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Poland Infrastructure Report Q1 2012
Business Monitor International, Dec 2011, Pages: 89
Business Monitor International's Poland Infrastructure Report provides industry professionals and strategists, corporate analysts, infrastructure associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Poland's infrastructure industry.
BMI View: We maintain our long-held view that the Polish construction industry was poised for a slowdown in H211 which will continue well into 2012. In fact, our core scenario envisages considerably slower annual average growth over the next five years as the sector reels from the after-effects of a surge in investment ahead of the UEFA Euro 2012 football tournament.
Although the Polish construction sector posted impressive 16% year-on-year (y-o-y) real growth during H111 (according to data released by the Central Statistics of Poland), we attribute this to the last minute rush in construction activity – mostly on existing projects – ahead of the Euro 2012 football tournament. It is our view that this trend will not have been sustained in H211 and is unlikely to continue into 2012 – as most contracts near completion. In addition, due to the fact that the ongoing slowdown in Germany will dampen investor sentiment, we restrict our 2011 and 2012 real growth forecasts to 4.1% and 2.9% respectively. Consequently, we anticipate 3.2% y-o-y real growth for the construction industry as a whole.
Key growth drivers include:
- Euro 2012 preparations: The tournament has boosted planned investment into the transport sector, specifically airports, roads and railways. In addition, the construction of stadia, hotels and related tourism infrastructure has buoyed the residential and non-residential building subsector.
However, with the tournament drawing closer and the artificial stimulus it has created coming to an end, we anticipate a lull in activity from 2012 and beyond.
- Road building programme: Poland's road building programme, running from 2007 to 2015, is expected to draw US$60bn of investment into the sector. The programme has been a blessing for European construction majors and Poland's largest builders over the past 24 months, which have faced depleted contract opportunities in other core European markets.
- EU Cohesion funds: The EU has allotted substantial funding for Poland's infrastructure sector in an effort to integrate the country into the EU's transport and energy networks. Geographically placed between Eastern and Western Europe, it is hoped Poland will act as a bridge between the two.
The substantial activity seen across Poland's construction sector has positioned the country as a safehaven for construction companies over the past 24 months. Europe's largest players, including Skanska, Strabag, Hochtief and Bouygues, and building materials providers such as Lafarge, all saw orderbook growth in Poland in 2009 and 2010. Poland's local construction companies – Budimex (a unit of Spain's Ferrovial) and Mostostal Warszawa – continue to benefit from positive investor sentiment with regard to the Polish construction segment, having bagged new projects in 2011 (for more information please see the individual company profiles).
Meanwhile, there is also significant growth potential for public private partnerships (PPPs). The deal between InterHealth Canada and the county of Zywiec in southern Poland – to build and manage a PLN200mn (US$63mn) hospital – is the country's first healthcare PPP project. Although investors will need to be prepared for delays and added costs, particularly during the procurement phase, the relative success of Turkey's health PPP programme over the last 18 months could act as a blueprint for the evolution of a similar market in Poland.
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