The latest EBI Construction Activity Report, prepared by Eltinga, Buildecon, and iBuild, has found that after the weak Q3 2022, Q4 2022 saw a slight nominal expansion in activity-start in Hungarian construction. The value of started construction works was still very low; between October and December 2022 they totalled roughly HUF 650 billion.
The whole-year figures were high thanks to the higher Activity-start in the first two quarters of 2022 and projects entered construction on more than HUF 3600 billion. Although it was a new record at current prices, it did not approach the highest values of 2017 and 2018 at constant prices and was at the level of 2019 and 2021. Annual change compared to 2021 at current prices was about +21%, while at constant prices it meant a drop of 0.6%.
The modest rise in Activity-start at current prices was mostly coming from the expansion of building construction with the value of started construction works being HUF 500 billion in Q4 2022. Overall, the entire 2022 brought high numbers. Projects worth more than HUF 2000 billion entered implementation - the highest ever registered.
In Q4 the improvement over Q3 was evident in building construction even at constant prices. But the value of started works, except for 2020, was lower than the quarterly values of the past years. At constant prices, the Activity-start indicator dropped during 2022 (-16.8%) and was roughly at the level of 2019. The better last three months were also typical for multi-unit housing and non-residential buildings, whether we look at current or constant prices.
In 2022, non-residential construction works were launched at a value of more than HUF 1800 billion, the highest amount so far. Thanks to the good first half of the year, even at constant prices, last year was considered a strong year: constant-price Activity Start of EBI Construction Activity Report was the third highest after 2018 and 2021.
Building construction projects launched in Q4 2022 included the CATL battery factory, the BMW plant, and the EcoPro BM electric battery cathode manufacturing plant in Debrecen. Construction also began on the CTP warehouses in Szigetszentmiklós, the University of Veterinary Medicine and the Siemens Energy M2B gas and steam turbine parts manufacturing plant in Budapest, as well as the logistics hall of HelloParks in Fót.
Activity-start in civil engineering fell further in the last quarter of 2022 with the value of construction starts not even close to HUF 150 billion. Compared to previous years, it is low even at current prices, but at constant prices, the decrease is even more striking: the segment has not seen such a feeble quarter since 2016. The decline affected both road and railway construction, as well as other civil engineering works.
The start of two big-volume projects at the beginning of the year brought the spiking Activity-start indicator in civil engineering: the Budapest-Belgrade railway stretch between Kelebia and Soroksár and the Kecskemét-Szentkirály section of M44. The biggest civil engineering projects started in Q4 2022 comprised several water pipelines and sewer-related ones, such as the DV-Dráva watershed in Zala and Baranya counties, the Eastern waterman’s drinking water treatment plant, the Balmazújváros-Hajdúnánás-Hajdúböszörmény transmission line and the Balmazújváros-Debrecen 1st waterworks transmission line. Only one road project made it to the list of biggest projects in Q4 2022, the Soltvadkert bypass section of highway 53.
Last year Budapest continued to record the largest value of started construction projects, although with a somewhat decreased share against 2021. Northern Great Plain had the second largest share, closely followed by Pest County and the Southern Great Plain. Lowest-value projects were launched in Southern and Western Transdanubia.
Q4 2022 registered a slightly higher building activity in multi-unit housing than the two preceding quarters. And even though the total value of projects entering the construction phase slightly rose between October and December compared to previous years, it was still not particularly high, and at constant prices, it is rather low. In total, construction projects worth slightly more than HUF 90 billion saw construction start. The temporarily higher numbers were mostly due to the launch of certain phases of larger, multi-phase projects, and do not indicate recovery in the segment. Further, developers are facing falling demand in the market for new homes, and due to economic uncertainties and expensive financing, this may also stretch to the coming months.
When it comes to completions, fewer multi-unit homes were completed in Q4 2022 than expected, indicating great delays in projects owing to supply chain disruptions. Since the value of completed multi-unit homes in Q4 somewhat fell short of Q3, 2022 as a whole posted a lower Activity-Completion indicator than 2021; multi-unit homes worth slightly more than HUF 280 billion were completed in Hungary.
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