Logo

36
issue
36 (131) 2018
Download PDF-version

Events Coverage

Has Poland’s construction boom reached its peak?

Header kwadrat p

Members from across the construction and real estate sector met for breakfast at the BPCC’s offices on 18 July to discuss the state of trade, to share insights and consider future prospects.

Despite this being the peak of the holiday season, there was a full house for the meeting, and with many different voices representing civil engineers, project manager, contactors and advisors present, the event yielded many interesting points of view.

Key issues for the sector continue to be ever-rising building-material prices and labour shortages, particularly on building sites. Contracts signed a year and half ago, before the market began to display signs of overheating, are in jeopardy as the rising costs borne by contractors affect performance.

Firms are waiting to see how the changes to the law on Special Economic Zones will affect the market – initial reports suggest a new interest among developers in eastern cities like Rzeszów, Lublin and Białystok, several members have observed a quiet move of factories and offices to Poland from the UK, driven by ongoing Brexit uncertainty.

Another interesting market trend is the shift towards co-working space; it was reported that one in three offices being built in Warsaw today is being earmarked for such use.

The political changes regarding Poland’s supreme court judges have left foreign investors with the feeling that should they ever have a legal case with the Polish public sector, they are unlikely to win a fair trial in Polish courts. This will affect the quality of construction firms – and hence quality of buildings and infrastructure – procured by the Polish state, as private-sector firms, especially foreign ones, the market as being too risky for them.

Labour was another topic of universal interest. Some insights – the peak of project planning and design has passed; the high tide has now moved on to building sites. It is here that governments’ past neglect of vocation schools is most felt. Labour from Ukraine is footloose – once Ukrainian builders have amassed the experience and skills most sought after from an employer, they tend to move west in search of higher pay. On the other hand, firms are reporting interest among recently-qualified Spanish and Italian engineers and architects, whose salary expectations are modest, even by Polish standards.

On the legal side, there is a greater readiness among investors and contractors to settle out of court, and an understanding that cooperation with one’s lawyers from the very outset of a project – and not just when things start to go wrong – is beneficial to all parties. Insurers too are becoming attuned to the specific needs of the sector. Some already can offer policies to protect investors and contractors against loss of profit caused by rising prices, based on actuarial assessments of the risks.

The main area of the open discussion, however, was the question of whether or not the market has peaked. The consensus was that the market is being kept buoyant by EU-funded infrastructure projects, and that once this financial perspective is finished, the next one will be far less generous. Until then, demand for labour and materials will stay high. But current boom is unlikely to turn to bust as hard or as fast or as unexpectedly as the crash of 2008/09. Greater financial transparency, and a greater awareness that things can go wrong mean that – while the peak may already be behind us, the next downturn is more likely to be a correction than a crash.

One bellwether is the hotel market. Just before a market peak, occupancy rates reach a point where the hotel business becomes profitable. At this point, hotel-building projects become attractive to developers and many new players enter the market – this, one member said – is happening now.

Meanwhile, as BPCC members shared their market observations, the Polish statistical office published the latest construction output figures for June 2018… up 24.7% up on June 2017 (which itself was 11.6% up on June 2016)! The consensus expectation was 20.2%, which suggests there is still some upside left in the market.

More in Events Coverage:

1st After Summer Business Cocktail in Gliwice

British-Polish Chamber of Commerce is becoming more and more active in the regions and organises activities at the sites of its members across south of Poland.

BPCC panel discussion in Kraków considers the future of the world of work

Algorithms and robots will be responsible for something between 30% and 45% of all existing jobs disappearing by 2030, according to reports by organisations like PwC and the Economist Intelligence Unit. At the same time, Poland (and most advanced economies around the world) faces a demographic dip. Will shortages in the workplace cancel out job losses created by technology? Or will one exacerbate the other?

14 International Oktoberfest in Wrocław

Wrocław's 14th International Oktoberfest maintained its famed profile as one of the largest and most prestigious business events in Lower Silesia.

CEO Breakfast in Warsaw looks at future needs of Poland’s labour force in light of workplace automation

Workplace issues surrounding the introduction of technology were discussed at a CEO Breakfast held in the Sheraton Hotel Warsaw on 21 September 2018.