Boston, MA -- (SBWIRE) -- 06/19/2014 -- The Portuguese construction industry recorded a compound annual growth rate (CAGR) of 10.67% during the review period (2009-2013) and valued EUR19.1 billion (US$25.4 billion) in 2013. During the review period, all construction markets registered negative growth, owing to the financial crisis and austerity measures implemented by the government. Although export demand has improved, the economy remained weak and the recovery is vulnerable to external risks. Until consumer and business confidence is revived, general spending and investment will remain low, undermining the prospects for construction activity growth. The construction industry's output is, therefore, expected to record a nominal CAGR of 1.06% over the forecast period (2014-2018), to reach EUR20.2 billion (US$28.4 billion) in 2018.

Report Highlights

- For the past decade, Portugal's construction industry has been in a state of decline. According to Statistics Portugal (Instituto Nacional de Estatistica - INE), in 2013, construction production activity was equivalent to just 40.0% of the total in 2003. The pace of decline quickened in 2012 and 2013, when the annual decline reached 16.0%. Construction value added in real terms declined from EUR6.4 million (US$8.2 million) in 2012 to EUR5.5 million (US$7.3 million) in 2013, while the contribution of total construction industry's value add to GDP in nominal terms declined from 4.4% in 2012 to 3.8% in 2013. There has also been a decline in the number of building permits issued in the country; the total fell to 16,700 in 2013, a decline of 19.6% over 2012. The number of completed buildings dropped to 19,700 in 2013, a decline of 24.1% during the same period.
- In 2011, the government introduced the new toll charges on roads stretching more than 900km. The charges resulted in a decline in traffic and affected investments in road infrastructure. According to Inrix, a leading provider of traffic services, congestion was reduced by 68.0% in the first quarter of 2013. Portugal's infrastructure projects are primarily financed by public private partnerships (PPPs) and in 2012 the government decided to renegotiate these contracts with private firms to generate savings and reduce the PPP obligation by 30% over the next 30 years. Owing to these situations, the investment in the road infrastructure category is likely to decline over the forecast period.
- In a bid to meet the targets set out by international lenders, the government has had to implement austerity measures. The government reduced its education spending from a peak of EUR8.5 billion (US$11.2 billion) in 2010 to EUR6.8 billion (US$8.7 billion) in 2012, with some of this saving coming from school closures. The number of schools was reduced by 1,200 to reach 6,292 for the academic year 2013-2014, and as such, future investment in new educational buildings is expected to be minimal.
- According to the INE, the movement of goods in ports increased by 20.2% in the fourth quarter of 2013, whereas railway freight transport increased by 8.0%. The road freight transport registered an increase of 19.9% in the fourth quarter of 2013. The upward trend in the transport of goods is likely to continue due to improvements in export demand, which, in turn, will attract investment in the transport infrastructure over the forecast period.
- According to the World Travel and Tourism Council, the direct contribution of tourism to the country's GDP reached EUR9.4 billion (US$12.8 billion) in 2012 and is expected to increase by 2.0% annually by 2023. The number of foreign tourist arrivals in the country increased by 8.1%, to reach 3.6 million in the first half of 2013. Due to an increasing number of tourists, investment in the leisure and hospitality buildings category is expected to increase. Various upcoming projects, such as the Monte Nabo Hotel Resort & Spa, worth EUR24.0 million (US$30.0 million) and Palmares Beach and Golf Resort in Algarve, worth EUR313.1 million (US$412.0 million), will support growth in the commercial construction market.

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Report Scope

This report provides a comprehensive analysis of the construction industry in Portugal. It provides:

- Historical (2009-2013) and forecast (2014-2018) valuations of the construction industry in Portugal using construction output and value-add methods
- Segmentation by sector (commercial, industrial, infrastructure, institutional and residential) and by project type
- Breakdown of values within each project type, by type of activity (new construction, repair and maintenance, refurbishment and demolition) and by type of cost (materials, equipment and services)
- Analysis of key construction industry issues, including regulation, cost management, funding and pricing
- Detailed profiles of the leading construction companies in Portugal

Companies Mentioned in this Report: Grupo Soares da Costa SGPS SA, Sociedade de Empreitadas e TrabalhosHidraulicos SA, Martifer SGPS SA, Conduril - Engenharia SA, Mota-Engil Group

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