PL

Choppy construction waters ahead

Construction
EUROPE The construction sector faces modest revenue growth and mostly stable profit margins in 2019 claims Scope Ratings. However the rating agency warns that the credit outlook is in danger of deteriorating as the business cycle turns.
“Skanska’s warning on its dividend shows that while the credit outlook for Europe’s biggest construction firms remains stable, the pressures on their operating performance are mounting, and with it a possible squeeze on cash flow,” says Philipp Wass, an analyst at Scope.

Scope has revised its forecast for 2019 and 2020 down to 2 pct annual growth from 2.5 pct forecast in December 2017.

"Stable demand for residential construction – supported by demographic trends, increased household income and low mortgage rates – faces capacity constraints in some regions, relatively high construction costs as well as the prospect of rising lending rates longer term," says Philipp Wass.

"In contrast, civil-engineering activity remains buoyant and we see an increase in non-residential output given stock under development is still below the 10-year average for Europe’s major markets," says Wass. Demand for office space for most of Europe’s major cities remains robust, he says.

For the largest companies in the sector, namely those that have diversified beyond their home markets and have prominent positions in civil engineering and concessions, the outlook is relatively stable. The biggest companies by revenue – such as France’s Vinci, the Spanish-German tandem ACS-Hochtief and Sweden’s Skanska– will benefit from Europe’s continued low interest rates, their exposure to other higher-growth markets, responsible for more than half of sales in some cases, and higher-margin, government-backed projects.

On the other hand, cash flow is likely to come under pressure: Increased capital spending and more deal-making by larger firms; rising labour costs for the overall sector. Tight labour markets, notably in Germany and the UK, are pushing up wages especially in hiring sub-contractors. Where labour markets are less stretched, much of the available workforce is unskilled – as it is in France, Spain and Poland – making it hard for companies to improve productivity.

Rising construction costs are problematic in the residential segment. Combined with relatively low housing prices and rents in the suburbs compared with more sought-after central metropolitan locations, they are discouraging developers from going ahead with new projects despite pent-up demand.

In these circumstances, the credit outlook is less benign for smaller firms, typically those with revenue below EUR 1 bln. They face tougher competition from multinational corporations in home markets – especially in sourcing skilled employees, which hampers their ability to respond to changing market conditions – and lack exposure to higher-growth markets outside Europe. Should the downturn prove severe, smaller companies will become prey for larger construction firms.

The full report can be read here.

Latest news

Office & mixed-use development

Poland Polcast Media moves into Trinity One

schedule 18 March 2024
Opr./edited by ANZ

Polcast Media Group, the owner of Polonia 1 television, one of Poland's oldest commercial television stations, has recently secured a lease for circa 500 sqm in Trinity One office building located in Warsaw's Służewiec district.

Office & mixed-use development

Poland Loftmill makes its debut in Silesia

schedule 18 March 2024
Opr./edited by ANZ

The Loftmill label has joined the tenants of the .KTW I office building. Owned by Rise.pl, the company offers serviced offices and coworking space.

ESG

Poland BREEAM Outstanding for Panattoni

schedule 18 March 2024
Opr./edited by JC

Panattoni has been awarded another BREEAM certificate with a rating of Outstanding for Panattoni Park Poznań A2. The building B was constructed for H&M without the use of PCVs.

Office & mixed-use development

Poland Another tenant on board at Diuna

schedule 18 March 2024
Opr./edited by ANZ

Warsaw's Diuna office complex from the Syrena Real Estate portfolio has welcomed a new tenant, JDE Peet's. The company's new 900 sqm office was designed by BIT Creative.

Investment & finance

World Real estate at a pivot point

schedule 18 March 2024
Opr./edited by JC

Despite the monetary headwinds and continued economic uncertainty around the world, there is a strong belief that the global real estate industry is at a "pivot point", with improving prospects ahead for renewed investment activity, according to the latest Emerging Trends in Real Estate® Global Outlook 2024 from PwC and the Urban Land Institute. 

Warehouse & industrial

Poland AS-PL goes to Tricity

schedule 18 March 2024
Opr./edited by JC

Automotive company AS-PL has signed up to Panattoni Park Tricity East I by leasing nearly 2,900 sqm of warehouse and office space.

