Government focuses on road and rail projects as construction industry sees slow growth, says GlobalData

The Swiss construction industry is expected to record marginal growth between 2019 and 2023, supported by investment in commercial, institutional, residential and renewable energy projects, according to GlobalData, a leading data and analytics company.

GlobalData’s latest report, ‘Construction in Switzerland – Key Trends and Opportunities to 2023’ reveals that, to reduce traffic congestion in the country, the Swiss Government is focusing on the development of road and rail transport infrastructure. For the expansion of the road network, the government plans to spend CHF16bn (US$16.5bn) during the period of 2018–2028. In 2018, the government also launched the new Motorway and Agglomeration Traffic Fund to finance road development works across the country.

Danny Richards, Lead Economist at Globaldata comments: “The Swiss construction industry expanded by 1.4%, in real terms, in 2018, with the industry’s output value – measured at constant 2017 US dollar exchange rates – increasing from US$78.9 billion in 2017 to US$80 billion in 2018. This was preceded by annual growth of 1.3% in 2017, 1.6% in 2016 and 0.1% in 2015. Slow growth can be attributed to the sluggish economic expansion during the period of 2015–2017, coupled with low global commodity demand, although the government’s investment in infrastructure, energy and institutional construction projects provided support to the construction industry to remain positive.”

The industry’s output value, in real terms, is expected to rise at a compound annual growth rate (CAGR) of 1.51% over the forecast period. The industry is consequently expected to rise from a value of US$80bn in 2018 to US$86.2bn in 2023, measured at constant 2017 US dollar exchange rates.

Richards continues: “Accounting for 33.6% of the industry’s total value in 2018, residential construction was the largest market in the Swiss construction industry during the review period. The market is expected to retain its position over the forecast period, driven by the growing population and ongoing urbanization. Low mortgage interest rates are also expected to support market growth over the forecast period.”

Commercial construction accounted for 19.8% of the industry’s total output in 2018, followed by infrastructure construction with 19.4%, industrial construction with 9.5%, energy and utilities construction with 9.2% and institutional construction with 8.6%.

Richards adds: “The total construction project pipeline in Switzerland, including all mega projects with a value above US$25 million, stands at CHF48.3bn (US$49.4bn). The pipeline, which includes all projects from pre-planning to execution, is dominated by late stage projects, with 84.4% of the pipeline value being in projects in the pre-execution and execution stages as of September 2019.”

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