BMI View : Hungary's construction sector is investment-thirsty, but the continuous decline y-o-y in the volume of construction output during the first eight months of 2016, primarily caused by the completion of works performed from EU funds at end-2015, will lead the construction industry to a contraction of 14.2% y-o-y in 2016. The residential building industry and the railways and power plants and transmission grids sub-sectors will be the only growth drivers over this year. In 2017, the country ' s construction sector is expected to recover, recording a slight growth of 0.25% y-o-y.
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. In August 2016, the volume of construction output decreased 9.0% y-o-y, the construction of buildings rose by 7.0% y-o-y as a result of the increase in industrial construction, while in contrast civil engineering works declined by 23.9% y-o-y due to the completion of works performed from EU funds at end-2015 (Hungarian Central Statistical Office, 2016).
The ex-post evaluation of EU Cohesion Policy programmes during the 2007-2013 funding cycle showed about 55% of the funding in Hungary was invested in transport and environmental infrastructure. The country built 502 km of new roads and 20 km of railway lines, while 2,521 km of existing roads and 216 km of railway lines were upgraded (Budapest Business Journal, 2016).
The Hungarian government earmarks HUF1.2trn for railways by 2022, while some 80% of the costs are reportedly set to be covered by the EU (Budapest Business Journal, 2016).
The Parliament of Hungary enacted the Renewable Energy Support System, known as METAR, in mid-June 2016; the new regulatory and support scheme for electricity generation from renewable energy sources (RES). Through METAR, Hungary aims to meet its undertakings in the field of RES generated electricity by 2020.
|e/f = BMI estimate/forecast. Source: Hungarian Central Statistical Office, BMI|
|Construction industry value, HUFbn||1,027.56||1,178.99||1,243.16||1,069.12||1,089.97||1,205.50||1,281.45|
|Construction Industry Value, Real Growth, % y-o-y||5.76||12.31||2.92||-14.15||0.25||7.50||2.90|
|Construction Industry Value, % of GDP||3.4||3.7||3.7||3.2||3.1||3.2||3.2|
Hungary's score in BMI's Infrastructure RRI has increased this quarter to 60.3 out of 100, compared to 55.6 in the previous quarter, while the regional average stands at 61.4.
Hungary's Industry Rewards score is its poorest showing in BMI's Infrastructure RRI; at 50.0, it is very close to the regional average of 50.2.
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 65.0 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.