the fastest pace in a decade, up by more than 10% in 2021 and 2022. Future growth is projected to be slower, especially if interest rates grow faster than expected due to high inflation rates. Still, several large civil engineering as well as residential construction projects are set to continue and prevent construction output from decreasing.
Russia. Last year, the Russian economy showed strong recovery, partly on the back of construction whose growth turned out to be much better than expected (6,8% instead of 3,2% that EECFA had previously forecasted). The reasons behind were the active completion of non-residential projects that had been frozen in 2020, high demand in the housing market that supported construction activity in residential, and considerable state funding for various infrastructure projects that accelerated growth in civil engineering. However, the special military operation in Ukraine that began in February this year has neutralized all positive trends in construction and has led to a sharp worsening in the macroeconomic situation. Unprecedented economic sanctions imposed on Russia will inevitably affect the construction sector whose output is predicted to be negative throughout the forecast horizon: -2,7% in 2022 and from -1% to -1,4% in 2022-2024.
Türkiye. The Turkish economy is facing an unprecedented devaluation in Lira and soaring inflation, hammering wage earners. Manufacturing sectors relying on imported inputs, agriculture, and construction in particular, face difficulties in financing production and selling to customers with lower real incomes. But industrial production and exports are not much hit by the weakened Lira. Since the beginning of 2022, housing shortage, high dwelling prices and rents have been an issue. In the last 21 years fewer homes were built than the need, and the around 3,8 million Syrian refugees and illegal migrants appear to contribute to housing shortage. Due to the roughly 2,8 million dwelling units under construction, housing starts in Q1 2022 may continue to fall by the end of the year. The small decline in housing completion, however, because of declining demand under current macroeconomic conditions, may turn into a positive rate of change under the effects of interest rate subsidies for mortgage loans. Total construction output in Türkiye in 2022 is estimated to contract, so it would be the fourth consecutive year of decline. Mild recovery is expected to begin from next year on.
Ukraine. Since February 2022, Ukraine has been at war with Russia. As of June 2022, the Russians destroyed up to 30% of Ukraine’s infrastructure, damaged 2% of overpasses and more than 23,000 km of roads in Ukraine. About 20% of Ukraine’s territory is being occupied. Russia blocked the seaports through which imported goods were delivered to Ukraine. Building material factories and warehouses mostly remained in the occupied territory and most developers have frozen their projects for an indefinite period. Despite this, some positive signs are beginning to appear in the construction market, mainly in residential where the market is gradually reviving, adapting to the military situation (especially in the relatively safe western region). Little by little, critical infrastructure is being restored (destroyed bridges, roads, electricity and gas supply, communication lines). Under these conditions of major uncertainty, and before the end of the war, predicting future developments in the construction market of Ukraine is impossible. Therefore, Uvecon, EECFA’s Ukrainian member institute in Kiev, prepared a brief Status Report this time instead of the usual Forecast Report.
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Source of data: EECFA Construction Forecast Report, 2022 Summer
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 ebi@ibuild.info.
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.
Photo by Hajnalka Hurta
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 ebi@ibuild.info.
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
EECFA’s 2021 Winter Construction Forecast Report was released on 6 December. Full reports can be purchased, and a sample report can be viewed here: www.eecfa.com. EECFA (Eastern European Construction Forecasting Association) conducts research on the construction markets of 8 Eastern-European countries.
We are more optimistic for 2022 in the Southeast European region of EECFA than in the previous forecast round. The drop in 2023 is caused by Bulgaria; the awaited shrinkage is so sizeable there that expansion elsewhere in the region might not counterbalance it. Expansion in the East European region of EECFA is foreseen to be smaller both in 2022 and in 2023 than in the previous forecast round. Growth in Turkey was revised downward.
The largest Southeast European construction market of EECFA, Romania, is expected to see only moderate growth on the horizon. Serbia, having recorded the biggest expansion of almost 100% in the 2014-2020 period, is foreseen to plateau in the upcoming years. In Eastern Europe, in Turkey we maintain to believe that the recovery could start, but we lowered our growth expectation compared to our previous forecast. After 2 years of no-growth, Russia’s construction market is foreseen to expand gradually until 2023.
Bulgaria. The Bulgarian economy is recovering more slowly than expected, and the likely growth rate is 3.8% in 2021. However, residential construction looks strong thanks to low interest rates on housing loans, making home purchase more affordable. Real estate is also the safest and easiest way for those wanting to invest to avoid negative deposit rates. The pandemic and its lasting follow-up effects played an additionally strong cooling effect on non-residential construction because of a surge in office and industrial construction earlier and with an emptying pipeline. Zero progress on big-league infrastructure projects will take its toll on growth in civil engineering construction in 2021, but it is set to catch up in 2022. Total construction output in Bulgaria is anticipated to grow by 6.5% in 2021 and 16.5% in 2022. The lack of preparation for the new programming period 2021-2027 and the National Recovery and Resilience Plan are to negatively affect total construction output which is expected to drop by 24.9% in 2023.
