Business environment - General market conditions

Business environment - General market conditions

market conditions

Despite the difficult and unstable situation on international markets and geopolitical conflicts, the past year was successful for the Polish economy. 2015 saw a slight acceleration in the economic growth in Poland. In accordance with the preliminary estimates provided by the Central Statistical Office (GUS), the gross domestic product (GDP) increased, in real terms, by 3.6% y/y in comparison with 3.3% in the previous year. Domestic demand had the biggest positive impact on the GDP growth (+3.4% as compared with 2014). Unlike the previous year, foreign demand (net exports) had a positive impact on the GDP. In 2015, the gross added value in the national economy increased by 3.4% in comparison with 2014, as compared with 3.3% the year before. This good performance was achieved mostly due to the industry and construction sectors, where the gross added value increased, according to preliminary estimates, by 5.4% and 4.4%, respectively, as compared with the previous year. A positive fact was also the decrease in the unemployment rate by 1.6 percentage point, i.e. from 11.4% in December 2014 to 9.8% as at the end of 2015.
Improved sentiments in the construction market were reflected by the index of general business climate in the construction industry which, while remaining negative, recorded higher values than in 2014. Without any doubt, an essential factor for future market prospects was an increase in investments measured by gross fixed capital formation (an increase by 6.1% as compared with the previous year) and an increase in the value of awarded contracts in the road construction segment as compared with 2014.

In 2015, the construction and assembly production increased by 2.3% y/y (in current values), in comparison with 2.6% in 2014. In 2015, the construction sector was driven both by the residential construction segment and the infrastructure construction segment, whereas within the latter one, the transmission and railway construction played the pivotal role. The increase in the infrastructure construction segment was hampered by the decrease in the construction and assembly production in the water engineering sector (decline in the production by 25.7% as compared with 2014).

The structure of the construction and assembly production in 2015 did not see any major changes in comparison with the previous year. Civil and water engineering facilities continue to have the largest share in the construction and assembly production (54% in the total of construction and assembly production, without any changes against the previous year). Meanwhile, an analogous share of the residential construction grew by one percentage point, i.e. from 13% in 2014 to 14% in 2015.

2015 was marked by further drop of prices in the construction and assembly production. Over the period from January to December 2015, the prices fell by 0.5% against a decrease by 1.2% in 2014 as compared with 2013.
After a two-year period of decline, in 2015, there was a slight increase in the number of flats put into use, achieving the level of 147.7 thousand (increase by 3.2% as compared with 2014). Very good market economic is confirmed by the number of flats whose construction was commenced (an increase by 13.7% y/y, to 168.4 thousand) and the number of construction permits issued (an increase by 20.5% y/y, to 188.8 thousand). The government programme called “A Flat for the Young” [Mieszkanie dla Młodych, MdM] and record-low interest rates resulting in relatively cheap financing and, at the same time, low interest rates on bank deposits contributed to a significant recovery in the development market. In view of the above factors, the developers’ offer tailored to the preferences and purchasing power of customers, as well as of the stabilisation in the housing market, 2015 must be considered probably historically best period in the development sector in terms of number of pre-sold flats. In 2015, within the six largest, in terms of their turnover, residential markets in Poland (Warsaw, Kraków, Wrocław, Tricity, Poznań and Łódź), developers pre-sold approx. 51.8 thousand flats (20% more than in 2014).

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