Lemminkäinen´s main market areas: Nordic countries, neighbouring regions of Russia
and Baltic countries
Source: Lemminkäinen's Interim Report 1-9/2011
(3.11.2011)
Operations in Finland
The operating environment for construction remained relatively stable in spite of the rise in general economic uncertainty. Consumer confidence has weakened substantially, but this has not as yet been felt in housing sales, which have remained steady during the entire year. Low interest rates and the population shift into growth centres have maintained demand for new housing.
The construction of business premises has seen moderate growth this year, although office vacancy rates are high in certain areas. The construction of commercial premises was supported by the consolidation of retail outlets into ever-larger business units. However, finding tenants poses challenges, slowing down the start-up of many commercial buildings that are in the pipeline. Property investors are still cautious in their decision making. The number of start-ups in industrial construction has remained below normal after the 2008 recession.
The total volume of infrastructure construction in 2011 is expected to fall short of the previous year. Demand was weakened by higher input prices and the scarcity of financing available to clients. In particular, the government and municipalities have cut their allocations for basic road maintenance and road investments. Fewer new civil engineering projects were started than last year. The market for rock engineering was good. Demand was maintained by mine investments and underground rock excavation works in growth centres. On the other hand, the good workload in rock engineering attracted foreign players into the infrastructure construction market. New building construction projects kept the demand for geotechnical engineering works, concrete construction and mineral aggregates at a good level. In the case of paving, 2011 is turning out to be on a par with 2010.
Demand for technical building contracting and services increased during the first part of the year on the heels of the growth in new building construction. Profitability in this field also improved slightly. Demand for electrical contracting declined after the summer. Great regional differences were seen in demand. Brisk building construction increased demand for HVAC installation work and services.
Operations outside Finland
In Sweden, large tunnel projects and highly active mining operations have kept rock engineering contractors busy in particular. The Swedish government has made large outlays on infrastructure development, which has substantially increased the volume of infrastructure construction work. In building construction, the workload was good in both new construction and renovation.
In Norway and Denmark, the paving season has been significantly better than it was last year. Demand for infrastructure construction has also been increased by growth in the energy supply sector and numerous ongoing traffic route projects.
The economies of the Baltic countries started out on the road to recovery, but infrastructure construction was still muted. That said, more road renovation and construction projects have been started up this year than in 2010.
In St Petersburg, Russia, the prices of new residential units rose by about 8% and those of old units by about 5% during the first part of the year. More and more homebuyers wish to finance their homes with mortgages. The amount of mortgages granted in St Petersburg almost tripled year-on-year.
Updated 7.11.2011