In December
1990, Lech Walesa was sworn in as the first non-communist Polish
president since the second world war. Since that period, Poland has
experienced a particularly turbulent history, both economically and
politically, with a number of factors influencing the overall growth
of the country.
Since
Poland joined the EU in 2004, the country has experienced a more
stable economy, despite a less predictable political landscape.
Inflation growth has been averaging around 1-2% per annum in the
last 2-3 years and interest rates are now more in line with Western
European countries. In addition, rising levels of investment, both
in the private and public sector, also point toward the likelihood
of a healthy economy, buoying construction industry prospects in the
medium to longer term.
The overall
Polish construction and refurbishment market is currently estimated
to be worth around £8 billion, with new build activity
representing around 70% of the market. The overall industry has
performed well since 2002, with the market expected to reach a value
in excess of £10 billion by 2010.
Repair,
maintenance and improvement (RMI) activity continues to gain share
of the overall Polish construction and refurbishment market, and
indications are that this trend will continue at least for the short
term.
Whilst
actual volumes of new build units have remained relatively static,
this sector is being stimulated by a continued rise in the average
size of newly constructed buildings, boosting project values
considerably. Increasingly, contractors are designing and building
larger residential homes with this trend also evident, albeit to a
lesser extent in the non-domestic sector.
In addition
to the growth in the average size of new build projects, the overall
market value is being stimulated by rising labour costs, as a
shortage of skilled labour increasingly impacts on the sector.
However, given the particularly high levels of unemployment in
Poland at present, this issue is unlikely to present significant
long term problems, with an abundance of unemployed people willing
to train and work in the Polish construction industry. This market
is becoming an increasingly attractive sector in which to work given
the continued healthy annual increases in salaries, as contractors
struggle to retain skilled labour from emigrating to Western Europe
where wages are significantly higher.
Optimism
remains high in late 2006/early 2007 with the majority of building
contractors indicating that order books, output and turnover are all
reportedly higher than was the case in 2005 – a consistent trend
since 2003 at least. This should therefore equate to a healthy rise
in completions in 2007 – a trend which trade sources suggest will
continue in the short to medium term.
Between
2007 and 2013, more than £40 billion has been allocated through the
National Cohesion Strategy, of which more than £25 billion
can be directly linked as being of benefit to the construction
industry, particularly in terms of construction development of
Poland’s infrastructure.
Building
product supply in Poland is dominated by the large international
manufacturers such as Saint Gobain, Kronopol, Atlas and Heidelberg.
All of these operations have manufacturing plants in Poland, taking
advantage of key factors such as lower labour costs, and
geographical location for distribution facilitation. In terms of
building products distribution in Poland, the market remains highly
fragmented, with a small number of large international players
dominating the key channels.
Building
contractors in the Polish Construction industry are continuing to
experience high levels of activity, with some key players recording
growth in turnover in excess of 70% between 2004 and 2005. Within
the top 500 Polish companies, there are 14 construction contracting
companies, operating with a combined turnover currently in excess of
£2.5 billion. This total turnover in 2005 reflects an increase of
more than 20% since 2004.
In general,
construction and refurbishment activity levels in Poland are among
the highest growth rates in Europe. In addition, this trend is
unlikely to wane to any great extent, for the short to medium term
at least. Obviously there remain some slight concerns regarding the
political make-up of the Polish government, with some sources
suggesting that right wing activists may still have a great deal of
power. Nevertheless, the membership of the EU should ensure that
investment in the country remains fairly high and this should in
turn negate any strongly negative sentiment toward the EU in the
short to medium term.
