After three years of clear upswing, there are now signs of a levelling off in the Scandinavian construction and civil engineering market, mainly as a result of a change of pace in the housing market in Oslo and the Stockholm region.
"A slight cool down in the housing market after record growth in 2016 might be positive, from a long-term industrial perspective. The overall construction and civil engineering market in Scandinavia remains strong, despite the expected slowdown in growth in 2018 and 2019, and the outlook for the civil engineering market in particular looks bright," says Kristoffer Eide Hoen, Director of Analysis at Veidekke ASA.
Norway: Continued strong market, despite a levelling off in the residential segment
The Norwegian construction and civil engineering market is looking strong going forwards, even though the housing market is now at a turning point that will eventually result in a decrease in production volumes.
"The contractors are still seeing increasing production volumes and order backlogs, but the decline in sales of new homes will lead to a decrease in production volumes in three to four quarters' time. In light of the great significance of the residential segment in the industry as a whole, we expect to see the first downturn in overall construction and civil engineering production volumes since 2009 in 2019," Eide Hoen explains.
Sweden: Overall, a strong market until the end of 2019, although growth will slow down
There is still high optimism in the Swedish construction and civil engineering industry, and orders are strong.
Both the private and the public sector have offensive investment plans, and the demand for homes remains good. However, sales of new homes have normalised after a strong 2016, leading to slightly fewer housing starts going forwards.
"After several years of exceptionally strong growth, a slight slowdown in 2018 and a gentle decline in activity in 2019 will probably be good for the industry as a whole. We expect the production growth in the residential segment to swing to a moderate slowdown at the beginning of 2019," continues Eide Hoen.
Denmark: Growth from a low level
The Danish construction and civil engineering market is in an upswing, but is still primarily driven by the growth in the residential segment.
"We expect the growth rate in the residential segment to remain high through to the end of 2019. In addition, the vacancy rate for offices and wholesale and retail trade is on a downward trend, which is very positive. It looks like the Danish construction market is finally starting to pick up," concludes Kristoffer Eide Hoen.
For more information, please contact:
Kristoffer Eide Hoen, Director of Analysis, Veidekke ASA, tel. (+47) 976 75 434, kristoffer.eide.hoen@veidekke.no
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Veidekke is one of Scandinavia's largest construction and property development companies. The company undertakes all types of building construction and civil engineering contracts, develops residential projects, maintains roads, and produces asphalt and aggregates. The company is known for its involvement and local knowledge. Its annual turnover is NOK 30 billion, and around half of its 7,400 employees own shares in the company. Veidekke is listed on the Oslo Stock Exchange and has always posted a profit since it was founded in 1936.
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| Presentation Economic Activity Report September 2017 |