BMI View : Hungary ' s construction sector growth will continue to be backed mainly by EU funds; in the transport infrastructure industry, road and rail projects will benefit mostly, while in the energy and utilities infrastructure industry, the power plants and transmission grids as well as the oil and gas pipeline sub-sector will experience higher growth. Residential building industry will grow substantially due to high disposable household income, as a result of an improving economic performance, decreasing unemployment rate and low inflation. The construction industry will expand 1.9% y-o-y in 2016, with an average annual real growth of 2.9% over 2016-2025.
Latest Updates And Structural Trends
Civil engineering projects have been the primary drivers of the construction sector rebound, with road and railway projects in particular, driving the civil engineering growth. However, in January and February 2016, the volume of construction output decreased 20.1% and 19.2% y-o-y, respectively, the construction of buildings also declined by 12.6% and 8.6% y-o-y, respectively as well as civil engineering works by 28.5% y-o-y in January and by 35.4% y-o-y in February. In 2015, the figures were positive, as the volume of construction output increased 3.0% y-o-y, the construction of buildings increased 4.8% y-o-y and civil engineering works 1.6% y-o-y (Hungarian Central Statistical Office, 2016).
According to Hungarian news agency MTI, the government and the European Commission reached a political agreement, significant for the country, in a dispute over road construction tenders, Cabinet Chief Janos Lazar stated on April 8, 2016 (Budapest Business Journal, 2016).
Hungary is able to draw EUR40mn of EIB road development loan directly and the remaining EUR100mn can be received in two tranches after the clarification of contract details and conditions, as Agnes Hornung, Hungarian Economy Ministry state secretary, stated on March 8, 2016 (Budapest Business Journal, 2016).
As announced on March 29, 2016, the bank CIB Group anticipates further recovery on the Hungarian property market due to favorable investment environment and several state incentives, such as a VAT rate cut and new home purchase subsidies for families with children (CSOK) (Budapest Business Journal, 2016).
|e/f = BMI estimate/forecast. Source: Hungarian Central Statistical Office, BMI|
|Construction industry value, HUFbn||1,027.56||1,178.99||1,243.16||1,289.66||1,370.90||1,462.07||1,554.38|
|Construction Industry Value, Real Growth, % y-o-y||5.76||12.31||2.92||1.94||3.40||3.25||2.91|
|Construction Industry Value, % of GDP||3.4||3.7||3.8||3.8||3.8||3.9||3.9|
Hungary's score in BMI's Infrastructure RRI has declined slightly this quarter to 60.1 out of 100, compared to 60.3 in the previous quarter, while the regional average is 61.6.
Hungary's Industry Rewards score is its poorest showing in BMI's Infrastructure RRI, at 50 it is slightly lower than the regional average of 50.3.
Although Hungary has a competitive and open infrastructure market, the lack of transparency in the tendering process has affected its market image. Compared to the regional average of 67.1, Hungary scores 65 in terms of Industry Risks.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Hungary 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 Hungary Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Hungarian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Hungary to test other views - a key input for successful budgetary and planning in the Hungarian infrastructure market.
- Target business opportunities and risks in the Hungarian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Hungary.
- 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.