Black Whale - nieruchomości inwestycyjne

Production Trends

The Polish construction industry is projected to experience a decline in production in 2024, followed by a notable recovery with a 7-9% increase in 2025, according to the forecast by Bank Pekao as of the end of April 2024. This year, construction companies will primarily face pressure from labor costs, while in 2025, material costs will become the main challenge.

2024: Decline in Construction Activity

In 2024, the construction sector is expected to see a decline, with the recovery in residential construction unlikely to offset the weakness in commercial real estate and engineering segments. The financial situation of construction companies will be marked by cost pressures, mainly from labor, in an unfavorable demand environment. This could lead to a reduction in profit margins, which were at record highs from 2021 to 2023, allowing companies to build a solid financial cushion. Labor costs remain a significant barrier, with over 73% of construction companies identifying high employment costs as a major challenge.

2025: Projected Rebound

A significant recovery is expected in 2025, with a forecasted growth rate of 7-9%, driven primarily by the initiation of numerous infrastructure projects. While labor cost pressures will ease somewhat due to increasing revenues, material costs will exert strong pressure on the sector. Historically, building material prices have shown significant volatility, rising faster than construction and assembly production prices during investment booms. This trend is likely to continue in 2025. However, the construction sector has learned from past experiences and is better prepared to handle these challenges, aided by favorable legal provisions such as indexation clauses in public contracts.

Sector-Specific Insights

- Residential Construction: In 2024, residential construction will benefit from the investment recovery seen in the second half of 2023. However, future growth will depend on the continued support for borrowers, particularly in the context of high-interest rates.

- Commercial Construction: The commercial construction sector will face a decline in activity in 2024-2025, particularly in segments like offices and warehouses. This is due to the slowdown in company investments in new and modernized buildings, driven by high financing costs.

- Engineering Construction: Engineering projects will experience a slowdown in 2024 due to the transition into the new EU budget perspective, delays in the influx of funds from the National Recovery Plan, and audits of major investment programs. However, from 2025 onwards, there will be a gradual increase in new project activity and a return to rapid growth.

Conclusion

The Polish construction industry faces a challenging 2024 with expected declines due to labor cost pressures and a weaker demand environment. However, the sector is set to rebound strongly in 2025, driven by infrastructure projects and improved financial conditions. While material costs will pose a significant challenge, the industry's preparedness and favorable regulatory environment are expected to support its resilience and growth in the coming years.