Real estate and construction The Future of the Construction Market in Poland
1. Growth of the Construction Market Value
The Polish construction market has seen impressive value growth, doubling over the last eight years and reaching a value of over 350 billion PLN in 2024. However, this growth has not resulted in a similarly significant increase in market volume, which has remained stagnant for over a decade. This phenomenon is typical in industries where prices rise, but the number of projects stays constant.
The outlook for the next few years is optimistic. The construction market is expected to exceed 400 billion PLN by 2026, meaning the market value will grow at a pace clearly surpassing inflation in the construction sector.
2. Factors Supporting Market Growth
The growth of the construction market is supported by several factors. Stable long-term macroeconomic foundations of the Polish economy, as well as substantial financial resources, such as 72 billion euros in EU grants for implementing cohesion policy 2021-2027, and 58 billion euros in grants and loans for investments under the National Reconstruction Plan (KPO), are some of the key drivers.
The continuation of large infrastructure projects, such as the National Roads Construction Program and the National Railway Program, as well as Poland's energy transformation, significantly contribute to the dynamic development of the sector. Additionally, the structural shortage of housing and a resurgence in military construction provide further vital impulses for the construction market's development.
Mega-investments, such as the Central Communication Port and offshore wind farms, will also play a crucial role. The increase in the number of new housing units in response to growing demand will be key to the continued growth of the construction market in Poland
3. Threats to Market Development
Despite the optimistic prospects for the construction market, there are several threats that may impact its development. High prices for raw materials, semi-finished products, construction materials, and contractor services, along with persistently high interest rates, are key factors that could negatively affect the market.
Geopolitical uncertainty has reduced investor interest in the Central and Eastern European region, which also poses a significant threat to the construction market. Additionally, the excessive deficit procedure initiated against Poland may limit the availability of financial resources for public investments.
Another serious issue is the shortage of skilled workers in construction. The industry is facing a drain of workers to higher-paying employers in Western Europe, as well as the return of workers from Ukraine to their home country after the Russian invasion in 2022.
4. Large Infrastructure Projects
Large infrastructure projects play a key role in the development of the construction market in Poland. Investments such as the Central Communication Port, High-Speed Rail, and the modernization of the railway network under the National Railway Program are crucial to the growth of the Polish economy.
However, these projects are not without challenges. Large-scale construction projects of strategic importance are almost always associated with delays, conceptual and design changes, and cost increases. Additionally, the timely implementation of planned investments may be hindered by a lack of processing capacity and rising construction service prices.
5. Future Outlook
In conclusion, the outlook for the construction market in Poland is optimistic, with the market value forecasted to exceed 400 billion PLN by 2026. The market value growth will significantly outpace inflation in the construction sector. Key factors supporting this growth are EU funds, public investments, and large infrastructure projects.
However, the construction market in Poland faces many challenges that could slow its development. High prices for raw materials, semi-finished products, construction materials, and contractor services, as well as persistently high interest rates, present significant barriers. Therefore, geopolitical uncertainty and the shortage of skilled workers are additional challenges the construction industry must address.
VON ZANTHIER & DACHOWSKI Law Firm has extensive experience in providing legal and tax advisory services for investors and contractors in the construction sector. We offer comprehensive support at every stage of investment project implementation, helping businesses meet challenges and capitalize on the opportunities presented by the dynamic growth of the construction market in Poland.
