Market situation and perspectives


In 2018, there was maintained the good dynamics of the economic growth achieved in 2017. The gross added value in construction in 2018, compared to 2017, increased by 17.0%, while in 2017 it had increased by 6.5%. The general economic situation in construction, from the enterprise’s point of view, was similar last year as the year before. A serious shortage of qualified personnel on the labour market was characteristic, constituing one of key factors affecting the uncertainty of conducting business activity. On the other hand, the construction industry did not feel a serious problem of insufficient demand for services and too fierce competition.

In 2018, the construction and assembly production increased by 21.3% year-over-year (as in 2017 increase came to 12.9%). The scale of completed projects for the first time in history exceeded the level of PLN 100 billion, which resulted from a very high demand for construction services, in particular infrastructural construction, where an increase in the construction and assembly production in last year came to 23.7% towards 11.7% in 2017. Road construction (increase by 21.0%) and railway construction (increase by 37.0% compared to 2007) were also crucial. In the reported period, there occurred also a high dynamics of increase in production in the housing construction, where the value of 17.5% was achieved. Non-housing construction recorded an increase in its value by 19.4% compared to 14.0% in 2017. That was mainly due to an increase in a group of public utility buildings (value of 43.5% in 2018 towards 31.5% in 2018) and the maintenance of the rate of growth in the industrial construction, where production increased by 13.9% towards 9.9% in 2017.

The scale of the construction and assembly production in the reported period was not subject to significant changes compared to 2017 and still civil engineering structures had the largest share in the entire production (51% in total construction and assembly production).

The main reason of the level of dynamics and a factor affecting directions of the construction development is still the rate of completion of large infrastructural projects and associated effectiveness of use of the EU funds. At the end of 2018, more than 46 thousand of co-financing agreements with the value of PLN 380.6 billion was concluded, with share of the EU funds at the level of PLN 233.5 billion, which constitutes approx. 71% of all funds allocated to Poland under the cohesion policy. The value of signed agreements concerning infrastructural road and railway projects came, respectively, to PLN 83.8 billion and 30.3 billion. In the perspective of subsequent years, the EU fund access shall be at a similar level and probably their significant role in the development of the Polish construction industry will be maintained. According to the decision of the European Commission from May 2018, Poland shall remain the largest beneficiary of the EU funds and in the following perspective 2021-2027 it shall receive EUR 73 billion.

In 2019, the construction sector shall be driven by rising investment expenditure in the area of infrastructure. Many enterprises start this year with a comfortable portfolio of orders and with secured revenues. Further high cost pressure connected with a continuous increase in costs of materials and labour is very likely. There are also difficulties with finding qualified employees and change in the provisions on the German labour market, which facilitate hiring foreigners from outside the European Union on the territory of Germany, thus employees from beyond the eastern border, whose support Polish construction companies are now using, may be interested in work in Germany, not in Poland.

The scale of road projects in the following years shall be determined by the rate of implementation of the “2014-2020 Programme of Construction of National Roads, with the Perspective by 2025”. From 2019 to 2020, the accumulated investments in the road construction may be expected, among others because many contracts executed in the “design and build” form shall enter the construction phase. Moreover, due to the low activity within the scope of announcing new proceedings in 2018, the value of contracts on general contracting signed in 2019 may be at a low level. On the other hand, in 2019 there will be probably an increased activity within the scope of tendering, however due to a long period from tendering to agreement signing, the majority of contracts will be concluded only in 2020. According to the list of tenders planned for the announcement published in January 2019, GDDKiA shall call in 2019 for tenders for works for 17 sections with a total length of 435 km, including several sections of the expressway S19 with a total length exceeding 170 km.

Inalterably, railway construction remains the prospective area of development from the point of view of a general contractor. According to the funding plan, updated in June 2018, for the “National Railway Programme by 2023”, a total value of projects completed from 2012 to 2015 by PKP PLK shall come to PLN 63.8 billion. Additionally, the reserve list includes 64 projects with the value of PLN 28 billion, the performance of which depends on generated savings. In two previous years, due to increasing costs and risks on railway contracts, many bids put forward in tenders exceeded the investor’s budget. According to the tender schedule for the year 2019 published by PKP PLK, calling for tenders under the KPK in 2019 should not go slower than in 2018.

If it is about hydraulic engineering, according to the project schedule concerning the Odra Waterway and Vistula Waterway, in 2020 the Ministry of Water Management and Inland Navigation will prepare the programme for development of waterways, which shall allow for a more credible assessment of this segment’s potential.

Recently, the energy construction segment has been maintaining a good growth rate as a result of progressive implementation of several large power plants with a total power of 5.8 GW. Several significant projects, including a power plant in the technology of the so-called clean coal at the Bogdanka mine, two new units with the power of 700 MW each in Zespół Elektrowni Dolna Odra and the coal power unit in Puławy are at the planning or tendering stage, Positive signals within the scope of the rate of implementation of a new investment programme come from the gas transmission market. In August 2018, Gaz-System commenced public consultations concerning the gas network development plan for the years 2020-2029. This plan assumed an increase in the network’s length by almost 3,800 km from 2020 to 2029.

In 2018, a number of flats sold by investment companies decreased. On the six largest markets, i.e. in Warsaw, Wrocław, Kraków, Łódź, Poznań and Tricity, 64.8 thousand flats were sold towards 72.8 thousand flats sold in 2017. The main reason for a reduced sale is constituted by the significant limitation of a flat offer of the leading property companies connected with the elongated formal and legal processes in the course of obtaining necessary permits and with the necessity to adjust flat prices to a dynamic inflation of costs of the housing investments’ general contracting. A continued expansive credit action of banks, driven by the maintenance of low interest rates and increasing creditworthiness of Polish people constitutes the factor that may positively affect the market shape in 2019.

The opportunity for further development of the construction market may be seen in projects in the form of public private partnership (PPP). The fact that the PPP team in the Ministry of Development developed and the government accepted the strategic document “The Government’s Policy on the PPP Development” constitutes a positive signal. The document assumes that in the years 2017-2020 at least 100 new PPP agreements shall be concluded, while the share of the value of signed PPP agreements in capital expenditure in the Polish economy within the public sector should come to 5%.

The accumulation of works in two large investment programmes within the scope of national roads and railroads, supported by a high value of investments implemented in the area of general construction, has recently translated into a dramatic increase in prices of building materials, subcontracting services and labour costs. The factor supporting an increase in material prices in 2020 and following years may be the potential increase in prices of electrical energy, which shall affect an increase in costs of building material manufacturers, e.g. cement plants, thus consequently converting to an increase in costs of general contracting of works. With regard to the issue of a dynamic increase in prices towards those assumed in tender cost estimates, as a result of discussions with investors’ representatives, it was decided to introduce changes in the methodology of valorisation of new contracts, in which the general contracting agreement was not concluded, however still an issue of no valorisation on already implemented contracts has not been solved.