Croatia. Croatia’s tourism season surpassed all expectations, driving a 16.2 percentage point swing in the country’s GDP growth, from -8.1% in 2020 to +8.1% this year, and a one-notch jump in its Fitch rating, to BBB. The near-term future of Croatia’s construction sector now depends greatly on the evolution of the COVID-19 pandemic, particularly its effect on tourism. EU and international financial institution crisis-relief funding will, though, soften any blow that the disease delivers. The City of Zagreb’s budget crisis, bureaucratic delays in spending crisis-relief money and much higher construction costs are other negative factors that will affect the growth of construction output, which must be assessed not for the sector as a whole, but segment by segment (e.g., hotels vs. residential).
Romania. The economy is expected to return to pre-pandemic levels, in terms of GDP, by the end of 2021, after growing 7% in real terms. The European Commission forecasts Romania’s GDP growth rate to stay above the EU average in both 2022 (5.1%) and 2023 (5.2%), and, with the help of the Recovery and Resilience Facility (RRF), construction would have a positive ground to grow upon. Total construction output in 2021 is predicted to slightly decline (-0.3%), but to recover and grow in 2022 and 2023. Low interest rates and excess liquidity coalesce into an expanding residential subsector, while non-residential construction continues to be impeded by pandemic-related changes to work habits and various restrictions. On the back of the RRF and the 2014-2020 EU cohesion funds, and despite ongoing difficulties and delays in implementing projects, civil engineering construction continues to have a high potential for growth.
Serbia. After the restrictions in 2020, economic recovery came faster than expected and GDP growth is estimated to reach at least 7.3% in 2021. This strong rebound is supported by accelerated construction activity and increased capital investments, where a high single-digit expansion is projected in 2021 outputs. Construction output is fuelled by civil engineering projects, but also the robust residential and industrial related constructions. Furthermore, budgetary expenditures for investments are planned to reach record levels, with 7.5% of GDP dedicated for this purpose in 2022. All indicators are pointing towards more extensive growth and sustained construction activity at record levels in this forecast horizon.
Slovenia. The Slovenian economy has rebounded stronger than expected after the pandemic. One of the strongest economic growth accelerators was gross fixed capital investment, causing construction output to get back on feet. Total construction output is projected to exceed EUR 4bln sooner than previously predicted – already in 2022 – and reach EUR 4,3bln in 2023. Construction cost growth will probably slow down from a hike in 2021, resulting in a more stable construction environment without supply shocks. This will enable several big civil engineering projects to continue apace, but the main contributor to construction output will be new residential projects. Of course, our forecasts remain contingent on the condition that no further lockdowns hinder the overall economic activity.
Russia. The construction industry in Russia is going through the second year of the pandemic relatively successfully, and the previously expected stagnation in 2021 is likely to turn into a 3.2% growth by the end of the year. This unexpectedly good result was enabled by segments with traditionally active government participation: residential and civil engineering which were supported by large funds. The non-residential subsector also contributed to the growth of the construction market in 2021, mainly due to the massive completion of objects whose construction was previously postponed from 2020. But because all these factors are temporary, construction market growth in 2022 and 2023 will lessen and is prognosticated to post +1.9% and +1.2% per year, respectively, as a part of the potential for the positive dynamics was already exhausted in 2021.
Turkey. The Turkish economy started to regain senses from the pandemic blow in Q3 2020, which continued with high GDP growth in Q2 2021. Although Turkey removed most COVID-19 related restrictions on 1 June 2020 with the elevated number of vaccinations, now, like across Europe, the fourth wave of the pandemic has started (yet with relatively fewer new cases). The estimated economic growth rate by end 2021 is about 10%, but the primary concern in recent months has been high inflation caused by the national currency’s devaluation. Building starts expanded greatly, but completions registered a small drop in the first 9 months of 2021. The government requires interest rates (also for mortgages) to be kept at less than half of the rate of rise in building construction cost. Keeping real incomes positive during high inflation times is important for demand for commodities like housing and other real estates. Turkey’s total construction output is prognosticated to be positive in the forecast horizon with an average growth of 2.6% up to 2023.
Ukraine. For the construction sector in Ukraine, 2021 marks the year of completion of the construction regulation reform launched back in 2019. In mid-September, the newly created State Inspectorate for Architecture and Urban Planning began to work as a full-fledged new body with its own structure, powers, and new work principles. Ukraine’s construction market in H2 2021 has showed a good recovery in investment activity and the resumption of construction. The residential subsector remains the driver of the construction sector due to stable demand from the population. The main constraint in the development of the construction market in 2021 has been increased construction costs despite the active implementation of residential projects against the backdrop of the revival of mortgage lending, increased demand from the manufacturing sector, as well as high volumes of financing.
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 ebi@ibuild.info.
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.