Eurobuild FM

Poland / Cannes Big business under the palm trees (ep. 1)

schedule 17 March 2024
Eurobuild CEE

MIPIM 2024 has officially closed, but we have our special podcast series from Cannes for you! Tune in to all the latest news, opinions and forecasts from the fair – this week exclusively at www.eurobuildcee.com and global streaming platforms!

Warehouse & industrial

Poland Plant ready for operation

schedule 15 March 2024
Opr./edited by ANZ

Panattoni has completed and handed over the main European production facility for Maxcess. Built on a BTS basis, the new hall in Łubowo will facilitate the relocation of the existing factory, enhance the capacity for new product and service development, and is expected to double employment, bolstering the local labor market's growth.

Warehouse & industrial

Germany Early full occupancy in Hamburg

schedule 15 March 2024
Opr./edited by ANZ

The technology company Freudenberg Sealing Technologies will move into the multi-user campus Victoria Park Hamburg, currently being developed by Garbe in a joint venture with the Jebens Group. The property, which has a total area of around 12,000 sqm, is scheduled for completion in February next year.

Retail & leisure

Poland Redkom develops Przystanek Karkonosze

schedule 15 March 2024
Opr./edited by ANZ

Office & mixed-use development

Hungary Green light for Millennium Gardens

schedule 14 March 2024
Opr./edited by JC

Revetas Capital and TriGranit have officially secured the occupancy permit for the second phase of Millennium Gardens in Budapest.

Office & mixed-use development

Romania Timpuri Noi Square twice as big

schedule 14 March 2024
Opr./edited by ANZ

Vastint Romania is starting phase II of the Timpuri Noi Square project in Bucharest. After obtaining the necessary permits, the developer will construct two new office buildings, which will increase the area of the entire complex to more than 100,000 sqm.

Warehouse & industrial

Poland Electronics at Segro Logistics Park Gliwice

schedule 13 March 2024
Opr./edited by JC

Segro has signed an agreement with Centrumelektroniki.eu for the rental of warehouse and office space in Silesia. In the new location, the company will strengthen its existing logistics services, offering more efficient completion and shipment of products to the target customer.

Warehouse & industrial

Poland Construction starts on CTPark Rzeszów

schedule 13 March 2024
Opr./edited by JC

CTP is starting construction of its first manufacturing and logistics complex in the Podkarpackie region. In Rzeszów, the developer will build a complex of two facilities with a total leasable area of nearly 50,000 sqm.

Office & mixed-use development

Poland Konika Minolta stays at The Park Warsaw

schedule 13 March 2024
Opr./edited by ANZ

Konica Minolta Business Solutions has extended its 3,000 sqm office lease at The Park Warsaw complex in the capital's Włochy district. The company will remain in the location for another five years.

Warehouse & industrial

Poland Better second half

schedule 13 March 2024
Opr./edited by JC

After the very successful years of 2021 and 2022, known as the golden period of development of the industrial market in Poland, 2023 was a period of greater challenges due to a change in the macroeconomic situation. Axi Immo presents the "Polish Industrial Market 2023" report.

ESG

Europe We know the winners of Global ESG Awards

schedule 13 March 2024
Opr./edited by JC

The trophy ceremony for the Global ESG Awards took place during MIPIM in Cannes. Following 180 nominations across six categories, 6,801 public votes and 2,177 evaluations done by a global official jury committee, a ranking revealed six  winners.

Investment & finance

CEE NEPI Rockcastle boosts the pipeline

schedule 12 March 2024
Opr./edited by ANZ

NEPI Rockcastle has expanded its development and refurbishment pipeline in 2024 to just over EUR 650 mln across its Central and Eastern European markets, the biggest retail investment programme in the region.

Retail & leisure

Romania Leroy Merlin to expand in Bucharest

schedule 12 March 2024
Opr./edited by JC

Leroy Merlin leased two retail spaces in Bucharest with a combined area of 21,000 sqm from the Supernova Group.

Investment & finance

Poland Rock Park Przeworsk changes owner

schedule 11 March 2024
Opr./edited by ANZ

The Rock Park Przeworsk retail park, opened at the beginning of February, gained a new owner after a month of operation. The transaction took place between RockCapital. and ME Invest, a company owned by TERG S.A., owner of the Media Expert chain. 

