The loss of production in the European construction sector in 2020, as a result of the crisis stemming from the Covid-19 pandemic, stands at -11.5% and has amounted to 438,000 million euros, “a not inconsiderable amount , equivalent to the GDP of a medium-small country such as Austria ”, explained Francisco Diéguez, CEO of the ITeC, during this presentation of the Euroconstruct Summer 2020 report this Thursday, June 18.
However, after this decline, a rebound is expected that will begin to be noticed in 2021 (+ 6%) and that will continue in 2022 (+ 3.5%). “A path very similar to that expected for the economy as a whole, with one exception: while GDP is expected to end in 2022 at 2019 levels, in the case of the construction sector it would still be 3% below,” he said. Diego.
After the decline that the sector will experience this year, a rebound is expected that will begin to be noticed in 2021 (+ 6%) and that will continue in 2022 (+ 3.5%), a path very similar to that expected for the economy in your set
The economic impact will be uneven between countries, among other reasons because each country was at a different point in the real estate cycle, and although it is expected that all 19 countries will not achieve the so-called “recovery in V”, there are seven countries that individually Yes they will (see in the image), some of them quite loosely, according to the latest Euroconstruct report, while four other countries will fall short by a very small margin, around 1%, among which are France and Germany. “If we add the market shares of the two groups, we obtain that in 2022 67% of the European market will again be producing at levels very close to those of 2019, or even higher,” said Josep R. Fontana, head of the Department of ITeC markets and author of the Spain report for the group.
Residential construction plans to decrease by -14% in 2020 and recover to an average of + 4.5% in 2021 and 2022, with which production in 2022 would still be 6% below 2019. “Housing will suffer therefore a somewhat more acute version of the general crisis in the construction sector. We must not lose sight of the fact that this market had already peaked after having grown continuously for six years and that it tended to slow down progressively before the coronavirus entered the scene, “said Fontana.
The forecast for non-residential construction is similar to that for housing with respect to the 2020 “shock” (-15%) but is somewhat more conservative compared to the recovery of 2021 and 2022 (+ 3% annual average). As for the reasons, Fontana argued that “circumstances do not invite investment: the pandemic has compromised the income of many companies and public administrations, to which must be added a brief but intense economic recession. Furthermore, none of the segments of the non-residential market will really escape the effects of the crisis, and some of great specific weight will be particularly affected. This is the case of offices and, above all, of commercial construction ”.
Before the pandemic, civil engineering was the subsector with the most positive outlook. And now it continues to be: the contraction forecast for 2020 (-11%) is the most bearable in the sector, and the rebound afterwards is almost as powerful as that of housing (+ 5% annual average). “This will make civil engineering the only subsector where production in 2022 will exceed that of 2019, and by a margin of more than 3%. Although most public budgets will give priority to continuing to control the coronavirus, a certain degree of commitment to the construction and maintenance of infrastructure is expected. A commitment that, in general, has not yet materialized in concrete plans, neither at the national nor at the community level, but which is expected to end up arriving as the degree of health alert is lowered, ”according to the head of the ITeC Markets Department. .
Situation and forecasts in Spain
Regarding the Spanish construction sector, the report states that it has operated with limitations in the works that have been higher than in many other European countries, which explains that the production drop expected for 2020 (-15 %) Is also above average. As explained by Josep Ramón Fontana, “the ‘invoice’ of the Covid-19 crisis in the Spanish construction sector for the period 2020-2022 amounts to 57,000 million euros, and by subsectors it should be noted that the rehabilitation is taking an important part of the impact. ” In this sense, Fontana affirmed that “we see rehabilitation more vulnerable in Spain than in Europe” and remarked that “we went to confinement with the need to promote a rehabilitation in need of aid and that is what we have found upon leaving; you don’t have to invent the wheel. It was clear before and it is still clear now. ”
“We went to the confinement with the need to promote a rehabilitation in need of aid and that is what we found when we left; you don’t have to invent the wheel. It was clear before and it is still clear now ”, stated Josep Ramón Fontana, head of the ITeC Markets Department
Thus, of the 57,000 million euros in which the lost production has been encrypted in the period 2020-2022, 21,000 million would be attributable to the rehabilitation segment, 18,000 million to housing, 10,000 million to non-residential and the remaining 8,000 million to civil Engineering.
According to the report’s forecasts, “it is hoped that part of the work not carried out in 2020 will be completed in 2021, so that the rebound in production (+ 6%) will be comparable to that of other countries. On the other hand, after having exhausted that backlog of projects, the projection for 2022 becomes much more moderate (+ 2.5%). Consequently, production at the end of 2022 will still be 7.6% lower than in 2019 ”. Ultimately, recovering 2019 levels is still an objective within reach, but it will take a longer period than the forecast period of this recently presented report.
In the analysis by subsectors, residential construction appears accompanied by a couple of vulnerabilities that will make the 2020 “shock” suffer more intensely (-17%): on the one hand, housing was the most dynamic segment before the arrival of the coronavirus and the one that had most dared to abandon the security of the areas of greatest demand and began to explore those intermediate areas that had later joined the recovery; on the other hand, it is more difficult to accept the premise, recurrent in most of Europe, according to which demand will not suffer. Despite everything, there seems to be no reason to rule out a productive rebound for 2021 (+ 9%) and 2022 (+ 4.5%) if we consider that in recent years very little superfluous stock has been built, and that the size and the business model of the current promoter companies have little to do with those of 2008 ”, argued Fontana.
Non-residential construction could experience a slightly less traumatic 2020 (-14%) due to the extra inertia provided by operating with larger-scale projects. In addition, the fact is added that “prior to the pandemic, the non-residential market was at a point in the real estate cycle that was less advanced than that of housing. This means that the project portfolio was not at all oversized, neither quantitatively nor in terms of risk, so that the conditions for a cancellation of projects such as that of the previous financial crisis do not exist. ” The reaction expected for 2021 (+ 5.5%) and 2022 (+ 2.5%) is less intense than in housing, “because although there will be market niches capable of recovering land with relative ease (logistics, offices), at The rest will cost them to get out of the stagnation. The extraordinary resources that will go to health and education will give priority to spending on personnel and equipment, and will hardly be translated into construction, “said the head of the ITeC Markets Department.
As for civil engineering, the first impact of the crisis in 2020 (-7.5%) has a better chance of supporting the construction than construction, “considering that it has been the subsector where the restrictions are being more bearable. However, in the following years the situation could be reversed, and the construction of infrastructures could have greater difficulties to recover ”. According to the report, public budgets and extraordinary programs will be dedicated to defray the extra cost due to the pandemic and its consequences in employment, with which “it is very doubtful that too much priority will be given to public works.” According to the forecast, as in the case of the building, the production that could not be carried out in 2020 will serve to improve the results of 2021 (4.1%). Likewise, the local work that foreseeably appears as a prelude to the municipal elections of 2023 contributes
Source : Cicconstrucción
