Boston, MA -- (SBWire) -- 08/23/2013 --The Estonian construction industry recorded a CAGR of -6.69% during the review period. The housing market cooled in 2008 as interest rates began to rise and banks tightened their lending conditions. Deflation in the property market was one of the main reasons for the decline in domestic demand and was a major contributor to the country witnessing an economic contraction of over 14% in 2009. Investment in the infrastructure construction market went some way to supporting the construction industry during the period of economic downturn, recording the lowest decline in all construction markets during the review period, at -0.08%. Overall, a balanced growth with a focus on quality is forecast for the Estonian construction industry. Timetric expects the Estonian construction industry to record a CAGR of 5.83% over the forecast period.
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Key Highlights
- Estonia's real GDP growth dropped sharply from 8.3% in 2011 to 3.2% in 2012, owing to weak external demand emanating from the eurozone crisis. Reflecting weak external demand from Russia, Finland and Sweden (its key trading partners), export growth decelerated sharply from 22.9% and 23.4% in 2010 and 2011 respectively to 5.6% in 2012.
- Private consumption, which accounts for 52% of GDP, grew at a faster pace, from 3.6% in 2011 to 4.5% in 2012, supported by enhanced consumer spending and retail activity. Gross capital formation remained robust, recording a growth of 25.9% and 20.9% in 2011 and 2012 respectively, as new projects supported by EU funds and sale of CO2 emission allowances supported investment activity.
- Due to a slowdown in construction during the economic downturn, commercial real estate supply lags behind demand. There is an acute shortage of Grade-A office space and good quality Grade-B buildings. Since adopting the euro, interest from foreign investors has grown significantly, with major interest coming from Swedish and Finnish companies. Additionally, the country's IT sector has performed well even through the crisis and will demand good office space.
- The construction of retail buildings is expected to be supported by some large projects in the pipeline. Large shopping centers such as Rocca al Mare, Ulemiste and Kristriine are planning and executing extensions. Linstow International, the owners and developers of the Ulemiste centre in Tallinn have announced a EUR30 million extension for the centre, making it the largest mall in Estonia.
Companies Mentioned in this Report: AS Merko Ehitus, Nordecon AS, Nordic Contractors AS, EstNor OU, Skanska EMV AS
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Construction in Estonia - Key Trends and Opportunities to 2017: New Research Report Available at Fast Market Research
New Construction research report from Timetric is now available from Fast Market Research