BMI View : Currently, there is an attempt for rebuilding Hungary ' s construction sector. An increase in new homes built and in the number of building permits issued in H116 has led to a boom in construction sentiment following the 25.3% decline y-o-y in the volume of construction output over the same period, primarily caused by the completion of works performed from EU funds at end- 2015. The residential building industry and the railways and power plants and transmission grids sub-sectors will be the only growth drivers over this year. The construction industry will contract 14.5% y-o-y in 2016, with an average annual real growth of 1.4% 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. In June 2016, the volume of construction output decreased 16.2% y-o-y, the construction of buildings rose by 7.4% y-o-y as a result of the increase in industrial construction, while in contrast civil engineering works declined by 36.8% y-o-y due to the completion of works performed from EU funds at end-2015 (Hungarian Central Statistical Office, 2016).
In Hungary, road projects worth more than EUR200mn awarded to several local companies in June 2016.
The Hungarian government will allocate HUF790bn to railway projects.
As announced in mid-June 2016, Attila Aszodi, government commissioner responsible for the upgrade of Paks nuclear plant, stated the building permit for the two new blocks could be issued by 2018, the new blocks are expected to go online in 2025 and 2026, while Paks could receive an environmental certificate within 2016 (Budapest Business Journal, 2016).
As announced on July 13 2016, the value of commercial real estate transactions in Hungary in H116 tripled compared to H115, exceeding EUR910mn, which is more than 2015's total (JLL, 2016).
The demand for quality space remained robust on the industrial real estate market in Q216 in Hungary, mostly driven by renewals, but occupiers are still restricted by the low amount of available space suitable for their needs (Cushman & Wakefield, 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||1,069.12||1,090.50||1,206.64||1,282.66|
|Construction Industry Value, Real Growth, % y-o-y||5.76||12.31||2.92||-14.50||0.25||7.50||2.90|
|Construction Industry Value, % of GDP||3.4||3.7||3.7||3.2||3.1||3.2||3.3|
Hungary's score in BMI's Infrastructure RRI has declined this quarter to 55.6 out of 100, compared to 60.1 in the previous quarter, while the regional average remains at 61.6.
Hungary's Industry Rewards score is its poorest showing in BMI's Infrastructure RRI; at 40.0, it is lower than the regional average of 50.6.
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.
|Geography||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.