OverviewBuilding permits and completed buildings trending downwards – 2nd Quarter 2008
In the second quarter of 2008, more than 10,100 buildings were licensed and approximately 6,500 buildings were completed. These figures represent negative annual average changes of 7.4% and 20.1%, respectively.
From the previous quarter, the number of building permits and of completed buildings decreased by 5.8% and 14.6%, respectively.
Characteristics of Market
The Portuguese construction market is worth about £10bn. It sustains 21,588 (2012) companies, and employs around 357,200 people (2012).
The number of companies in this sector varies depending on the sources of information. According to the data provided by INE, in 2012 the construction sector represented circa 12% of the companies in the non-financial production sector in Portugal.
In 2012 the employment and the volume of work in the construction sector registered a low performance and a decrease of 18.9% e 17.5%.
Very few foreign contractors operate directly in the market, but several French and Spanish companies have significant stakes in local companies.
Building materialsThe companies involved in this sub-sector are mainly producers of five products - ceramics, cork, wood, metal products and ornamental stones. This sub-sector includes more than 5000 companies, 15% of which are exporters.
The market for building materials is estimated to be worth £16bn per annum. About £750m worth of materials are imported, primarily from EU countries. Distribution in the market is fragmented - there are close to 1,100 wholesalers and over 6,000 retailers. The majority are small companies employing 6 to 10 people that operate exclusively on a regional basis. Only 20 companies have annual turnovers of £10m or more.
The latest export value of Portuguese building materials has reached around €1.2bn, and the main markets are E.U. member states, USA, Japan and it encompasses users in housing, commercial as well as hotel construction.
Apart from being highly fragmented, the builders' merchants tend not to specialise in particular ranges of products. Most companies sell heavy (cement, sand, bricks, etc) and light (sanitary ware, plumbing accessories, floor and wall coverings, etc) products. Only a few specialise in pre-stressed concrete products, HVAC equipment, paint, timber floors or wallpapers, etc.
This sector includes mostly small and medium sized companies: in the sub sector of the non metallic minerals 74% of the companies have less than 9 employees and a sales volume of € 0, 1m per company. On the sub sector of other materials there is around 2 900 companies.
The builders' merchants' main customers are mainly large contractors and public entities (25%); small and medium sized contractors (35%); construction industry professionals (15%); private individuals (15%) and other retailers (10%).
Some large national and foreign groups have recently entered the market and set up branches in the country's largest cities. These groups include MaxMat, Aki, Mestre Maco and Bricomarché. These groups have rapidly established themselves as the largest merchants operating in the market and also the ones with the widest geographical coverage.
An increasing number of small independent builders' merchants are joining APCMC's (Builders Merchants' Association) CentralMat central buying office operation, probably in response to the large group's entry into the market. CentralMat buys in bulk at discounted prices for quantity purchases and sells at market prices - thus affording larger profit margins to its shareholders, who buy only small quantities as independents.
Market trendsBy its characteristics the construction sector is orientated for the internal market, the commercial relations with the exterior not being very relevant. The civil construction sector needs to invest in markets where it can have economic benefits, for example Africa, Brazil, Spain, etc.
To overcome the constraints which create some difficulties in the access to the big international and European markets, the companies need to become efficient and competitive. According to the INE conjuncture analysis for the first 2004 quarter, and after the strong contraction in 2002 and 2003, the sector seems to resurge slowly.
The expectations are less negative in all the activity segments, namely in the public works construction. The investment in the housing segment does not give recovery signs due to decrease of the number of licences issued; however the recovery of the sector might be in the implementation of recovery works in order to implement the new renting law disposals.
POLIS, an €800m central government-funded programme for the restoration and improvement of city centres has just started and should lead to numerous opportunities for restoration and other building materials and services.
CompetitionCompetition in the sector is intense, from both domestic and foreign suppliers. There are nearly 100 well-established local manufacturers of building materials. They manufacture products ranging from clay bricks and other ceramic products to PVC window frames and top quality bathroom fittings.
There are also several well-known foreign suppliers, such as Gröhe, Henkel, Sika and Weber & Broutin, who have established their own local manufacturing facilities. Others, such as Roca, have taken over local distributors.