Latest in Construction

schedule 08 January 2024

There's hope in the modules

According to the report released by research firm Spectis, “Modular construction market in Poland 2024-2029”, top 100 manufacturers of prefabricated buildings made of wood, steel, concrete, or LECA generated revenue of nearly PLN 10 bln in 2022, with 47 pct of the figure contributed by sales in the modular building segment.

schedule 17 July 2023

Erbud and Daewoo sign five-year MOU

Polish construction company Erbud has signed a cooperation agreement with South Korean giant Daewoo Engineering & Construction to jointly implement projects in the energy and key industrial, infrastructural and military sectors across Poland.

schedule 03 July 2023

Russian builders enlisted in return for orders

Moscow city authorities have “asked” development and construction companies to enlist their workers to fight in the war in Ukraine in exchange for orders. One of these corporations is to provide the Russian defence ministry with 30 volunteers ready to be posted to the front by the end of August.

schedule 17 April 2023

Skanska to build for CD Projekt

Skanska has been commissioned to construct a new building for Polish video game developer CD Projekt on its main campus in Warsaw’s Praga Północ district.

schedule 02 March 2023

Training centre in Attendorn

Viega has launched an interactive training centre near its headquarters in Attendorn. Over five floors, Viega World occupies a total of 12,000 sqm of space.

schedule 12 July 2022

Frontex opens new HQ tender

Frontex, the European Border and Coast Guard Agency, has opened a tender to select a contractor for the design-and-build project of its future headquarters in Warsaw.

schedule 22 June 2022

Erbud wins PLN 30 mln WUM contract

Erbud has been awarded a PLN 29.8 mln contract to modernise the Rector’s Office of the Medical University of Warsaw (WUM).

schedule 20 May 2022

Atlas Ward starts work on Szczecin sheds

Atlas Ward Polska has started work on two logistics parks with a total area of over 70,000 sqm on the eastern outskirts of Szczecin for Panattoni.

schedule 11 May 2022

Rex-Bud to build MDC2 Park Gliwice

Polish industrial developer MDC2 has chosen Rex-Bud Budownictwo to be the general contractor for MDC2 Park Gliwice in Upper Silesia.

schedule 29 April 2022

FineTech chosen to complete Lixa

Yareal has commissioned FineTech Construction to be the general contractor responsible for completing the final stages of its Lixa office complex in Warsaw.

schedule 28 April 2022

Prices rise for construction

Prices for building materials in Poland increased by close to 30 pct over the last twelve months according to Savills.

schedule 21 March 2022

Erbud to rebuild Gdańsk shipping infrastructure

Erbud is to reconstruct the Nabrzeże Szyprów shore in Gdańsk for PLN 28.5 mln.

schedule 25 February 2022

Hochtief builds for Warsaw University

Hochtief Polska has completed construction work on an educational building for the University of Warsaw on ul. Dobra for the department of applied linguistics.

schedule 28 January 2022

Financing secured for completion of The Park Kraków

International investor Cain International and its local development partner, White Star Real Estate, have secured a EUR 36 mln loan from PKO BP to complete the development of The Park Kraków.

schedule 26 January 2022

Erbud takes in GWI for wooden mod cons

Polish construction firm Erbud has merged its subsidiary Mod21 with German wooden modular buildings specialist GWI to establish a new company, also called Mod21.

schedule 31 December 2021

Erbud wins PLN 300 mln Lidl contract

Erbud has been awarded a PLN 298.4 mln contract to build a distribution centre for discount retailer Lidl near Błonie, west of Warsaw.

schedule 02 December 2021

Erbud to build three residential blocks in Warsaw

Erbud has announced a PLN 52.8 mln contract with Polish Export Trade & Investment to build three residential buildings in Warsaw’s Praga-Południe district.

schedule 10 November 2021

Skanska partners with Holcim

Skanska has announced a strategic partnership with concrete supplier Holcim Romania to help it reach carbon neutrality by 2045.

schedule 09 November 2021

Warsaw psychology faculty takes shape

Work is progressing on Mostostal Warszawa’s construction of a new building for the Faculty of Psychology of the University of Warsaw, having now reached the foundation slab stage.

schedule 30 June 2021

Food science centre for SGGW

Skanska is to build the Innovation Centre for Food Sciences for the Warsaw University of Life Sciences [SGGW].

Edition 3 (286) March 2024

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