BMI View: After five years of industry contraction, the construction sector is once again growing since 2014 , along with the economic recovery of the country. A slowly recovering economy, lower unemployment and rising consumer confidence will provide a moderate increase for residential and non-residential construction. While Slovenia's transport sector dominates the country's infrastructure industry, we highlight the rising importance of gas interconnector projects in the energy and utilities sub-sector as some of the most important infrastructure projects going forward. These will receive EU funding related to diversifying energy sources and limiting Russian gas dependence.
We expect the Slovenian construction industry will grow moderately over the forecast period to 2025, at an average annual rate of 5.03%.
As for the construction subsector mix, there will be very little change in dominance over our forecast period to 2025. Residential and non-residential construction will continue to represent roughly 57-58% of total construction industry value; transport infrastructure about 31%; and energy and utilities about 11%. Transport will contribute around 73% to total infrastructure value, with roads and bridges dominating transport spending. Energy and utilities will contribute 27% to infrastructure value over this period. Within the Energy and Utilities, we note water infrastructure, which has accounted for at least half of Slovenia's energy sector value for many years, will begin to lose some of this long-held dominance to the power plants, transmission grids and oil and gas pipelines subsectors, as they receive EU funding related to diversifying energy sources and limiting Russian gas dependence. This will notably be the case through gas interconnector projects.
Key Trends And Developments
Principal Airport To Finally Expand: In September 2014, German airport company Fraport acquired a 75.5% stake of Slovenia's principal airport Ljubljana International's operator Aerodrom Ljubljana. Fraport signed an agreement with a consortium led by SDH to buy the stake for EUR177.1mn (USD224mn). SDH received about EUR16mn (USD20.24mn) for its 6.82% stake in Aerodrom Ljubljana, while the Slovenian government received EUR118.8mn (USD150.26mn) for a further 50.67% in equity. Fraport made the partial acquisition with the intention of purchasing the remaining 24.5% stake in the future, as it views the airport as a long-term investment. It is hoped Fraport will re-energise what's been a faltering process of modernisation at the airport, which has struggled to push through on promises laid out in its Master Plan.
European Funding To Energise Energy And Transport Sectors: The EU's projects of common interest (PCI) and trans-European energy networks (TEN-E) initiatives provide access to funding to enhance the effective operation of the internal energy market; ensure security and diversification of supply; strengthen territorial cohesion; and promote sustainable development. The European Commission has outlined 248 priority energy PCIs, which will not automatically receive EU funding, but are eligible for financial support from the EUR5.85bn CEF budget for TEN-E between 2014 and 2020.
The energy and utilities sector will grow at a moderate 4.7% annual average growth rate over 2016-2025. This will largely be pulled by the power plants and transmission grids and oil and gas pipelines subsectors, as they receive EU funding related to diversifying energy sources and limiting Russian gas dependence. Various gas interconnector projects are set to be the key projects over our forecast period.
In terms of the transport sector, we expect the ailing railway network will be the transport infrastructure priority for the coming years, shifting focus away from the motorway system. We maintain that the EU's raft of transport network project funding announced in 2013 will benefit Slovenian road and rail development/upgrading to better integrate with a European network.
Residential And Non-Residential Building Still Lagging: A slowly recovering economy, lower unemployment and rising consumer confidence will provide a moderate increase for residential and non-residential construction. Nevertheless, we do not expect to see any surge in growth, as demand for residential will remain modest due to modest economic performance relative to that before 2008; the large stock of unsold and empty dwellings in the market discouraging new investments in the sub-segment; and the Slovenian banking crisis making mortgages difficult to get approved.
|f = BMI forecast. Source: Statistical Office of the Republic of Slovenia|
|Construction industry value, EURbn||1.90||2.02||2.17||2.35||2.53||2.71||2.91|
|Construction Industry Value, Real Growth, % y-o-y||2.85||5.06||5.68||5.89||5.63||5.40||5.20|
|Construction Industry Value, % of GDP||4.9||5.0||5.2||5.4||5.5||5.7||5.8|
Slovenia remains in sixth position regionally in 2016, with the outlook for the domestic economy and infrastructure sector improving, but with much of this coming from a very low base.
The country scores poorly overall in terms of Industry Rewards, reflecting both the small size of the market and the weak economy, which continues to dog the local construction market. Despite a strong return to growth in 2014, industry activity will remain steady as opposed to displaying strong growth to 2025. The country scores 55.0 in this category.
Corporate and bank debt could impact financing for major projects severely, with downside risks to the country's Country Risk over the coming years should the situation not improve.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Slovenia 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 Slovenia Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Slovenian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Slovenia to test other views - a key input for successful budgetary and planning in the Slovenian infrastructure market.
- Target business opportunities and risks in the Slovenian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Slovenia.
- 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.