Road construction, unlike housing construction, has reached peak investment levels
According to the 2023 statistics, Poland is increasing investment in road construction. At the same time, investment in residential construction has fallen. However, despite the increase in funding, the companies involved are rather sceptical about the activity in this sector. The fact is that funds for road construction are not allocated from the local budget but through EU mechanisms. This makes the long-term development of the segment uncertain. However, the Polish government notes that local authorities are discussing this issue with the European Parliament.
The railway company PKP is already conducting various tenders, but delays in EU funding mean that most of these projects cannot be completed by the deadlines set. In addition, the railway operator is not sure when the next tranche of funds from the European Parliament will arrive. This significantly complicates the work on the new lines and the ongoing processes. PKP representatives point out that the company has open orders worth $9.6 billion.
In the housing sector, the pace of construction is slowing. Experts cite global processes that have taken place in recent years as the reason for the slowdown. They have had a negative impact on the market development. Experts note that the number of building permits issued in 2023 has decreased, and ongoing projects are gradually coming to an end. The situation has been exacerbated by rising interest rates, which have reduced the number of mortgages issued. According to analysts, the best solution for the sector may be to increase the number of private rental properties. It should be noted that this is a relatively new phenomenon in Poland. In addition, construction companies are trying various ways to keep their businesses afloat. One of them is to look for opportunities in the energy infrastructure sector.
The cost of building materials and steel has stabilised since the increase in 2022. However, contractors are still in no hurry to start active work, as the market situation is still unstable. The price of construction materials is 3-4 times higher than the figures stated in the contracts signed 2-3 years ago. Another problem for the industry is the lack of project approvals, with many projects being delayed.
February 2023 was a good period for the construction industry in Poland when the sector showed high growth rates. Infrastructure projects were the main reason for the good results, while the dynamics in the housing sector remained low. In February, the pace of construction here decreased by 2.8% compared to the same month in 2022.
Analysts forecast that the housing situation will not change significantly over the next few months. It will remain unfavourable for developers.
