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GROWTH DRIVERS AND INVESTMENT OPPORTUNITIES IN EUROPEAN CONSTRUCTION TO 2016
Michael Weingärtler Metal Expert Europe Steel Trade Conference April Stresa, Italy
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OVERVIEW Overall Trends in Construction Macro-economic Framework
Construction Outlook by Sectors Housing Non-residential construction Civil Engineering
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EUROCONSTRUCT NETWORK
FI EUROPE (EC-19) Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Nether-lands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, Czech & Slovak Republic, Hungary, Poland. BIG 5 Countries France, Germany, Italy, Spain, United Kingdom Northern Europe Norway, Sweden, Finland, Denmark, Ireland Smaller European Countries Austria, Belgium, Netherlands, Portugal, Switzerland Eastern Europe Czech Republic, Hungary, Slovak Republic, Poland NO SE DK IR UK NL PL DE BE CZ SK AT HU CH FR IT ES PT
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DOUBLE DIP IN CONSTRUCTION
Source: EUROCONSTRUCT .
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2010 2011 2012 WHAT HAPPENED? (1) INCREASING WORLD TRADE
(2) DYNAMIC EXPORTS (3) MACHINERY INVESTMENTS EUROPEAN PUBLIC DEBT CRISIS (4) CONSTRUCTION INVESTMENTS 2010 2011 2012
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THREE STEPS OF ECONOMIC RECOVERY
World Trade Exports Construction Investments Consumption Time lag quarters quarters 2008 2009 2010 2011 2012 2013 2014 GDP 0.3 – 4.1 2.2 1.8 – 0.2 0.1 1.4 Exports – 11.2 10.5 6.0 2.4 4.2 Fixed Capital Investment – 0.9 – 12.0 0.7 2.1 – 2.2 – 2.7 2.5 Private Consumption 0.2 –1.2 0.5 – 0.4 0.0 1.1 Public Consumption 2.3 0.9 0.4 Construction – 3.9 – 9.0 – 3.4 – 5.2 – 3.0 Source: EUROCONSTRUCT .
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HOW WILL IT GO ON? Source: EUROCONSTRUCT .
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EUROPEAN CONSTRUCT ION 2014
Volume: construction output per capita in mill. Euro (horizontal axis) Activity: real annual average growth 2014 in % (vertical axis) low volume high volume average volume low activity high activity average growth low activity high activity average growth low volume high volume
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European Construction – A 1.28 bn Euro Market (2013)
RENOVATION DOMINATES WESTERN CIVIL ENGINEERING & NON-RESIDENTIAL EASTERN EUROPE European Construction – A 1.28 bn Euro Market (2013) EC EC-4 TOTAL CIVIL ENGINEERING 21 bill. € TOTAL CIVIL ENGINEERING 263 bill. € NEW HOUSING bill. € NEW HOUSING Mrd. € 18% 17% 21% 31% 16% NEW NON-RESIDENTIAL 196 bill. € 30% 45% 22% NEW NON-RESIDENTIAL 21 bill. € BUILDING RENOVATION 16 bill. € BUILDING RENOVATION 542 bill. € Source: EUROCONSTRUCT. – Western Europe: Belgium, Denmark, Germany, Finland, France, Ireland, Italy, Great Britain, Netherlands, Norway, Austria, Portugal, Sweden, Switzerland, Spain. Eastern Europe: Czech Republic, Hungary, Poland, Slovak Republic.
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SLOW RECOVERY IN CONSTRUCTION
gdp and construction output index 2010 = 100 without Poland Source: EUROCONSTRUCT. – Western Europe: Belgium, Denmark, Germany, Finland, France, Ireland, Italy, Great Britain, Netherlands, Norway, Austria, Portugal, Sweden, Switzerland, Spain. Eastern Europe: Czech Republic, Hungary, Poland, Slovak Republic.
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SLOW RECOVERY IN CONSTRUCTION
gdp and construction output index 2010 = 100 Source: EUROCONSTRUCT. – Northern Europe: Denmark, Finland, Ireland, Norway, Sweden. Smaller Countries: Belgium, Netherlands, Austria, Portugal, Switzerland.
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RECOVERY OF NEW HOUSING IN EUROPE
housing output index 2013 = 100 NEW HOUSING TOTAL HOUSING RENOVATION Source: EUROCONSTRUCT .
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LONG TERM HOUSING IN EC-19
total housing output in billion Euro at 2012 prices – 34% + 6% Source: EUROCONSTRUCT .
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BACK TO 2010 total housing output in billion Euro at 2012 prices
Source: EUROCONSTRUCT .
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TOTAL HOUSING IN BIG-5 COUNTRIES
volume change in billion Euro Source: EUROCONSTRUCT .
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HOUSING TRENDS – NORTHERN EUROPE
total housing output in billion Euro at 2012 prices – 28% + 17% Source: EUROCONSTRUCT. – Northern Europe: Denmark, Finland, Ireland, Norway, Sweden.
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HOUSING TRENDS - Smaller Countries
total housing output in billion Euro at 2012 prices – 10% + 4% Source: EUROCONSTRUCT. – Northern Europe: Denmark, Finland, Ireland, Norway, Sweden. Smaller Countries: Belgium, Netherlands, Austria, Portugal, Switzerland.
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TOTAL HOUSING - SMALLER COUNTRIES
volume change in billion Euro Source: EUROCONSTRUCT .
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HOUSING TRENDS – EASTERN EUROPE
total housing output in billion Euro at 2012 prices – 21% + 9% Source: EUROCONSTRUCT. – Eastern Europe: Czech Republic, Hungary, Poland, Slovak Republic.
