Sales and construction of new apartments and houses will slow down next year and it will be important for the state to maintain planned spending on transport construction. Builders generally expect a slight decline next year and are hoping for a promised acceleration of the permitting process and certainty of investment in the longer term so they can plan effectively for the long term.
The construction industry will be affected in 2023 by the cooling of the Czech economy that began this year with high inflation, rising prices for building materials, labour, energy and rising mortgages. “Times will be difficult. We will see how the situation develops in terms of the investment appetite of the public sector and we will see if the situation will calm down,” said Jiří Nouza, president of the Union of Building Entrepreneurs.
The State Fund for Transport Infrastructure (SFDI), which is expected to manage CZK 150.9 billion next year, is important for transport construction. The Directorate of Roads and Motorways will receive CZK 65.5 billion and the Railway Administration CZK 70.4 billion. For the Directorate of Waterways, the budget provides for CZK 1.15 billion. Another part of the money from the fund will be earmarked, for example, for cycle paths or the introduction of transport technologies. The SFDI will send CZK 6 billion to lower-class roads managed by regions.
According to Strabag spokeswoman Edita Novotná, it is questionable whether the state will not cut investment budgets during the year due to the expected pressure on mandated expenditures of an across-the-board nature, for example, in connection with solving the energy crisis. “It will therefore be crucial for the government to find a way to finance the long-underfunded infrastructure construction,” she said. She appreciated that the current government was finding a way. Whether it is a loan from the European Investment Bank to modernise the Czech rail network or plans to involve private financing in PPP projects, she said.
Developments in the war in Ukraine will continue to play a role in the construction sector. “We expect the economy to cool down, so our priority is to maintain employment and stability for our employees,” Metrostav said. Peter Markovic, CEO of Xell (Ytong manufacturer) for the Czech Republic and Slovakia, added that no dramatic drop will come, only in units of percentages.
Petr Vaněrka, CEO of Pro Doma construction companies, said that the influence of energy prices, raw materials, emission allowances or labour cannot be ignored. “On the other hand, the extent to which some producers will be willing to give up their profits and the impact this will have on the final price will also be decisive. Somewhere there is a lot of room and somewhere there is no room. The recession can reach up to a 40 percent drop in output for some materials. Elsewhere, for example in insulation systems, it can be units of percent,” he said.
There is likely to be a reduction in orders for residential and office construction, which, in addition to rising material and energy prices, is being caused by expensive mortgages. “So renovations will play a more important role. The Czech housing stock is still relatively outdated and people want to live better and more modern and financing reconstruction is more affordable in terms of overall investment,” Markovič said.
All agreed that construction procedures need to be speeded up, and they look to digitisation and transparency of processes to reduce overall administration. A drop in interest rates would help revive the civil engineering sector. They identified investment continuity and certainty as crucial. “Whether from the private or public sector. When investment changes by tens of billions year-on-year, we have a shortage or, conversely, an excess of capacity. And this is a serious problem, extra costs are incurred. A stable financial source and planning investments long in advance would help us significantly,” Nouza said.
Novotná also pointed to another long-term problem that needs to be addressed, which is the lack of qualified personnel in all construction fields. From apprentices to university-educated technicians. Qualified employees are an essential and necessary condition for the introduction of new technologies and the digitalization process, said Novotná.
Source: CTK
