Union: The construction industry will continue to struggle with declines, it is held by the state, regions and municipalities

Union: The construction industry will continue to struggle with declines, it is held by the state, regions and municipalities

Union: The construction industry will be able to deal with slumps, holding it down ;t, regions and municipalities

Construction of apartment buildings. Illustrative photo.

Plzeň – The construction industry has been dealing with declines for two years, which will continue this year, according to the Association of Entrepreneurs in Construction (SPS). In the Pilsen region, it is held by infrastructure projects of the state, the region and the municipality. All these entities are preparing a record volume of construction this year and want to support the industry. In the region, the Railway Administration and the Directorate of Roads and Highways are investing billions of crowns in the repair of the Pilsen railway station, the corridor to České Budějovice on the outskirts of Pilsen, the new road from Pilsen to Přeštice and the Klatov bypass. The region is spending over one billion kroner on roads this year, Pilsen will build several new buildings for hundreds of millions of kroner, Tachov and Rokycany are spending large sums on building repairs, ČTK found out.

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“Most manufacturers of materials for construction see that the fundamental problem of the volume of construction production is yet to come, probably in the second half of this year and next year,” said Roman Blažíček from the SPS board of directors, CEO of Pilsen's Lasselsberger, the largest producer of ceramic tiles. According to him, interest in apartments fell by several tens of percent due to the significant drop in the mortgage market. Developers have stopped starting construction, large private companies have stopped most investment projects, both groups are waiting to see how the situation will develop.

According to Pilsen governor Rudolf Špoták (Pirates), most of the current private and corporate projects have been carried over from previous years, and not many new ones are being created this year. “It can be seen in the planners, who are always the first indicator. The role of the municipalities will therefore be important at this time. That is why we do not want to relax in construction projects with the city of Pilsen in these years, on the contrary,” he said.

According to Pilsen Mayor Roman Zarzycký (ANO), this year's region and city budgets are highly pro-investment. “The municipality has a clear task of keeping the entire segment alive. We are adding tens of millions to the preparation of projects,” he said. According to the mayor, the city's money does not only go into building construction, but a lot into repairs of historically valuable buildings and hundreds of millions into investments in sports. The city wants to help private developers and enters into property relations with them and offers participation in specific housing projects. Developers claim that the demand for new apartments in Pilsen is now one-tenth compared to previous years. According to Blažíček, the Prague housing market is also experiencing a sharp decline.

“Housing construction will be bad. It is very important now how the state sector will support it. The state proclaims that it will invest a lot, especially in transport constructions,” said the chairman of the Czech Chamber of Authorized Engineers, Robert Špalek. He called on the state and regional spheres to prepare projects that will be launched when the construction industry starts up again at a time when construction preparation is expected to decline.

Blažíček acknowledged that they are not slowing down the construction of roads and railways. “However, this only helps the part of construction production, which is specialized in line construction. It does not apply to building contractors, who have craftsmen and a large share of work on the construction site, we have concerns there,” he said. As a strong exporter of tiles, Lasselsbergr feels the decline in neighboring countries as well – in Austria, but also in Germany, which, according to Blažíček, has always been a “big support”.

“The most positive feedback is precisely from the municipalities where the projects they show and continue, and we expect more positive news from them,” said Blažíček. Of the 600 billion CZK that are invested annually in the Czech Republic, a quarter is for transport infrastructure, which has already been confirmed this year, another 25 percent are projects financed by cities and municipalities, but according to him, the big question mark is private construction, which is the remaining 300 billion CZK . “There is a serious fear among them that there will be a more fundamental decline, at least this year or next year,” he said. According to Blažíček, however, it is necessary to take into account the current high inflation due to the increase in the prices of materials, labor and wages, and the 600 billion in 2023 will therefore have a smaller value than in 2021.