Europe Construction Market Report 1Q 2024
Poland
Local economic indicators
Gross domestic product (GDP)
Statistics Poland has released its January flash report giving preliminary figures for the growth of both GDP and gross value added (GVA) in construction for 2023, 0.2% and 3.4%, respectively. Its latest quarterly flash report also claims a seasonally adjusted, year-over-year (YoY) increase in GDP of 1.7% and stability when compared to the previous time period, Q3 2023. The GVA of the construction industry exhibited growth of 1.6% and 0.4% over the same respective time periods.
The Organisation for Economic Co-operation and Development (OECD) has revised its GDP growth forecasts, lowering the 2023 projection from 0.9% to 0.4% and increasing the 2024 forecast from 2.1% to 2.6%.
Inflation
The preliminary data for January from Statistics Poland indicates local inflation reached 3.9% in January, a rise of 0.4% compared to the previous month. Eurostat's Harmonised Index of Consumer Prices (HICP) for January is yet to be published but is expected to corroborate the local inflation figures. The OECD predicts final inflation for 2023 to have been 11.8% and forecasts a steep decline to 4.7% in 2024, in line with the current trajectory.
Construction materials
In recent months, there has been a significant slowdown in material and service price growth in the Polish construction market. In the case of some materials, there is even a noticeable reduction in prices.
The above is due to the stabilisation of supply chains seen in 2022 due to the outbreak of the war in Ukraine, as well as the reduction in the number of investments on the Polish construction market, which has an impact on price stabilisation — both in terms of state and private investments.
The Gleeds materials price table below has been updated from previous reports:
Market outlook
The construction confidence indicator stood at -19.5 in January, a slight 0.5 point decrease from December's -20. This stability stemmed from improved employment expectations, shifting from -9.7 to -6.8, counterbalanced by a decline in the order book from -30.2 to -32.1.
Regarding the primary constraints on building activity in Poland, labour shortages persist as the foremost issue, registering at 73.9 in January and averaging 72.6 throughout 2023, marking a notable increase of 34.9 points compared to 2022's average of 37.7. Additionally, material and equipment shortages remain persistently elevated, although dipping by 5.5 points in January to 49.4 from December's 54.9. In terms of weather-related constraints, Poland reported a figure of 32.4 in December, which decreased slightly to 31 in January, yet remains the highest reported since February 2021 (38.4).
As per assessments from experts in our local office, the Polish construction market witnessed increases ranging from 5% to 10% in tender prices during 2023, with a comparatively smaller figure of 2% predicted for 2024.
Gleeds recommends revising previously set project budgets to present-day figures based on local statistical information, our own internal data and 1Q 2024 forecasts. Additionally, we advise investors to consider inflation contingencies in their budgets as materials and labour shortages remain unpredictable.
Nobu Hotel, Warsaw, Poland — Gleeds Project Management, Cost Management, Quality/Construction Supervision and LEED Certification and Consultancy services.
