OFFPLAN NEWS

(28.06.2007 )
Czech Republic real estate Czech Republic Increase of value of Czech construction orders

Czech builders recorded a total of 88,116 construction property Czech Republic orders in 2006, down 5.9 percent compared to 2005. Despite the drop, the total value of these orders amounted to Kč 299 billion (€ 10.5 billion), up by more than a fifth year-on-year, according to the latest data by the Czech Statistical Office.

This increase is explained by rising costs related to upgrades on railways and motorways. The average value of a new building order reached Kč 3.4 million, 25 percent higher than in 2005.

Mid-sized and large companies with staff of 100 or more had 88.6 percent of the value of new orders, with the 11 largest firms making up 56.2 percent of the total value in 2006. In the last quarter of 2006, construction companies signed 23,106 new orders worth Kč 89.2 billion, up 40.2 percent year-on-year. In the public sector the average value of an order reached Kč 6.3 million; in the private sector it was Kč 2.5 million.

The fastest growth in the last quarter of 2006 was the value of contracts for engineering projects, which increased by 95.4 percent year-on-year. This sharp increase is again explained by the costly reconstruction of the Czech Republic’s infrastructure and the construction of new motorways, the ČSÚ reported.

“The public sector is the main driver of growth in the volume of construction orders,” said Vladimír Pikora, analyst with brokerage Next Finance. Even the low number of public orders pushed the volume of the orders up, he added. He expects that this year the growth in the volume of orders will slow.

Despite upgrades, Czech daily Právo reported that 44 percent of the country’s 49,000 kilometers of second- and third-grade highways are still in a state of disrepair. Moreover, 1,705 of the country’s 12,520 bridges on these roads are also in need of repair, according to the state-run roads administrator Road and Motorway Directorate (ŘSD). A total of 1,352 bridges were built before 1900 and 4,090 bridges were built between 1901 and 1950.

The State Fund of Transport Infrastructure (SFDI) estimates that Kč 42 billion would be needed immediately to repair Czech roads. About Kč 2.5 billion annually would be needed to fix the bridges.

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