There is a clear divide in the construction trends between the East and West European marketplaces and a significant change of development within the United Arab Emirates (UAE) region, according to new research.
Eastern Europe has shown growth whereas the construction sector in the West has seen demise, reported Rider Levett Bucknall’s latest European Cost Commentary. The extraction from Europe of skilled management and site labour to the UAE is also drying up as the Emirate countries become affected by global economic events although Saudi Arabia seems to be buoyant.
The bi-annual construction industry review is compiled using market intelligence from more than 30 countries across Europe which includes the Rider Levett Bucknall partners within the RLB EuroAlliance network that was officially launched last autumn.
The commentary includes an overview on the market conditions in each of the European countries where Rider Levett Bucknall has a presence as well as including a summary of the global economic environment to ensure the European data is correctly set in a wider context. Lance Taylor, chief executive of Rider Levett Bucknall, said: “Despite the doom and gloom there appears to be some positive news.
“ At the time of our research the Eastern European market had risen by six per cent in 2008 led by Poland, is and is forecast to grow by up to five per cent during 2009. Germany is the only country to have grown in Western Europe with the remainder of the countries suffering an average three per cent fall in output. Ireland and Spain have been the worst hit.
“We also work closely with Euroconstruct, the main network for construction, finance and business forecasting in Europe. They predict that total European output is expected to fall by over four per cent in 2009 following a 2.5 per cent decline in 2008. Moderate growth of 0.4 per cent is expected in 2010, picking up to 2.2 per cent in 2011, all of which falls in line with RLB’s independent analysis from our representatives across the globe.
“In many countries, it is the government that is seen as the main source of work, with investment in infrastructure projects in particular at least partly making up for the falls in the private residential and commercial markets.
“While the mature construction markets will experience recession this year, these will be compensated for by the continued growth in the developing regions of the world including the BRIC countries of Brazil, Russia, India and China.
“Effectively predicting past 2010 at this stage is not feasible due to a wide range of conflicting opinions amongst forecasters in the wider economy, although there are murmurings of a green shoot recovery with the Bank of England suggesting economic conditions will begin to lift by the end of this year and the IMF report that the recession will continue well into 2010.
“What RLB does suggest is that next year tender prices will continue to fall although not to the same magnitude as this year as there will be effectively nowhere to go in terms of price reduction against a backdrop of increasing costs.”