Feature: More Growth Expected in Slovenia’s Construction Sector

By , 03 Jan 2019, 11:59 AM Business
Feature: More Growth Expected in Slovenia’s Construction Sector Flickr - Brisbane City Council CC-by-2.0

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STA, 3 January 2019 - The construction sector in Slovenia expanded for the second year in succession in 2018 and the Chamber of Commerce and Industry (GZS) expects the growth to continue in 2019 although at a slightly slower pace.

Construction up by fifth in 2018

The value of construction work rose by 18% year-on-year in 2017, while it grew by 21.5% in the first ten months of 2018, data from the Statistics Office show.

"The growth was expected because the scope of construction at the end of 2017 was low despite the high growth of the sector," the head of the Chamber of Construction and Construction Material Industries at the GZS, Jože Renar, told the STA.

The value of work on civil engineering in the first ten months of 2018 rose by 21.7% from the same period a year ago. Work is under way both on road and railway infrastructure.

"Intensive road maintenance work is under way to make up for the backlog of recent years when the state reduced road maintenance to far below minimum ... Extensive renovation work is also under way on railways," Renar said.

The construction company Pomgrad, which built the Magna Steyr paint shop near Maribor and is currently working on three major infrastructural projects with partners, recorded good results in 2018. Its consolidated revenue for the year is expected to reach some EUR 160m.

The company is focussing on exports, having built a hotel in the Plitvice Lakes National Park in Croatia and a housing complex in Sweden in the past year.

"We made a big step primarily in internationalisation and have several important deals under way abroad. We also finished several major construction projects in the domestic market, among them the new Magna factory in Hoče, which we successfully built in an extremely short period of time," CEO Iztok Polanič told the STA.

Construction of buildings expanded by 20.8% in the first ten months of 2018. "Construction of buildings is on the rise, both for private and business buildings, where unlike in the civil engineering projects private investors prevail," Renar said.

GZS expects single digit growth in 2019; staff shortage among biggest challenges

The GZS expects growth to continue in 2019 but it is not expected to be double digit as in the last couple of years. "We're counting on growth in civil engineering section and in buildings to be comparable," said Renar.

Although Slovenia's economy has been expanding rapidly and all construction companies in the country are very busy, the construction sector faces many challenges and problems, Polanič said.

"A key challenge is definitely the lack of engineering staff, a problem virtually all construction companies in Slovenia are struggling with.

"Another challenge is the unpredictability of projects and investments, which makes long-term planning in construction extremely difficult," the Pomgrad CEO said.

According to Polanič, the company will this year focus on infrastructural and industrial projects, it also counts on several new calls for applications in roads and railway infrastructure.

"We are starting the new year quite busy and will start working on a few new projects ... It's important for our company to win projects that occupy the entire Pomgrad system," he said.

According to Renar, the GZS expects the state to adhere to the international rules on tenders in the future and avoid "risky non-transparent contracts."

The state should prevent unfair competition by companies that are not bound to respect the collective bargaining agreement of the constructions sector, he said.

Related: All our stories tagged "property" can be found here

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