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On the construction market, a period of dynamic growth is over. How will individual regions fare in the new situation?

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After growing by less than 6% in 2019, construction activity in Poland will weaken further in 2020, although growth will remain respectable. But the situation will vary considerably among voivodships, as shown in a new report from PMR, “Construction sector in Poland 2020 – regional analysis. Market analysis and development forecasts for 2020-2025”.

Strong comparatives are a major factor behind the predicted slowdown of the Polish construction market in 2020. Even so, each of the three construction market segments will show an improvement in relation to 2019. We expect the smallest growth to occur in non-residential construction, due to its sheer size (it is the biggest of the three segments, accounting for over 41% of the total construction market.) The prospects are much better in civil engineering, which has not yet reached its peak: major ongoing infrastructure investments will continue and new projects will enter the implementation phase. Housing construction, too, has a chance to show fairly good statistics.

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Construction market in the regions – prospects are moderately optimistic

The good news is that in each and every one of the country’s voivodships, the value of construction and assembly output in 2020 will be higher than in 2019. The scale of this increase will vary substantially, however. Growth will be minimal, at less than 1%, in three voivodships. The biggest group of provinces – nine – will see a moderate growth rate of between 1%-5%, according to our forecasts. In two voivodships, construction and assembly output will grow by between 5%-10%. And in the remaining two, activity could increase by more than 10%.

However, it is worth noting that the growth rates in particular regions depend to a large extent on the size of their construction markets. In voivodships with the highest value of construction and assembly output, achieving high growth rates is incomparably more difficult than in regions where the construction market is several times smaller.

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Regional map to remain stable despite varying growth rates

The relative positions of individual regions in terms of levels of construction activity carried out on their territory are generally quite stable, being the result of many years of processes taking place in the sphere of economics, demography, etc. Some regions have a huge advantage over others in many aspects, including ones that directly and indirectly influence investment opportunities and the level of investors’ activity. For this reason, no major shifts in the regional map should be expected in the coming years. But this does not mean that things will stand still. Some of the smaller construction markets will accelerate and reduce the gap to larger ones. Others will decelerate and lose ground.

Civil engineering is where regional differences in activity could be biggest – but also where reality rarely matches plans

The growth prospects in individual voivodships also vary depending on the construction segment we are interested in, i.e. residential, non-residential, or civil engineering. Due to the complex nature of civil engineering projects – which are the most time-consuming and capital-intensive – differences in levels of activity between individual regions are bound to be largest in this area. Some voivodships have already experienced or are experiencing a pile-up of projects in the present cycle, and will see a certain calming down in the following years; others are yet to experience it. However, it should also be remembered that, for much the same reasons, forecasts for civil engineering are subject to the greatest risk: delays, changes in deadlines and costs, and even complete cancellations of projects are common in this segment. Therefore, the situation in individual voivodships can be dynamic. Zachodniopomorskie and Lubelskie, in particular, stand out in this respect. That’s why it is important to continuously monitor, both actual levels of activity and updates of investment plans.

More detailed information and forecasts of market development in individual regions are presented in the PMR report Construction sector in Poland 2020 – regional analysis. Market analysis and development forecasts for 2020-2025″.

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