Construction in Finland – Key Trends and Opportunities to 2023

Summary

Finland’s construction industry expanded by 4.1% in real terms in 2018. This was preceded by an average annual growth of 3.3% during the preceding four years. Growth during the review period (2014-2018) was driven by positive developments in regional economic conditions and government investment in energy, residential and institutional construction projects.

The country’s construction industry is, however, expected to contract in real terms – by 0.2% in 2019 and 2% in 2020 – before regaining growth momentum. Low spending on residential building due to oversupply, a shortage of labor and a decline in building permits is expected to hamper the growth of the construction industry during the period of 2019-2020.

Over the remaining part of the forecast period (2019-2023), the industry’s output is expected to be supported by the government’s efforts to revitalize the economy, as well as subsequent improvements in investor and consumer confidence, coupled with the government’s investment on the maintenance of transport infrastructure and renewable energy infrastructure. With an aim to increase regional connectivity, in 2018 the government announced plans to build the Arctic railway in collaboration with the Government of Norway. Under this plan, the Finnish government intends to invest EUR2.1 billion (US$2.5 billion) on the Rovaniemi-Sodankylä-Kirkenes route, EUR2.3 billion (US$2.8 billion) on the Kemi-Kolari-Kilpisjärvi-Tromsø route and EUR1.9 billion (US$2.3 billion) on the Kemijärvi-Sodankylä-Kirkenes route by 2022-2023.

The industry’s output value in real terms is expected to post a compound annual growth rate (CAGR) of 1.0% over the forecast period.

Key Highlights

– GlobalData expects the infrastructure construction market to record a forecast-period CAGR of 3.49% in nominal terms, driven by the government’s focus on transport infrastructure. In February 2019, the government announced plans to invest EUR7.5 billion (US$8.7 billion) to develop the railway infrastructure of the country with the help of private investors by 2030. The government also plans to spend EUR2.8 billion (US$3.2 billion) annually on the maintenance and modernization of transport infrastructure during the period of 2018-2021.
– In order to support economic development and growth, the government is focusing on high-speed broadband connectivity, through which it aims to create investment opportunities and facilitate social and economic inclusion. Under the Digital Infrastructure Strategy 2025, the government aims to provide an internet connection speed of up to 1Gbps to 98% of the population by 2025.
– Energy and utilities construction market’s growth over the forecast-period will be driven by the government’s focus on the development of renewable energy with an aim to phase out the use of coal in power generation by 2029. In June 2019, the government announced a new policy to phase-out all coal fired power plants by 2029, with an aim to become a carbon neutral country by 2035. To meet this target, the government plans to build two new nuclear reactors by 2030. In addition, the government is spending EUR1.3 billion (US$1.5 billion) on the development of clean energy infrastructure in the country during the period of 2018-2022.
– GlobalData expects the residential construction market to post sluggish growth over the forecast period and account for a market share of 34.6% in 2023. The oversupply of houses, coupled with declining net immigration and residential permits, is expected to hamper the growth of the residential construction market over the forecast period.
– The total construction project pipeline in Finland – as tracked by GlobalData, and including all mega projects with a value above US$25 million – stands at EUR120.9 billion (US$142.5 billion). The pipeline, which includes all projects from pre-planning to execution, is skewed towards early stage projects, with 61.5% of the pipeline value being in projects in the pre-planning and planning stages as of August 2019.

GlobalData’s Construction in Finland – Key Trends and Opportunities to 2023 report provides detailed market analysis, information and insights into the Finnish construction industry, including –
– The Finnish construction industry’s growth prospects by market, project type and construction activity
– Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Finnish construction industry
– Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Scope

This report provides a comprehensive analysis of the construction industry in Finland. It provides –
– Historical (2014-2018) and forecast (2019-2023) valuations of the construction industry in Finland, featuring details of key growth drivers.
– Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
– Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
– Listings of major projects, in addition to details of leading contractors and consultants

Reasons to buy

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– Assess business risks, including cost, regulatory and competitive pressures.
– Evaluate competitive risk and success factors.