The construction sector in the Czech Republic expects the construction market to grow slightly by 0.8 % in 2025, and this positive trend should continue in the following year. The market could increase by an average of 1.9 %. Growth is expected in both civil engineering (by 0.7 %) and building construction (by 0.8 %) in 2025. In 2026, both sectors could achieve an average growth of 1.9 %. This is according to the Quarterly Analysis of the Czech Construction Industry Q4/2024, published by CEEC Research at the Czech Construction Industry Leaders Meeting conference at Prague Castle.
According to the macroeconomic forecast of the Ministry of Finance of the Czech Republic, GDP is expected to grow by 1.2 % in 2024, which could have a positive impact on the construction sector in the following years. Moreover: the draft state budget for 2025 includes record investments in transport infrastructure and public projects, which will help ensure stable demand for construction works. The Ministry of Finance also forecasts a decline in the average inflation rate to 3.1 % in 2024, which could lead to a stabilisation of construction material prices and costs, thereby encouraging investment in the construction sector.
According to a recent survey by CEEC Research, construction companies in both civil and civil engineering have similar market growth prospects. Those specialising in civil engineering construction expect work volumes to grow by 0.7 % in 2025, while those specialising in ground construction expect to increase by 0.8 %. Both sectors then estimate a further market shift in 2026, of around 1.9 %. These favourable expectations are not only due to positive macroeconomic forecasts. Indeed, the government is taking steps to promote affordable housing, which is increasing demand for ground-up construction - for example, through programmes to build rental housing and renovate existing housing stock. In addition, the stabilisation of building material prices following previous price increases is making it easier for firms to plan and execute projects in both these key sectors.
"The current development of the Czech construction industry shows mixed signals. According to data from the Czech Statistical Office, construction output in 2023 grew by 2.5 % year-on-year, indicating a slight recovery of the sector. Despite this growth, the construction sector faces several challenges. One is the dysfunctional digitalisation of construction management and another is the lack of skilled labour, which limits firms' capacity and can hinder project delivery. Overall, the Czech construction sector is going through a period of moderate growth, but faces significant challenges that need to be addressed to maintain and strengthen this trend. Improving the digitalisation of construction management and addressing the shortage of skilled labour will be key," says the director of CEEC Research Michal Vacek.
"In 2025, we expect the construction market to become more active, and consequently a growing interest in building materials. Behind the construction momentum is the gradual calming of the volatile market and the magic threshold for mortgage interest rates, which could fall below 4 % in the first half of the year. This will significantly affect investors' interest in building houses. According to our internal data, it can be said that the desire to own a home has not disappeared among investors, but in the context of the domestic economic situation, which has not been favourable in recent months, they have decided to postpone investment in their own homes and wait for better financing conditions," comments the CEO and Managing Director of Wienerberger Kamil Jeřábek and confirms the data from the CEEC Research survey.
A Dusan Kunovsky, Chairman of the Board of Central Group, also sees the situation on the construction market positively: "I expect a significant increase especially in residential construction. Demand for flats has increased extremely this year and is approaching the level of the record year 2021. Moreover, interest in flats and the willingness of companies to start building will grow even more with the further decline in interest rates, although it will probably not be as fast as was expected not so long ago."
Sales of construction companies will also record positive developments in the construction industry.
Higher revenues are forecast by civil engineering firms, which estimate an increase of 2.4 % in 2025 and 2.9 % in 2026. This is due to easier access to financing, which includes support from banks and mortgages. Residential and commercial projects are thus better equipped for quick implementation. In addition, ground-up developments are subject to less complex permitting processes than large engineering projects, which speeds up construction progress and return on investment.
Firms specialising in engineering projects, such as roads or infrastructure, are more restrained in their estimates, forecasting growth of 1.4 % in 2025 and 2.1 1 % in 2026. They are dependent on government investment and budget constraints, and their execution is often affected by seasonal conditions.
Jaroslav Heran, CEO of Metrostav, sees the situation on the construction market as follows.If declining interest rates induce private investors to implement deferred projects, especially in the residential construction segment, and at the same time do not slow down the pace of investment in transport infrastructure, we believe that in 2025 the Czech construction industry will grow in the order of one percent. This growth should also be supported by upcoming investments in the energy and heating sectors."
I Moritz Freyborn, Chairman of the Board of STRABAG, is optimistic about the development of the construction market:"I am positive that the level of investment in the construction sector in the Czech Republic is more stable than in other European countries, such as Germany or Austria. On the residential property market, I expect to see to revive. Thanks to falling inflation and a gradual reduction in interest rates, investment in residential construction should start to grow again. However, the supply of new housing is likely to continue to be affected by the rising cost of building materials and labour, as well as slower starts of new projects. Whether improvements in the planning permission process can be achieved will be crucial to supporting new and more affordable housing."
Contracts are awarded to construction companies on average for nine months in advance. For 31 % companies, this means more orders than in the same period last year, while for 33 % companies, the contract period remains the same.
The directors of construction companies report that their capacities are used up to 93 %, which is a common situation in the industry for this time of year. Traditionally, utilisation is expected to fall slightly in the first quarter of 2025, to around 85 %, due to seasonal conditions.
2025 should be a year of recovery. Construction company executives expect positive changes that could contribute to market stabilisation and industry-wide growth.
The data are based on Quarterly analysis of the Czech construction industry Q4/2024 prepared by the analytical company CEEC Research, which is published in full on www.ceec.eu.
CEEC Research Helena Grofová/ gnews - RoZ
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