Construction in Latvia – Key Trends and Opportunities (H1 2021)

Prior to the Coronavirus (COVID-19) outbreak, the Latvian construction industry lost momentum in 2019, with growth falling to 2.9%, from 11.3% in the previous year. Following the disruptions due to the COVID-19 containment measures, the industry grew by a marginal 1.9% in 2020, with overall growth for the year being shored up due to a high 15% in the first quarter of the year prior to the outbreak. GlobalData expects the industry to recover and regain some momentum this year and grow by 4% in real terms in 2021. According to GlobalData’s “Construction Risk Index (CRI)” update for Q1, Latvia scored a rating of A2, with countries with an A-rating considered to be in a robust state, owing to few, if any, financing, operating or market difficulties and general political and economic stability. Project operators are therefore not expected to face any major disruption at the country level that could result in project failure.

In March 2020, the government had announced containment measures in response to the pandemic. Despite the restrictions, the construction activity was not completely suspended, and the industry continued to operate at 85% capacity. However, construction progress was hampered by the delay in delivery of building materials, as well as difficulty in the movement of workforce and materials. In a positive development for the industry, in May 2020 the Prime Minister announced that the government will focus on three main areas in its economic recovery plan, including infrastructure. The plan involved an allocation of EUR75 million (US$82.6 million) for the construction and maintenance of road infrastructure in 2020.

In the short term, the construction industry’s output will be weighed down by weak investor and consumer confidence amid weakness in the tourism and transport sectors. The uncertainty about the evolution of the pandemic in the country and recovery of the global economic conditions could also pose a downside risk to the industry’s output in the short term. On a positive note, however, in December 2020 the government approved a new healthcare package to support the sector amid the current crisis. The package includes allocations to boost laboratory services, build and renovate hospitals and other healthcare infrastructure in the country – this will support the industry’s output over the short term.

Over the remainder of the forecast period, the industry is expected to register annual growth rates in the range of 2.6-3.9% between 2022-2025, supported by investments on infrastructure, residential and electricity infrastructure projects. One of the main projects which will support the industry’s output over the forecast period is the Rail Baltica Project. In a recent development, in March 2021 a contract worth EUR236.9 million (US$272 million) was awarded for the construction of the Rail Baltica station and related infrastructure works at the Riga international airport. The government is also preparing a plan to invest EUR5.9 billion (US$6.5 billion) over the next two decades to upgrade 1,020km of the state’s main roads into four-lane highways – this will support the industry’s output over the long term.

This report provides detailed market analysis, information, and insights into the Latvian construction industry, including –

– The Latvian construction industry's growth prospects by market, project type and construction activity

– Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Latvian construction industry

– Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Scope

This report provides a comprehensive analysis of the construction industry in Latvia. It provides –

– Historical (2016-2020) and forecast (2021-2025) valuations of the construction industry in Latvia, featuring details of key growth drivers.

– Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector

– Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.

– Listings of major projects, in addition to details of leading contractors and consultants

Reasons to buy

– Identify and evaluate market opportunities using GlobalData's standardized valuation and forecasting methodologies.

– Assess market growth potential at a micro-level with over 600 time-series data forecasts.

– Understand the latest industry and market trends.

– Formulate and validate strategy using GlobalData's critical and actionable insight.

– Assess business risks, including cost, regulatory and competitive pressures.

– Evaluate competitive risk and success factors.

Table of Contents

Table of Contents

1. Construction Outlook

2. Construction Industry: At-a-Glance

3. Latest News and Developments

4. Project Analytics

5. Construction Market Data

6. About GlobalData

6.1 Definitions

List of Tables

List of Tables

Table 1: Construction Industry Key Data

Table 2: Latvia, Top Construction Projects by Value

Table 3: Latvia, Construction Output Value (Real, US$ Million)

Table 4: Latvia, Construction Output Value (Nominal, EUR Billion)

Table 5: GlobalData Construction Market Definitions

List of Figures

List of Figures

Figure 1: Latvia, Construction Output Value (Real, US$ Million, 2017 Prices and Exchange Rate), 2016-2025

Figure 2: Latvia, Construction Output Value, by Sector (Real, US$ Million), 2016-2025

Figure 3: Eastern Europe, Construction Output (Real % Change), 2020 and 2021

Figure 4: Latvia, Construction Projects Pipeline by Sector (US$ Million)

Figure 5: Latvia, Construction Value-add, In Constant 2015 Prices, in EUR Million, % Change YoY

Figure 6: Latvia, Volume of Construction Output, In Current Prices, % Change YoY

Figure 7: Latvia, Number of Permits Issued for Office Buildings, % Change YoY

Figure 8: Latvia, Number of Permits Issued for Hotel, Wholesale and Retail Buildings

Figure 9: Latvia, Non-Resident Visitor Arrivals, In Thousands, % Change YoY

Figure 10: Latvia, Value-Add of Accommodation, Food Services, Arts, Entertainment and Recreation Activities, in Constant 2015 Prices, in EUR Million, % Change YoY

Figure 11: Latvia, Manufacturing Value-add, Constant 2015 Prices, EUR Million, % Change YoY

Figure 12: Latvia, Volume Indices of Industrial and Manufacturing Production, 2015=100, In Seasonally Adjusted Terms, % Change YoY

Figure 13: Latvia, Exports, in EUR Million, % Change YoY

Figure 14: Latvia, Volume of Construction Output of Roads and Railways, In Current Prices, % Change YoY

Figure 15: Latvia, Electricity Generated and Consumed, in Million kWh

Figure 16: Latvia, Volume of Construction Output of Utility Projects for Electricity and Telecommunications, In Current Prices, % Change YoY

Figure 17: Latvia, Value-add of Education, Health and Social Care Services, In Constant 2015 Prices, in EUR Million, % Change YoY

Figure 18: Latvia, Value-add of Real Estate Activities, In Constant 2015 Prices, in EUR Million, % Change YoY

Figure 19: Latvia, Number of Permits Approved for Residential Buildings, % Change YoY

Figure 20: Latvia, House Price Index (HPI), 2015=100, % Change YoY

Figure 21: Latvia, Construction Projects Pipeline, Value by Stage (US$ Million)

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