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TOTAL HOUSING – EASTERN EUROPE
volume change in billion Euro Source: EUROCONSTRUCT .
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SIGNIFICANT GROWTH DIFFERENCES
average housing permits per 1000 inhabitants 2 & less Ireland Portugal Spain Hungary 2 < 3 Netherlands Sweden Germany Slovak-, Czech Rep. Denmark UK, Italy 3 < 4 Belgium 4 < 5 Austria Finland Poland 5 & more Norway France Switzerland Source: EUROCONSTRUCT .
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RENOVATION DOMINATES HOUSING OUTPUT IN WESTERN EUROPE
share of new construction and renovation in european housing markets in in % New Housing Housing Renovation Source: EUROCONSTRUCT .
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TOTAL HOUSING PRODUCTION
FI average growth : 2.0% NO SE Western Europe: 1.1% Eastern Europe: 2.6% DK IR UK NL PL DE 4% and above BE CZ SK 2% to less than 4% AT HU CH 1% to less than 2% FR below 1% IT shrinking market PT ES Source: EUROCONSTRUCT .
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This brings us to non-residential construction.
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MINOR RECOVERY IN EUROPEAN NON-RESIDENTIAL CONSTRUCTION
non-residential construction output index 2013 = 100 Source: EUROCONSTRUCT .
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BEST OUTLOOK: NEW INDUSTRIAL CONSTRUCTION
new non-residential construction output index 2013 = 100 Source: EUROCONSTRUCT .
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POOR NON-RESIDENTIAL PERFORMANCE
gdp & non-residential construction Output index 2010 = 100 Poland, excluded Source: EUROCONSTRUCT. – Western Europe: Belgium, Denmark, Germany, Finland, France, Ireland, Italy, Great Britain, Netherlands, Norway, Austria, Portugal, Sweden, Switzerland, Spain. Eastern Europe: Czech Republic, Hungary, Poland, Slovak Republic.
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BIG-5 EUROPEAN COUNTRIES STAGNATION IN NON-RESIDENTIAL CONSTRUCTION
new non-residential construction output index 2013=100 BIG-5 Germany United Kingdom Italy France Spain Source: EUROCONSTRUCT .
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NORTHERN COUNTRIES average growth 2013-2016: +4.3%
new non-residential construction output index 2013=100 Denmark Ireland Finland Sweden Norway Source: EUROCONSTRUCT .
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SMALLER WESTERN EUROPEAN COUNTRIES average growth 2013-2016: +1.5%
new non-residential construction output index 2013=100 Netherlands Austria Switzerland, Belgium Portugal Source: EUROCONSTRUCT .
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CENTRAL EASTERN EUROPEAN COUNTRIES average growth 2013-2016: +2.5%
new non-residential construction output index 2013=100 Hungary Poland Czech Republic Slovak Republic Source: EUROCONSTRUCT .
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NON-RESIDENTIAL OUTLOOK
FI average growth : 1.2% NO SE Western Europe: 1.1% Eastern Europe: 2.6% DK IR UK NL PL DE 3% and above BE CZ SK 1.2% to less than 3% AT HU FR CH 0.6% to less than 1.2% below 0.6% IT shrinking market ES PT Source: EUROCONSTRUCT .
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CIVIL ENGINEERING OUTLOOK
gdp and civil engineering output index 2010 = 100 Poland, excluded Source: EUROCONSTRUCT. – Western Europe: Belgium, Denmark, Germany, Finland, France, Ireland, Italy, Great Britain, Netherlands, Norway, Austria, Portugal, Sweden, Switzerland, Spain. Eastern Europe: Czech Republic, Hungary, Poland, Slovak Republic.
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CIVIL ENGINEERING OUTLOOK
gdp and civil engineering output index 2010 = 100 Source: EUROCONSTRUCT. – Northern Europe: Denmark, Finland, Ireland, Norway, Sweden. Smaller Countries: Belgium, Netherlands, Austria, Portugal, Switzerland.
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ROAD SECTOR DOMINATES CE
STRUCTURE IN CIVIL ENGINEERING PRODUCTION OUTPUT 2013 EC EC-4 TELECOM & OTHER CE 2 bn. € TELECOM & OTHER CE 45 bn. € ROADS bn. € ROADS bn. € WATER 4 bn. € WATER 36 bn. € ENERGY 43 bn. € ENERGY 3 bn. € RAILWAY 45 bn. € RAILWAY 2 bn. € OTHER TRAFFIC 22 bn. € OTHER TRAFFIC 1 bn. € Source: EUROCONSTRUCT .
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ENERGY SECTOR AS GROWTH DRIVER
total civil engineering output index 2010 = 100 Source: EUROCONSTRUCT.
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CIVIL ENGINEERING OUTLOOK IN BIG-5 EUROPEAN COUNTRIES
total civil engineering output index 2013 = 100 Source: EUROCONSTRUCT .
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CIVIL ENGINEERING OUTLOOK
FI average growth : 1.5% NO SE Western Europe: 1.3% Eastern Europe: 4.5% DK IR UK NL PL DE 4.2% and above BE CZ SK 2% to less than 4.2% AT HU CH FR 0.5% to less than 2% below 0.5% IT shrinking market ES PT Source: EUROCONSTRUCT .
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SUMMARY Economic recovery is mainly driving European Housing
Civil Engineering HIGHEST RISK SLOW AND UNSTABLE OVERALL ECONOMIC DEVELOPMENT
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