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Kicking off

Eurobuild Poland 07/05/2007

The industry has a battle on its hands more testing than the fiercest derby match

Poland will be co-hosting the European football championships in 2012! – perhaps the most surprising and welcome news this year. The construction industry also has a smile on its face.

Now that the initial elation has subsided, let us take a measured look at what the decision means for the growth of the Polish construction market. This is what the experts have to say:
Marta Dziarnowska, central Europe regional director, Arcelor Mittal
This is surely going to prove a real challenge for our economy. Building materials are already at a premium on the market, so problems could arise with supplying sufficient quantities to build Euro 2012 facilities. New large projects will create even greater headaches for residential market developers. The most urgent question requiring an immediate answer is weather Poland can make proper use of European Union funds. As far as my company goes, Euro 2012 will generate huge advantages, since steel is generally used in stadium construction. We believed Poland would come out on top long ago and now we must make full use of the opportunity to also promote steel as a building material. Unemployment is bound to fall in all market sectors. We can expect a real economic boom.
Krzysztof Kałuża, board member, Tebodin SAP-Project
Organizing Euro 2012 will have a clear influence on the growth rate of the construction industry. The need  for an urgent improvement of the transport infrastructure will enforce changes and the acceleration of investments in that field, especially for the construction of the A4 motorway – the section to the Ukrainian border – and the S5, between Wrocław and Poznań and further on the section linking it with the A1. This investment has been on the backburner and now ought to become one of the most urgent  priorities. Local airports are also certain to be enlarged, while the  second line of the Warsaw underground railway will be built more rapidly, at least the section linking the National Stadium. Investments in new building materials factories will now be sure to increase in importance, since the amount of materials produced will have to grow.
These are definitely going to be golden years for construction companies. Investment market firms however will need more government support. The government and parliament must change the law on employing foreign workers, making it much easier than at present. The Public Procurements Law also requires amending. The lowest price practice currently applied as the principal (and often sole) criterion effectively scares off serious companies thinking of participating in tenders. In the next half year it will become clear whether attempts to amend some regulations have been successful, so we can put on the final touches to what we are doing. This is not only going to be a test of government will, but also of its abilities to push through solid pro-investment legislation.
Andrzej Rybarczyk, board vice-president, Hochtief Polska
Now that the initial euphoria has died down, Poland faces serious challenges. A boom period clearly lies ahead, not only in road and sports infrastructure, but also on the property market. The demand for residential and public utility projects, together with the simultaneous deficit in personnel and building materials, is bound to spark off rises in land, services and rent prices. So the emerging  huge opportunities for economic growth and the need for significant investment in a relatively direct action to quickly overcome those barriers which have been holding back the investment  process.
Bartosz Pawłowski, analyst, ING Bank Śląski
On the one hand, the hotel market will certainly start moving – and this is already happening. Following the announcement, shares in the Orbis company experienced a significant price increase on the Warsaw Stock Exchange. On the other hand, stadiums, airports and a transport links will have to be constructed. I feel that no great improvement will occur in residential construction. It will rather be a case of the continuation of processes already on the market.
Jerzy Werle, director general, Warbud
It is difficult to forecast just what will happen on the market. Much depends on how investors and the government acts. Tenders, for one, will have to be better prepared, with the money we receive from the European Union quickly and wisely invested. The greatest problems which the construction market is presently having to tackle are the lack of workers and building materials – and this will have to change. Bringing workers in from abroad is not a good idea, since it means that foreign companies will also have to be brought in, leading to stiff competition for local firms. What is required, first and foremost, are engineers experienced in constructing sports facilities.
Zenon Kornacki, financial analyst, Gray International
After the understandable euphoria generated by the decision to award Poland and Ukraine the Euro 2012 tournament, the mood – particularly among economic analyst – is also slowly cooling down. No one is denying that the investment outlay which Poland will need for the construction of new stadiums, transportation system and all the tourist facilities, is going to have a beneficial effect on the country’s economic growth both in the next 5 years a well as those which follow. Construction companies – contractors and suppliers – will be the first beneficiaries of Euro 2012. The price of housing will not fall, but the present high level of prices will effectively restrict their increasing further. Housing profit margins will slump, but good profits are guaranteed. The successful hosting of Euro 2012 will have a long-term positive influence on how Poland is perceived. Euro 2012 also offers an opportunity for Poland to be promoted to another, better league and an opportunity for the efficient construction of a modern tourist and road infrastructure which this country so urgently requires. The removal of barriers holding back the construction process should become one of the first tasks for the country’s authorities.
Brian Burgess, managing director, Savills
Overall the affect will be very positive for Poland. It is a test, however, not only for the politicians of the country but also the whole property and construction industries, which will have to perform as well as the best footballers to get everything built on time. The construction market  is already short on capacity so we can expect greater delays in projects and higher costs, especially as there will inevitably be a backlog of work as we near the opening game. Which public projects are carried out will be decided by the government; but it will be interesting to see how the private sector reacts – will they build new hotels for a one-off event, however profitable it might prove to be, without certainty that the occupancy levels can be maintained when everything returns to normal? Certainly the economy will receive a boost and the onward spending from the construction sector will also benefit the consumer, retail and housing markets.

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