Spain, Italy, Germany and France are Britain's main competitors. Spain supplies almost a third (£250m) of all building materials imports. Britain exports an average of £30m.
Specificity of the marketThe quality of personnel in the Portuguese construction sector varies widely. There are a number of well-qualified and internationally respected architects and engineers who bring quality and innovative technology to the market. Much of the labour force is, however poorly trained. Pay levels are about 60% of those in Britain. This factor also influences the low productivity in the sector. To improve this indicator several training programmes have been implemented, namely the management advanced programme for construction and public works executives, conceived in collaboration with some companies in the sector. These programmes aim to rethink the companies' strategies and organisation in order to prepare them for a context of international competition and the entrance in the Portuguese market of foreign companies
These factors often hinder the introduction of new construction technology and can force contractors to downgrade architectural and engineering specifications.
Also, both engineers and architects have the right to "design" buildings, which can have a negative effect on developments in the range and quality of building materials used in the market.
Planning and project management in Portugal tends to be poor and can result in over optimistic deadlines. This can lead to reductions in the quality of the materials used and delivery dates.
The quality and innovation in this sector are very incipient. The innovation programmes cover traditionally advanced technology sectors, but the trend is applying it to other sectors, including the construction.
The execution of policies that mitigate these conditions might re-launch the sector, such as the new licence legal regime, reduction of the late payments from State to companies, etc. The development of training, information and regulation activities are a priority and might contribute to an improvement of the sector productivity levels.
Bureaucracy and fiscal measures
Labour force poorly qualified
The future of the sectorThe construction sector has progressed during 2005 in a very unfavourable manner. After some recovery signs in the period between May and August 2005, the production rhythm of the engineering segment registered a very negative result. The entrepreneurs of the sector are very concerned with the future of their companies.
Despite the negative evolution of the sector, globally the percentage of use of the companies' production capacity was superior to the registered one year ago. (73, 3 in October 2004 and 76, 3 % in October 2005).
The entrepreneurs have also identified main obstacles to the development of the companies' activities, the low level of the demand for the sector products, the high fiscal obligations and the late payments from the State.
The entrepreneurs involved in the public works identify other obstacles namely the reduced number of public tenders, excess of competition and the delay in the administrative processes.
Concerning the future evolution of the sector, the entrepreneurs still have a pessimistic view relating to the production perspectives, employment evolution or either the applicable prices.
Concerning the private works, the investment contraction results from the weak economic growth and the uncertainty generated from the recent alterations to the patrimony taxation. Therefore ANEOP projects a break of 8% in the housing construction production. The recovery might begin with several new public projects in 2005 and 2006 namely the Douro Litoral concession and the high-speed rail network.
According to the specialists in the sector a way to recover construction activity in Portugal would be to utilise properly the potential of the rehabilitation market in Portugal. For that purpose it would be urgent to eliminate the financial and legal constraints that make this market unattractive. In Portugal rehabilitation represents 5% of the total of the civil construction sector, against 24% in Spain and 33% of the European average.
The internationalisation appears as another alternative to some companies, with good examples of some Portuguese companies that are working in the already existing external market, namely in Latin America and Eastern Europe.
For the period 2004/2006 a a moderate increase of the construction sector in Europe is expected .
Useful contacts in the sector
Associação de Empresas de Construção e Obras Públicas – AECOPSRua Duque de Palmela, 20
Tel: + 351 213 110 200
Fax: +351 213 562 816
Associação dos Industriais da Construção Civil e Obras Públicas –AICCOPNRua Álvares Cabral, 306
Telefone: + 351 22 340 22 00
Fax: + 351 22 340 22 97
Associação Nacional de Empreiteiros de Obras Públicas –ANEOPRua Castilho, nº 57 R/ch Dto
Tel: + 351 21 382 55 20
Fax: + 351 21 386 15 38
Associação Portuguesa dos Comerciantes de Materiais de ConstruçãoPraça Francisco Sá Carneiro, 219-3º , 4200-313 Porto.
