Summary

The Italy Construction Market is estimated to grow at a CAGR of approximately 3.5% during the forecast period, driven by the government’s plans to upgrade infrastructure.

As per ANCE, the national association of construction companies, the construction investment increased 1.7% year-on-year, to about EUR 130 billion in 2019. The sub-sectors such as building construction industry is expected to grow at a CAGR of 2.9% approximately during the forecast period. The residential construction industry in value terms increased at a CAGR of 4.4% during the study period 2015-2019.

The value-added sector growth in the years 2017 and 2018 stood at 1.1% and 1.9% respectively. However, the sector value-added growth in the year 2019 increased multifold to reach 3.8%. The average sector growth over the past 3 years is at 1.1% and over the last 5 years is at -1.5%. Currently, the industry is facing one of the most challenging periods in the construction sector since the 2008 economic crisis. In Q4 of 2019, the number of new housing permits decreased by 0.9% which implies slower growth in the year 2020. Many constraints and challenges remain with high nation debts and weak housing markets. These factors will have a sturdy effect on the growth prospects of the Italian construction industry. However, it is expected to refine over the short to medium term, supported by changes in government policies to improve confidence in investors and the government's investment in the construction of commercial and infrastructure.

The impact of Covid’19 can be seen clearly on the construction market of Italy. In April 2020, estimates for construction output dropped by 51.5% in the month on month series, following the strong monthly fall of 36.4% reported in March 2020. In the three months to April 2020, the seasonally adjusted index of production in construction decreased by 33.2% compared with the previous three months. Year on year, the unadjusted index for construction output plummeted by 66.7%, while the calendar adjusted index sharply fell by 67.8%. In the first four months of 2020, construction output decreased by 25.2% in the calendar adjusted series and contracted by 24.4% in the unadjusted series.

Key Market Trends

Investments in Residential Construction Sector Holds the Major Share

Investments in residential building increased by 5.4% in 2019 and renovation rose 0.7, supported by fiscal incentives from the government. Although commercial construction investment increased by 2.5% in 2019, the market will be impacted by lower business investment in the currently feeble economic environment. Public construction investment increased by 2.9% in 2019 after observing annual decreases since 2016 mainly driven by building projects of municipalities.

Investments in the construction sector continue to grow, driven by the resumption of public works. In 2018, investments in the residential sector value up to USD 82.6 billion whereas investments in non-residential and public works stood at USD 46.7 billion and USD 26.52 billion. While the overall value in Italy in 2018 came to USD 155.6 billion, an increase of 3.5% is expected by the end of 2019 followed in 2020 by a further +2.4%. During the forecast period, residential construction is also expected to maintain an expansionary profile, but at a more moderate pace than in 2018-2019, benefiting from the good formation of disposable income of families and the low levels of interest rates.

Investment in Civil Construction Works to boost the Italy Construction Sector

The construction sector in Italy is expected to grow during the forecast period driven by government investments in developing public assets and infrastructure. The civil construction sector is estimated to show an accelerated growth during the forecast period which is driven by a large number of public resources made available in 2016-2019 and as well as the funds allocated by Budget Law 2020 to various central and regional administrations in order to carry out several civil works and public works. The funds are allocated mainly to develop sustainable living. The most important funds include the new edition ofmaxi-fund for investments of central administrations, with an endowment of USD 25 billion variously distributed over the period 2020-2034, and loans to municipalities for public works amounting to 2.5 billion during 2020-2024, for urban regeneration interventions USD 9.62 billion over the 2021-2034 period and for the design of the works USD 3.02 billion over the 2020-2034 period. In addition, other measures are anticipated in approval of the maintenance of the public assets, focused in particular at schools and energy efficiency measures, such as the allocation of resources (USD 3.92 billion) to metropolitan cities and such as the Urban Renewal Plan aimed at reducing housing problems in urban areas, especially in the suburbs.

Competitive Landscape

The report covers the major players operating in the Italy Construction Market. The Italy market is highly competitive with several players competing for the major share. The market is fragmented, and the market is expected to grow during the forecast period due to the increase in the construction investments and up-coming major projects in the country and other few factors are driving the market. As per ACNE rankings, Bonatti secures rank among the top 5 Italian construction contractors present abroad.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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