2013-08-31 16:27:09 - New Construction research report from Business Monitor International is now available from Fast Market Research
Following negative growth in the construction industry in 2012, we forecast the recession to continue in 2013 and anticipate construction industry value to contract by 1.9% in real terms over 2013. The industry has been contracting consecutively for the past five years, from 2008 to 2012, when it experienced negative growth of -0.4%. At this point, we see little scope for a recovery as France's macroeconomic outlook remains bleak. Our Country Risk team is forecasting a contraction of -0.3% in GDP for 2013, which is a significant impediment to any recovery in the construction sector.
With the residential and non-residential construction sub-segment accounting for an estimated 82% of total construction industry value in 2013, it is unsurprising that the weaknesses in
the housing sector are dampening growth in the industry. House prices in France reportedly dropped 1.7% y-o-y in 2012, marking the fastest decline since Q409, according to the French National Institute for Statistics and Economic Studies (INSEE).
Full Report Details at
- www.fastmr.com/prod/670637_france_infrastructure_report_q3_2013. ..
Our slight optimism for the French construction industry comes on the back of growth in the infrastructure industry, which we expect to outperform the overall construction sector. Buoyed by growth in the transport segment, we expect the share of infrastructure in the total value of the construction industry to increase from an estimated 18% in 2013 to 23% by 2022. This will lead to average annual real growth of 2.5% in the construction sector over the period.
The outlook for the industry is brighter in the long term, as the country's hosting of the UEFA Euro 2016 Football Championship will provide a very welcome source of new contracts for developers.
Key developments in the sector:
* The pace of concessions and project financing has slowed down significantly since 2011, though the award of the concession for the Marseille L2 by-pass in May 2013 indicates that the pipeline is still alive. This latest concession award encourages our view that France's infrastructure industry - and especially the transport sector - will buttress growth in the construction sector in the longer term.
* Three high-speed lines (LGV Sud Europe Atlantique, Contournement Nimes-Montpellier (CNM) and Bretagne-Pays de la Loire), costing a total of EUR29bn, will be a key thrust behind value creation for the French infrastructure sector. At a time when funding of projects is a key concern, the high-speed project connecting the cities of Le Mans and Rennes proved its worth in October 2012, when the European Investment Bank (EIB) signed the first instalment of EUR100mn (US$129.1mn) out of a total EUR300mn (US$387.4mn) loan to finance the project.
* The government's commitment towards the railway sector has remained intact in 2013, with Prime Minister Jean-Marc Ayrault announcing plans to proceed with the Nouveau Grand Paris project. The programme entails the construction of a network of orbital automatic metro lines stretching nearly 200km and serving the outer suburbs of the capital. The project has a budget of EUR30bn and is due to be completed by 2030. In addition to this, the programme will also see nearly EUR7bn being allocated towards improving some existing routes by 2017.
* Large-scale projects planned in nuclear power and the investment in overhauling and expanding the country's power grid will support growth in the energy and utilities infrastructure sector. Our long-held view that the renewables sector will generate interest at a global level gained more strength in January 2013, when the French government launched a call for tenders to construct offshore wind farms, which are expected to generate 1,000MW of electricity, according to a statement made by former Energy Minister Delphine Batho. The farms would attract investments of around EUR3.5bn (US$4.6bn).
Despite the overall cautious outlook, France fares significantly better than its other developed counterparts in BMI's Infrastructure Risk/Reward Ratings, scoring 70.0 - higher than the developed market average of 65.5.
About Business Monitor International
Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010
About Fast Market Research
Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.
For more information about these or related research reports, please visit our website at www.fastmr.com
or call us at 1.800.844.8156.