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Construction in Finland - Key Trends and Opportunities to 2017

Finland construction market: Decline of over 1% CAGR between 2008-2012

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2014-02-20 18:57:02 - Construction in Finland - Key Trends and Opportunities to 2017 - a new market research report on

The Finland construction market is experiencing a period of weakness. In 2012 construction gross value-added contracted by 2.3%, with the pace of decline accelerating during the year. The industry registered a CAGR of -1.16% during the review period but is expected to grow at a CAGR of 3.35% over the forecast period. Investor sentiment is low due to the Eurozone crisis and people are opting to wait until the economic scenario improves. The rise in income levels in the past three years and solid demand from the retail and tourism market is expected to boost the industry. Finland will also benefit from its strategic location in Northern Europe and a relatively stable economic environment compared to other EU members.

Finland is



playing a role in several infrastructure projects currently underway in Northern Europe such as the Bothnian Corridor and the Nordic Triangle, which will enable the cross-country flow of goods between Northern Europe and the rest of the EU. The institutional construction market is expected to record moderate growth during the forecast period, driven by the rapidly aging population, and an emphasis on improving the education system and innovation. Low interest rates, migration to urban regions and a rise in income levels are expected to drive the expansion of the residential construction market. However, growth is expected to be moderate at best, constrained by fairly low GDP growth.

Key Highlights

• Finlands economy is expected to post modest growth in 2013. Given the current global growth prospects and the sluggish domestic demand, real GDP is expected to grow by 0.4% in 2013, before growth increases to 1.1% in 2014. Reflecting weak business sentiment, domestic investment is set to contract (by 1.2%) in 2013 before rebounding to 1.1% growth in 2014. Private consumption growth will remain modest in 2013, with an increase in VAT curtailing the trend. The economy is expected to grow in the range of 1.5–2.7% between 2015 and 2017 in line with improvements in domestic as well as external demand conditions.

• Exports account for 40% of GDP and 56% of those exports go to EU member countries; low demand in the region impacted exports significantly in 2012. With concerns over the outlook for the Eurozone and the restructuring of two key export industries (electronics and forestry), export growth is expected to remain around 1% in 2013, much lower than its trend growth.

• The energy industry aims to achieve a carbon-free district heating electricity scenario by 2050. The total generation capacity is expected to reach 30,000 MW by 2050. According to the EU renewable energy directive, the country aims to achieve a 38% share of renewable out of total energy usage by 2020 from the existing level of 28%. These plans are expected to boost investments in the renewable energy sector.

• The population is aging at a rapid pace, faster than its EU counterparts. The proportion of population aged 65 years and above has increased from 12% in 1960 to 18% in 2011. The proportion is expected to reach 26% by 2030. The birth rate is expected to decline at 0.5% per annum over 2012–2050, while the death rate is expected to rise by 0.6% over the same period. With the aging population requiring special care, the government proposed a new act in the 2013 budget to provide health services to the elderly population. A sum of EUR33 million is earmarked in 2013 towards the implementation of the act, with an additional EUR82 million a year expected to be granted from 2015 onwards.

• Although the rising urbanization rate is positive for residential construction, Finlands population is aging and unemployment remains fairly high. The demographic change and employment scenario could constrain growth in residential construction.

Report Scope

This report provides a comprehensive analysis of the construction industry in Finland:

• Historical (2008-2012) and forecast (2013-2017) valuations of the construction market in Finland using the construction output and value-add methods
• Segmentation by sector (commercial, industrial, infrastructure, institutional and residential) and by project type
• Breakdown of values within each project type, by type of activity (new construction, repair and maintenance, refurbishment and demolition) and by type of cost (materials, equipment and services)
• Analysis of key construction industry issues, including regulation, cost management, funding and pricing
• Assessment of the competitive environment using Porters Five Forces
• Detailed profiles of the leading construction companies in Finland

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