Latvia Construction Market Size, Trend Analysis by Sector, Competitive Landscape and Forecast to 2028
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GlobalData expects the construction industry in Latvia to shrink by 6% in real terms in 2024, following an annual growth of 17.9% in 2023, owing to a high base effect, coupled with headwinds such as elevated inflation, high interest rates and construction material prices, as well as supply chain disruptions caused by the Red Sea conflict. According to the Central Statistical Bureau (CSB), the average Construction Cost Index (CCI) grew by 1.7% year-on-year (YoY) in the first two months of 2024, following an overall annual increase of 7.4% in 2023; by segments, the average CCI grew by 2.8% YoY for residential buildings, 2% YoY for non-residential buildings, and 1.3% YoY for civil engineering structures during the first two months of 2024. Residential construction, which was the fourth-largest sector in the Latvian construction industry in 2023, is expected to be one of the hardest-hit sectors this year, registering an annual fall of 11.9% in 2024; this weakness is attributed to a sharp fall in residential building permits and high construction costs. According to the CSB, the total number of permits issued for residential buildings declined by 6.5% in 2023, preceded by an annual decline of 1% in 2022. Furthermore, a fall in export activity and a global economic slowdown amid the ongoing geopolitical tension are likely to deteriorate the performance of the construction industry in the short term.
The industry is however expected to rebound at an average annual rate of 3.4% from 2025 to 2028, supported by investments in transport and renewable energy infrastructure projects. The government aims to reduce greenhouse gas emissions by 6%, compared to 2005 levels, by 2030 and achieve climate neutrality by 2050. To support this target, Latvia is focusing on increasing the capacity of renewable energy across the country. In September 2023, Lithuania-based energy holding company Ignitis Group announced its plan to invest EUR270 million ($286.2 million) in acquiring the Latvian renewables company to construct a 200MW hybrid wind-solar project in Latvia. Moreover, in October 2023, Saeima, which is the parliament of the Republic of Latvia, approved the 2024 Budget, with an expenditure of EUR16.2 billion ($17.2 billion). The budget includes an allocation of EUR334.5 million ($354.6 million) for developing road infrastructure.
GlobalData’s Construction in Latvia – Country Briefing (H1 2024) report provides detailed market analysis, information, and insights into Latvia’s construction industry, including –
– Latvia’s construction industry's growth prospects by market, project type, and construction activity
– Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in Latvia’s construction industry
– Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.
Latvia Construction Market Segmentation by Sectors
Infrastructure construction was the leading sector in the Latvia construction market in 2022
The key sectors in the Latvia construction market are commercial construction, industrial construction, infrastructure construction, energy and utilities construction, institutional construction, and residential construction. In 2022, the infrastructure construction sector accounted for the highest market share, followed by commercial construction.
Infrastructure construction: The project types in this sector include rail infrastructure, road infrastructure, and other infrastructure projects. The sector output will be supported by public and private investment in transport infrastructure projects, to expand the country’s networks.
Residential construction: The project types in this sector include single-family housing and multi-family housing. Investments to construct new residential buildings in the country due to growing urbanization will drive the sector’s growth over the forecast period.
Energy and utilities construction: The project types in this sector include electricity and power, oil and gas, telecommunications, sewage infrastructure, and water infrastructure. The sector’s growth over the forecast period is attributed to public and private investments to expand the electricity networks, coupled with its focus on producing renewable energy.
Commercial construction: The project types in this sector include leisure and hospitality buildings, office buildings, outdoor leisure facilities, retail buildings, and other commercial construction. Growing investments in the construction of data centers, and hotels coupled with improvement in the sports and cultural industry will drive the sector’s growth over the forecast period.
Industrial construction: The project types in this sector include chemical and pharmaceutical plants, manufacturing plants, metal and material production and processing plants, and waste processing plants. Increased private investments in developing the country’s manufacturing and raw materials production plants will boost the sector’s growth during the forecast period.
Institutional construction: The project types in this sector include educational buildings, healthcare buildings, institutional buildings, research facilities, and religious buildings. Rising investment in healthcare, and education infrastructure projects will facilitate the sector’s growth during the forecast period.
Latvia Construction Market Analysis by Sectors, 2022 (%)
Buy the Full Report for more Sector Insights into the Latvia Construction Market
Latvia Construction Market – Latest Developments
- In July 2023, the University of Latvia (LU) announced its plan to invest EUR40 million ($40.8 million) in the construction of a sports house in Riga. The new project will be built on an area of approximately 14,000 square meters and will include the construction of three sports halls, swimming pools, a fitness room, a 100-meter running track, and other necessary facilities. It is scheduled to be operational by 2026.
- In November 2023, Lithuania-based energy company Ignitis Group plans to invest EUR178 million ($181.8 million) for the construction of three solar power plants in Latvia with a combined capacity to produce a 239-megawatt peak (MWp). According to Ignitis Group, the project is the largest foreign direct investment in the solar energy sector in Latvia.
Segments Covered in the Report
Latvia Construction Sectors Outlook (Value, $ Billion, 2018-2027)
- Commercial Construction
- Industrial Construction
- Infrastructure Construction
- Energy and Utilities Construction
- Institutional Construction
- Residential Construction
Scope
This report provides a comprehensive analysis of the construction industry in Latvia. It provides –
• Historical (2019-2023) and forecast (2024-2028) valuations of the construction industry in Latvia, featuring details of key growth drivers.
• Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
• Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
• Listings of major projects, in addition to details of leading contractors and consultants
Reasons to Buy
• Identify and evaluate market opportunities using GlobalData's standardized valuation and forecasting methodologies.
• Assess market growth potential at a micro-level with over 600 time-series data forecasts.
• Understand the latest industry and market trends.
• Formulate and validate strategy using GlobalData's critical and actionable insight.
• Assess business risks, including cost, regulatory and competitive pressures.
• Evaluate competitive risk and success factors.
Table of Contents
Table
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Frequently asked questions
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What was the Latvia construction market size in 2022?
The construction market size in Latvia was $5.8 billion in 2022.
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What will the Latvia construction market growth rate be during the forecast period?
The construction market in Latvia is projected to achieve an AAGR of more than 1% during 2024-2027.
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Which was the leading sector in the Latvia construction market in 2022?
Infrastructure construction was the leading sector in the Latvia construction market in 2022.
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What are the factors driving infrastructure construction in the Latvia construction market?
The infrastructure sector output will be supported by public and private investment in transport infrastructure projects, to expand the country’s networks.
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