Europe Construction Market Forecast from 2015 to 2020

Overview of the European Construction Market

The European construction market forecast has always been a complex task for analysts owing to the many different players in the region. However, recent times have seen the European construction market on a path of steady growth. Until 2008, market prospects were relatively bleak, given the economic downturn. However recent developments and an economic turnaround suggest a positive outlook for the near future. Since 2014, GDP for nearly all EU countries is growing. It is therefore unsurprising, that the future of the European construction market looks bright. Our research analysts predict that construction activity will increase again from 2015, with the growth of up to 3% per annum.

GDP & Total Construction Output from 2014
GDP & Total Construction Output from 2014

1. European Construction Market Forecast (short-term)
2. European Construction Market Forecast (long-term)
3. The European Commission’s Action Plan: Construction 2020
4. Technological Developments in Europe
5. Predictions for the Future

1. European Construction Market Forecast (short-term)

We researched short-term growth patterns across the European construction market. Our analysts predict the market will stabilise in some countries in preparation for long-term future growth. In other countries, markets will continue in a steady pattern of growth.

2014 CONSTRUCTION OUTPUT% CHANGE IN REAL TERM
 Billion euro2014201520162017201820192020
Germany2852,401,800,20-0,400,300,390,48
France200-2,80-0,401,801,601,662,132,47
United Kingdom1775,205,103,502,403,124,215,10
Italy163-2,201,102,502,803,725,187,20
Spain63-2,401,803,605,006,507,939,04
Netherlands600,303,403,504,705,787,989,73
Switzerland530,80-0,701,401,501,972,713,01
Norway462,103,902,502,903,803,875,04
Poland444,907,106,206,707,508,7810,45
Belgium390,700,001,502,402,933,403,94
Sweden345,301,301,101,602,132,603,25
Austria321,701,001,301,501,912,633,52
Finland29-0,201,501,703,204,105,205,41
Denmark272,502,903,503,704,265,496,48
Czech Republic161,002,503,304,004,965,567,67
Portugal15-1,002,503,605,006,558,2510,40
Ireland910,109,0010,609,209,299,949,94
Hungary914,305,103,802,903,454,355,52
Slovak Republic4-0,401,802,703,003,514,004,16
Western Europe1.2321,92222,702,973,12
Eastern Europe735,55,15,55,57,157,799,98
Euroconstruct Countries1.3052,12,22,22,22,402,522,72

Development of the construction output in the Euroconstruct countries

Further, we looked into different sectors of the construction industry which are expected to prosper in the near future and it is expected to have a steady growth pattern. 2015 was a very important year for the construction industry in Europe.

20132014201520162017201820192020
New Residential-40,12,64,73,75,06,27,6
New Non-residential-5,20,62,72,12,33,14,14,7
Building R&M-0,31,41,61,11,41,82,22,6
Civil Engineering-4,21,42,22,62,73,74,44,9
Total-2,712,12,22,22,93,64,2

Total output development by market segments – % growth rate in real terms

2. European Construction Market Forecast (long-term)

We believe the construction market forecast is positive overall, expecting growth in the near future extending beyond 2015. However, differences in political and economic development mean it is difficult to generalise further. We have therefore broken down the European market into four regional and economic clusters:

1. Western Europe (UK, Austria, Belgium, France, Germany, Ireland, Netherlands, and Switzerland)

The market outlook in each of these countries varies according to economic policy and political priorities. In Germany, the country with the largest economy, steady growth at 1.2% p.a. is expected until 2017. France has the poorest forecast 0.1% p.a. Ireland should experience the highest growth rates at 6% p.a., a strong sign of economic recovery in Ireland.

2. Scandinavian Countries (Denmark, Finland, Norway, and Sweden)

As to the Scandinavian countries, EUROCONSTRUCT (2014) predicts market success over the next three years. Even Denmark, the country most affected by the financial crisis, is in a position to experience growth in its construction market. Further, past market performance in the Scandinavian region contributes to a solid foundation for future growth. Sweden has the strongest growth forecast in this region and is expected to grow around 5% in 2015 and 4% in 2016.

3. Southern Europe (Italy, Portugal and Spain)

The outlook for Southern Europe is still bleak. Countries like Portugal, Italy, and Spain are struggling with their economies. In particular, Spanish companies whose businesses relate to infrastructure have been keen to secure projects abroad. They have had some success, securing big projects from the Middle East. Among the major projects won by the Spanish companies are contracted to build railway lines in Saudi Arabia (worth €6.73bn), and another underground railway line in Saudi Arabia (€6.03bn). The strategy and outlook of this region are to return to stability rather than to focus on outright growth.

4. Central and Eastern Europe (Czech Republic, Hungary, Poland, and the Slovak Republic)

The market forecast for Central and Eastern Europe looks bright, as these nations are experiencing economic recovery and heading towards patterns for growth. Our analysts predict a growth rate of at least 4% in this region, as investments are increasingly made in transportation and energy production. The railway construction market is set to top €1.5 billion in 2015. Poland, as the strongest player in Central and Eastern Europe, accounts for 60% of construction output in the region.

3. The European Commission’s Action Plan: Construction 2020

The future and outlook for the construction industry look bright and promising, in part because the European Commission wants the construction industry to stabilise and grow once again. In 2013, a “Construction 2020” Action Plan was established with the aim of ensuring that the industry becomes more competitive and experiences sustainable growth in the short and long run. The Construction 2020 Action Plan is a comprehensive plan, which outlines a strategy for “sustainable competitiveness of the construction sector and its enterprises” featuring key pillars of competitiveness and efficiency.

The plan has 5 objectives:

  1. Securing investment for renovation
  2. Human capital
  3. Resource efficiency
  4. Improving the internal market for construction
  5. Remaining competitive in the global industry

The European Building Conference (EBC) has welcomed this project and is in cooperation with the EU to work on key measures to promote growth in the construction industry in Europe and make it more attractive. The Construction 2020 Action Plan supports SMEs in the construction industry, by encouraging them to expand in the low carbon refurbishment market through financial and other incentive schemes. It also encourages a level playing field among SMEs to promote competitiveness, in particular through the Build Up Skill program, a valuable self-improvement tool for business.

4. Technological Developments in Europe

A major goal in the EU is to promote green energy and encourage “smart infrastructure”. Policy aims include investing in technology, fostering innovation in the construction industry. Our research indicates that Europe has some of the most advanced energy efficient measures for the development of infrastructure. All these measures are part of the EU’s strategy to promote eco-innovation and environmentally friendly techniques for development and infrastructure.

ECMF 4

5. Predictions for the Future

Generally, the European construction market shows a trend of steady growth, although some regions may not experience growth as quickly as others. Measures such as the Construction 2020 Action Plan and eco-innovation policy indicate the EU has and will continue to provide key facilities and incentives to provide stability and encourage growth.

Data Sources

Data from 2013-2017: Euroconstruct.org
Data from 2017-2020: Internal Market Research

Author: Seyed Hasan

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Join the discussion 2 Comments

  • Paige says:

    This is a great breakdown of information. Thank you for sharing!

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