Construction to decline slightly in 2020–2021: RAKSU

Construction is set to decrease by no more than two per cent this year, remaining close to last year’s level, according to a report released by the RAKSU group on Thursday.

The total production in the construction sector will decrease this year. Construction was expected to decline more sharply, but now it seems that a sharper fall in production will not be experienced until next year, said an official press release.

In 2021, production in construction is feared to fall by two to four per cent. This year, construction will continue more vigorously than anticipated owing to a large number of commercial properties that started at the end of 2019.

Housing production has remained at a high level for a few years now. In 2019, construction of nearly 40,000 new homes began, but the production output is now expected to gradually return to the normal level.

The decline in housing construction will be slowed down by continued economic growth and low interest rates.

The RAKSU group estimates that construction will begin on 31,000 to 33,000 housing units in 2020. However, the number is expected to decline in 2021, when the launch of construction of new housing units will fall below 30,000.

For buyers and renters of houses, the market conditions have remained positive. The housing market has been lively, and the supply of rental housing also increased sharply last year. A large number of housing units will continue to be completed throughout the current year.

Renovation construction has clearly slowed down in the previous years. As the economy cools off, renovation of commercial properties in particular will slow down. Renovation is projected to increase by around 1.5 per cent in the next few years.

Growth in civil engineering is expected to accelerate this year, partly explained by increased investment in basic transport infrastructure management. This year, civil engineering is projected to increase by 1–2 per cent.

Pressures on construction prices have decreased, and some prices are now on a downward trend as the economy slows down. Demand for construction staff is also declining somewhat. Employment in the construction sector is expected to fall further this year as well as in year next.