Boston, MA -- (ReleaseWire) -- 02/13/2013 -- BMI View: Our core scenario for the Greek construction industry envisages continued contraction in the industry value in real terms until 2015. From then until the end of our forecast period in 2021, we see the industry returning to positive growth territory; however, the modest growth from the infrastructure projects will fail to take the industry value to levels seen in 2007.
According to estimates from the Bank of Greece, domestic property prices contracted by 9.3% in Q112, 10% in Q212 and 12% y-o-y in Q312 - signalling a much steeper decline than the 2011 quarterly average decline of 5.3% y-o-y. Faced with weak economic growth prospects, reduced spending on planned projects and diminished demand from the private sector (owing to higher property taxes, tight credit and rising unemployment), there is little reason for investors to return to the market. However, the infrastructure sub-sector draws much of its strength from the fact that a large number of these projects are supported by the EU or will benefit from the convergence and cohesion funds Greece receives from the European Commission. Equally encouraging for the infrastructure sub-sector are the government's plans to privatise some of its infrastructure assets, which are expected to generate EUR50bn by 2015 and could open up the potential for capital investment by the new private owners into existing infrastructure.
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Key areas with growth potential:
?? Transport Infrastructure: In August 2012, Greek development minister Costis Hatzidakis announced that the government will increase its focus on new transport infrastructure projects to boost development in the recession-plagued economy. Key transport projects include an extension of the Athens metro network, completion of a metro network in the northern city of Thessaloniki, expansion of the suburban rail network and the regional ports of Patras, Igoumenitsa and Lavrion.
?? Renewable Energy: Greece's government is keen on making the country Europe's solar energy powerhouse, with up to EUR20bn being invested over our 10-year forecast period to 2021. The incentive, broadly named Project Helios, sees Greek solar power production multiplying by about 50 times, from 206 megawatts (MW) in 2010 to 2.2 gigawatts (GW) by 2020 and up to 10 GW by 2050. Industry participants are already positioning themselves to tap the growth the segment holds, with German solar-energy company Conergy AG and Athens-based MGD Energy the most recent players to announce plans to operate solar plants in Greece.
?? Privatisation Drive: In August 2012, it was reported that Turkish investors were looking forward to the privatisation of several Greek ports and marinas. The government is seeking to sell a 75% stake in Thessaloniki and Piraeus, as well as 43-66% stakes in other ports over 2012 and 2013.
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