Western Mainland Europe Construction Market Report 1Q 2023
Italy
Gross domestic product and inflation
Early estimates of Italy’s yearly gross domestic product (GDP) growth during 2022 are nearly 4%. Forecasts for 2023 maintain positive rates, although reduced in the first half of this year.
It appears the worst of inflation for Italy has passed, as December 2022 and January and February 2023 produced subtle improvements, currently reported at 9.2%. The Organisation for Economic Co-operation and Development (OECD) predicts an inflation rate of 8.6% by the end of 1Q 2023.
Construction materials
The overall industrial producer price index continued to rise through 4Q 2022, although minor reductions were detected in some steel items and electrical distribution.
The European Union (EU) price cap will be applied to the Italian market with maximum gas prices set by the Italian Regulatory Authority for Energy, Networks and Environment (ARERA).
Authorities are confident of a gradual diminishing of energy prices beginning in the next quarter. The mild winter reduced demand on local gas reserves, allowing authorities to focus on defining new strategies to increase energy efficiency.
Market outlook
After striking a low of 0.4 points last November, the construction confidence indicator has stayed above 3.5 points for the last three months. This improved outlook is largely due to employment expectations rising in February to 8.1 points after a low of 1.1 point in November 2022. Though work continues, other factors measured in the survey, such as materials shortages and anticipated price increases, indicate that industry challenges persist.
As part of the Recovery and Resilience Facility set out by the EU to be completed by 2026, Italy’s digital connectivity proposals are driving the need for data centres, making the country a leader in megawatt development amongst EU member states.
Following government investment, particularly in the supply of gas, there is general confidence that current energy policies will support the swift development of new infrastructure.
The start of 2023 has seen private investors renewing interest in sectors such as offices, student residences and hotels. Generally, investments are driven by satisfactory cost savings whilst maintaining quality, in order to achieve previously targeted rental returns.
At Gleeds, we support our clients to define bespoke budgets for each of their assets, leading them through the delivery process while working specifically on cost estimating and management.
