31st March 2020

EdilBox, the Italian construction portal, is reporting that this is the result of the preliminary estimate conducted by CRESME analysts on the sectoral impact of the health emergency. The estimate was made, together with a detailed analysis framework, in the context of the CRESME LAB seminar on the market scenario, the CRESME analytical think tank in which important industries and distributors of the construction sector actively participate. The seminar was held …..

….. remotely on March 26 within the new network of connections (CRESME LAB Remote Think Tank) that CRESME is developing. In 25 days there will be a second forecast and the start of a new operation for CRESME LAB, not only of an analytical but tactical and strategic nature.

Based on the analyses carried out, building and civil engineering, including investments in new construction and extraordinary maintenance, could undergo a contraction (valued at constant values) of -22.6% compared to 2019. By comparison, in 2009, the blackest year for Italian construction during the crisis, the drop in investments had been -9.6%.

It should also be considered that before the health emergency the buildings experienced a phase of growth that was consolidating; The expectations at the end of 2019 were in fact comforting, with an overall growth of + 2.4% (which followed the + 3% of the past year), driven by the new construction activity (especially in the infrastructure sector). The investments expected in 2020, valued at 2019 values, were therefore equal to approximately 141 billion euros; the preliminary estimates of Cresme indicate, however, that we could stop at just 107 billion euros, a potential loss, in fact, equal to 34 billion euros. On the other hand, if you look at the 2019 figure (138 billion), the fall is quantifiable at 31 billion euros.

At the sectoral level, the impact on construction activity would equally affect both the residential and non-residential sectors (public and private). Investments in new homes could collapse by more than a fifth compared to 2019 (-22.6%), while the blocking of the renovation activity could be heavier, quantifiable at -23.5% of the expenditure. The residential sector could therefore lose, compared to the expectations of the beginning of 2020, 3.9 billion of new construction and 13.2 billion of renovations. Equally negative numbers could concern the non-residential sector (-23% for new private construction, -27% for new public construction, -30% for redevelopment in the private sphere and -27% in the public sphere), which are equivalent to 3 , 2 billion for the non-residential new private sector (-1.3 billion for the public) and 6.8 billion for private redevelopment (-1.7 billion for the public one). Although smaller, the figure on lower investments in infrastructure works could also be dramatic, which would drop by -12.6%, both in the new construction (-2.5 billion) and extraordinary maintenance (-1 , 9 billion).

At the basis of this scenario there are assumptions about the extent and duration of the blockade of the activity imposed on the sector within the framework of the ongoing epidemic:

almost total suspension of construction sites for a quarter for new non-public buildings;
almost total suspension of construction sites for a quarter for building redevelopment interventions (unless repairs are postponed, consider that in the months between March and May 35% of the interventions are carried out)
partial suspension of construction sites for civil engineering works of new construction and extraordinary maintenance (excluding strategic infrastructures, healthcare construction, etc.)
restart marked by caution from June to October.

These are hypotheses which, as such, will be subject to revision in the coming weeks, as the situation develops.

For further details, click here.