The Hungarian construction industry started off this year with an exceptionally high Activity Start indicator: nearly HUF 1,300 billion worth of construction works started in Q1 2022. The Activity Start of EBI Construction Activity Report in the first quarter is a new record (construction works have never started in such a high value in one quarter) and exceeded the level of Q2 2021 (the highest so far) by almost 37%. Yet, this spike is mainly thanks to the launch of two major infrastructure projects, according to the EBI Construction Activity Report, prepared by Buildecon, Eltinga (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database).
Stagnant building construction
The value of started building construction projects was slightly more than HUF 430 billion in the first 3 months of 2022; a good start to the year. The Activity Start of EBI Construction Activity Report was a bit below the value of the same period of the previous year but compared to the last two quarters of 2021, there has been no major change in the Activity Start of building construction. And the first 3 months of 2022 were considerably better than the period between April and December 2020.
Within building construction, the Activity Start of residential construction was modest: the value of started construction works stayed below HUF 90 billion. The Activity Start indicator of non-residential buildings was almost HUF 350 billion in Q1 2022, lower than the very strong first 2 quarters of 2021, but almost the same as the values of Q3 and Q4 2021.
The biggest started building projects in Q1 2022 included Kovács Katalin National Kayak-Canoe Sports Academy in Sukoró, eMAG logistics centre in Dunaharaszti, and ActiCity Event Center in Veszprém. In Budapest, the construction of BEM Center office building and Kimpton Hotel (District 2), as well as Phase 2 of Corvin 7 office building (District 8) entered the construction phase.
Big numbers in civil engineering
Construction start on the Budapest-Belgrade railway line between Kelebia and Soroksár, and the section of M44 between Kecskemét and Szentkirály brought an outstanding Activity Start indicator for civil engineering. The total value of launched projects went up to an unprecedented HUF 850 billion between January and March 2022; twice the previous record value of Q1 2018. The Activity Start of civil engineering in the first 3 months of 2022 exceeded the full annual value of both 2020 and 2021.
The total value of road and railway construction works within civil engineering was almost HUF 800 billion thanks to these two large-scale projects. It is indeed the highest value of the last decade. But non-road and non-railway civil engineering projects, similarly to the last two quarters of 2021, started in a low value again.
In addition to these two big-volume projects, key civil engineering projects include Phase 2 of main road 33 (Debrecen).
Modest start of multi-unit residential construction projects
New multi-unit residential projects are being launched at a moderate pace. The total value of such projects started to drop in Q1 2022 compared to Q4 2021. The numbers also fell short of Q1 2021. Between January and March 2022, the Activity Start of multi-unit residential construction was HUF 85 billion. Developers are cautious to start new projects: market uncertainties like hiking and unpredictable building material prices and supply chain issues are making it difficult to plan. There are also demand-side risks owing to more expensive financing.
Key projects launched in Q1 2022 comprised works in Budapest such as the construction of BRG building of BudaPart residential project (Phase 6) in District 11, as well as Phase 1 of Le Jardin residential project and BLU residential complex in District 13.
Although the total value of projects completed between January and March 2022 was just over HUF 40 billion (the lowest Activity Completion indicator in recent years), a close-to-record completion is expected in multi-unit residential construction works this year. However, supply chain disruptions may slow down project completions, and thus, some projects may be delayed until next year.
The share of multi-unit residential construction works in the regions was rather unequal in Q1 2022. 72% of the total value of such projects entering the construction phase was concentrated in Central Hungary, 71% in Budapest, which is more than 10 percentage points higher than in 2014-2021. The shares of Eastern and Western Hungary shrank, and the share of the former one from the Activity Start indicator was only 12%.
