BMI View : Our outlook for the French infrastructure sector remains subdued in 2015 and 2016 . A weak domestic economic environment and ongoing policy and regulatory uncertainty are undermining investor confidence and we expect to see limited gains in terms of fixed capital formation. Overall , we expect to see construction industry value contract in 2015 by 1. 5 % , before returning to minimal growth in 2016.
Key Trends And Developments
Weaknesses in France's labour market - both in terms of unemployment and lack of competitiveness - support our negative outlook on the country's construction industry.
The outlook for the housing market remains bleak, as economic uncertainty and stubborn unemployment rates prevent a recovery in the demand for housing. However, we have slightly reduced the y-o-y contraction forecast for 2015 this quarter and very slightly increased growth for the sector past 2015 on the back of a small recuperation in housing permit authorisations.
Transport infrastructure remains the strongest sector in France's construction market, with annual average growth of 3.0% expected throughout the forecast period to 2024. Railway projects attract the majority of the investment in the sector.
France's energy sector remains subdued and will lose market share to the more vibrant transport infrastructure sector throughout our forecast period to 2024. We are however increasingly optimistic on opportunities within the solar and wind power sectors on the back of improved regulatory clarity, strong government support and ambitious targets for non-hydropower renewable, as highlighted by our Power and Renewables team. This presents upside risks to our forecast over the coming quarters based on industry uptake and confidence towards financing the sector.
|f = BMI forecast. Source: National Institute for Statistics and Economic Studies, BMI|
|Construction industry value, EURbn||108.30||107.06||109.57||112.22||115.46||119.17||123.54|
|Construction Industry Value, Real Growth, % y-o-y||-3.59||-1.49||1.54||1.27||1.44||1.52||1.82|
|Construction Industry Value, % of GDP||5.1||4.9||4.9||4.8||4.8||4.8||4.8|
France's Infrastructure Risk/Rewards Index score remains subdued this quarter at 68.7, lagging its regional peers, ranking six out of 11 countries in the region.
With sub-2% y-o-y sector growth, its Industry Reward score remains limited, despite the size of the industry value.
A strictly regulated market, the dominance of large traditional domestic players, high unemployment and strong trade unions are prevent higher scores for Industry Risks. The country scores 75.0 for this variable, falling short of the developed market average of 80.9.
|Geography||Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The France Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's France Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the French infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for France to test other views - a key input for successful budgetary and planning in the French infrastructure market.
- Target business opportunities and risks in the French infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in France.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.