On the back of a record industry order intake at the end of 2021, particularly in Sweden, activity levels were recovering at the start of 2022.
“Following start-up of many projects last year, Veidekke expects construction production to be high in 2022. We anticipate growth in the Swedish building sector and the Norwegian transport infrastructure sector,” says Kristoffer Eide Hoen, Director of Business Development and Analysis at Veidekke ASA.
Recent increases in production values are partially attributable to high construction cost inflation. However, cost inflation has been compensated for by increased sale prices in many market segments. For example, both average construction costs and new-build prices for apartments in Norway increased by approximately 6% in 2021.
The invasion of Ukraine is putting additional pressure on both European markets and global commodity prices, exacerbating existing strains on certain supply chains resulting from the Covid-19 pandemic. Rises in the prices of input factors already committed or announced as at 30 March indicate a 5% to 10% increase in construction cost indices from December 2021 to December 2022. However, given the uncertainty of the current situation, the range of potential outcomes is broad.
There are indications of somewhat lower demand for new construction projects in the year ahead, particularly compared to the strong figures recorded in Sweden and Norway towards the end of 2021. This change is linked to both new geopolitical uncertainty and expectations of rising interest rates and further increases in construction costs.
Forecasts as to new-project demand and future price levels are considerably less certain than usual, and any escalation or de-escalation of the conflict level in Europe may result in different scenarios than those adopted as the basis for Veidekke’s forecasts.
Veidekke’s market report will be presented at 08:30 on Thursday 31 March. The presentation will be streamed as a webcast on www.veidekke.com.
For more information, please contact:
Kristoffer Eide Hoen, Director of Business Development and Analysis, Veidekke ASA, +47 976 75 434, Kristoffer.Eide.Hoen@veidekke.no
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Veidekke is one of Scandinavia's largest contractors. In addition to undertaking all types of building and civil engineering assignments, the group also maintains roads and produces asphalt and aggregates. Veidekke emphasises stakeholder involvement and local experience. Its annual turnover is approximately NOK 38 billion, and half of its 7,800 employees own shares in the company. Veidekke is listed on the Oslo Stock Exchange, and has posted a profit every year since its inception in 1936.
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| Presentation market update Spring 2022 |