Hungary to benefit from transport infrastructure

Civil engineering is expected to be the driving force in the construction industries of Slovakia and Hungary over the next few years, with the non-residential sector also proving influential in Hungary

The Hungarian construction industry is likely to benefit from the civil engineering and non-residential sectors most in the next few years, according to research company PMR.

Thanks to the increasing number of tenders in the civil engineering sector, particularly transport infrastructure construction and environmental protection-related construction, Hungarian construction output is predicted to see steady growth. However, in 2016 the construction sector may witness some decline, said PMR, mostly as a result of the slow execution of projects from the new EU budget.

In its Construction Sector in Hungary 2015 - Development Forecasts for 2015 to 2020 report, PMR said that following a drop of almost 9% year-on-year in 2012, Hungarian construction output recovered in both 2013 and 2014, growing by more than 14% year on year in each of the two years.

This growth was said to have been driven mostly by civil engineering construction, which experienced an increase of over 24% year on year in 2014.

Following an estimated rise of less than 3% in 2014, Hungarian non-residential construction was expected to experience a near 5% increase in 2015, as a number of projects, particularly on the warehouse and office markets, are expected to start.

On the other hand, said PMR, the non-residential subgroup which is likely to lag behind all others was retail facility construction. The renewal of a ban last December on the construction of large shopping malls dashed hopes of recovery among investors in this area. As a result, no major retail facility projects were unveiled in 2014, a year which saw no facilities completed in this field. PMR said that most of the output in the retail construction arena was accounted for by small developments in small towns.

Road construction is forecast to be the main generator of funding and orders for the Hungarian construction industry. The EU budget for the years 2014 to 2020, which is described by PMR as relatively favourable for Hungary, along with the expected high rate of absorption, is expected to stimulate public investment and employment in the economy. As a result, the amount invested in civil engineering structures will still be relatively substantial in the medium term, said PMR.

However, in 2016, it is expected that expenditures covered by EU funds will be reduced significantly because of the end of the financing period for projects under the 2007 to 2013 EU budget. PMR said this would have a detrimental effect on public investment and, consequently, civil engineering construction.

PMR has already seen some signs of possible slowdown. In the first three months of 2015 the construction confidence indicator began to deteriorate again, it said, mostly driven by slow-growing prices and still massive competition for a low number of orders.