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Future of Infrastructure and Construction market in Poland 2021-2027

18.02.2021, 10:15

Future of Infrastructure and Construction market in Poland, promising areas of the economy trends and demand of Ukrainian investors: Andrii Romanchuk, a partner and head of the Warsaw office of EUCON Legal Group, shared his opinions in an article for UJBL magazine.

The construction industry proved to be an industry extremely resistant to COVID-19 in 2020. I am writing this article from the perspective of a Ukrainian who has been living in Poland since 2014, observing the construction boom there and benefiting from Polish infrastructural success. This country is building its road and rail infrastructure all of the time, as well as industrial and warehouse facilities. The development market currently remains stable due to low interest rates and the desire to preserve the value of money in real estate.

Warehouses and industrial construction

This has been the segment of construction to have experienced most growth of late. Changes in distribution are forcing the demand for warehouse space used by companies trading and servicing online sales as well as industrial processing plants which increase production and exports.

Road infrastructure

Poland’s road infrastructure will be developed in accordance with the new EU and Polish national budget, and this perspective will provide many new contracts for the construction industry. The General Directorate for National Roads and Motorways plans to announce tenders in 2021 for the construction of more than 660 km of new roads and the modernization of existing road networks, and wants to spend about PLN 20 billion on this (around EUR 4.5 billion). Many plans also apply to the EU budget for 2021-2027. Tenders for new EU plans are set to be successively announced. This segment promises to see a constant boom and lots of orders.

Railway industry

Investment in this area promises to be extremely rich. Experts estimate that in 2021 the construction and modernization of the Polish railway network is a cake to the value of about PLN 14 billion (EUR 3.2 billion) which will be distributed to construction companies, and it is expected that these outlays will be at such a high level for the next few years. The Polish government confirms the continuation of the project to build the Central Communication Port (airport, rail and road infrastructure), it will not be a large budget next year, however, until 2034, it is gradually planned to spend in excess of PLN 80 billion on this construction (EUR 18.1 billion).

Office space

In my view, this is one of the most damaged sectors, which still remains with quite a high range of price per square meter, probably due to long term contracts and warm interest on the part of global players to locate here their Business Process Outsourcing or Shared Service Centers to Poland.

Anyway, office space is definitely less popular now, and the main reason for this is the popularity of remote working (which has started to be real even for banking institutions like Citi Group, JP Morgan and other banking players). Measurements of higher work-from-home efficiency have led many corporations to permanently abandon office space. Increasingly popular short-term rental and office space sharing services do not meet demand for long-term rental of office space. Banks increased the estimated risks associated with investments in office space and, therefore, in 2020 experts spoke of a possible decline of 5-10%, though these are quite cautious forecasts.

Shopping facilities

Anticipating the development of suburban open shopping centers and the construction of discount stores. Expansion in 2021 will continue in towns and municipalities, including Dino supermarkets, building several hundred new stores annually. This format of the store is the most popular, and competitive chains do not locate stores in closed shopping malls and large formats (hypermarkets). Many smaller local chains have announced expansion plans to construct new stores and some even distribution centers. However, the development of online trading can change their investment strategies, especially taking into account the strong development of food delivery services that Frisco (online supermarket) now offers, and which other retailers like Biedronka (largest discounter shops chain in Poland), together with food delivery service Glovo, offer.

The full text of article here: https://eucon.ua/?p=11627