Why is the Central
European construction sector so interesting?
A private equity perspective. Construction sector in CE – a private equity perspective

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Construction sector in CE – a private equity perspective

Introduction
Analysis of market drivers indicates that the growth prospects for CE construction industry are promising.

All types of targets in the construction sector need to consider specific success factors and will face certain risks.

Market drivers:
• Companies focusing on residential segment construction will continue to benefit from the deficit of modern apartments in CE (constructed after 1989) as well as the development of the mortgage loans market. • Targets involved in the commercial building segment will enjoy high demand for modern office and retail space; growing numbers of tourists will fuel the growth of the hotel segment and the dynamic growth of transit and trade between Eastern and
Western Europe will boost the demand for industrial and logistics facilities.
• Companies involved in Civil Engineering will benefit from EU funding flows and PPP projects related to largely underdeveloped civil infrastructure in CE (roads, highways, airports, railroad transport).

For segment specific market drivers and issues please see pages 2 – 3.

Sectoral challenges:
• Real estate developers will face rising costs of materials and services, growing land prices and building permit issues.
• Construction companies will have to cope with cash flow instability, growing costs of materials and labour as well as the threat of underbids in order to remain competitive.
• Building products manufacturers will have to secure access to cheap raw materials and energy sources along with the necessity to deal with environmental costs.
For analysis of Key Success Factors and risks specific for respective types of targets please see pages 4 – 5.

Private Equity can play a consolidation game in several highly fragmented segments of the CE construction market.

Private Equity