Telefone: 225 074 210
Fax: + 351 225 074 218 - + 351 225 074 219
E- mail: email@example.com
Presidente: Carlos Alberto Tomaz
Apeb-Associação Portuguesa das Empresas de Betão ProntoAvenida Conselheiro Barjona Freitas 10-A
Tel + 351 21 778 53 65
Fax + 351 21 778 58 39
Acepe-Associação de Controle de Qualidade de Espumas de Poliestireno ExpandidoAv D.João II 1.16.052,4º-I
Tel + 351 218951690
Fax + 351 218951691
Açomefer-Associação Portuguesa dos Grossistas de Aços, Metais e FerramentasR Filipe Folque 67,5º
Tel + 351 21 352 85 37
Fax + 351 21 356 03 71
Apicer-Associação Portuguesa da Indústria de CerâmicaR Cel Veiga Simão Edifício-C
Tel: + 351 239 497 600
Fax: + 351 239 497 601
Apimineral-Associação Portuguesa da Indústria MineralAvenida Manuel Maia 44,4º-D
Tel: + 351 218499225
Fax: + 351 218497233
Assimagra-Assoc Portuguesa dos Industriais de Mármores, Granitos e Ramos AfinsR Aristides Sousa Mendes 3-B
Tel: + 351 21 712 19 30
Fax: + 351 21 712 19 39
Associação dos Industriais da Construção de Edifícios - AiceAvenida Ressano Garcia 13-r/c
Tel + 351 213815500
Fax + 351 213815509
Associação Nacional dos Industriais de Mosaicos HidráulicosPç Machado Assis 23,1º-H (Ed Arco)
Tel + 351 239 829 615
Fax: + 351 239 833 529
Associação Nacional dos Industriais de Produtos de CimentoR D.Filipa Vilhena 9,2º-D
Tel: + 351 21 799 53 70
Fax: + 351 21 796 40 56
Atic-Associação Técnica da Indústria de CimentoAv 5 Outubro 54,2º-D
Tel + 351 213510830
Fax + 351 213510838
Umac-União de Empresas de Materiais de Construção, ACER Brasil 504-A
Tel: + 351 239 701 743
Fax: + 351 239 401 007
Mota-Engil, SGPS, S.A.Edifício Mota - Rua do Rêgo Lameiro, 38
SomagueRua da Tapada da Quinta de Cima - Linhó
Tel: + 351 219 104 000
Fax: + 351 219 104 001
Direcção de Marketing e Comunicação/Marketing and Communication Department
Teixeira DuarteEdifício Dois, Lagoas Park, 2740-265 Porto Salvo, Oeiras
Tel. +351 21 791 23 00
Fax. +351 21 794 11 08
Grupo Soares da Costa, S.G.P.S., S.A.Rua Senhora do Porto, 930
4250 - 453 Porto - Portugal
Tel: : + 351 22. 83 42 200
Fax: + 351.22. 83 42 695
Commercial - National Division - firstname.lastname@example.org
International Division - email@example.com
African Division - firstname.lastname@example.org
Edifer-Construções Pires Coelho & Fernandes SARua Fontainhas 62 Venda Nv
Tel: + 351 214 759 000
Fax: + 351 214 759 500
C M E-Construção e Manutenção Electromecânica, SAPq Taguspark-Ed Ciência II 13,1º/3º
2780-920 Porto Salvo
Tel 214233100 Fax 214233199
CIMPOR - CIMENTOS DE PORTUGAL, SGPS, S.A.Rua Alexandre Herculano, 35
Tel.: + 351 21 311 81 00
Direcção de Relações Externas e Comunicação - email@example.com
Gabinete de Relações com Investidores/Investors Support Bureau
Representante para as Relações com o Mercado: Dra. Filipa Saraiva Mendes
CIMPOR - Cimentos de Portugal, SGPS, SARua Alexandre Herculano, 35
Telefones + 351 21 311 81 00/+ 351 21 311 88 89
Fax+ 351 21 311 88 67
Direcção Comercial/Commercial Department
Av. Severiano Falcão, 8 - Edifício CIMPOR
2685-378 Prior Velho
Tel.: + 351 21 940 86 00
Fax: + 351 21 940 87 60
C M P-Cimentos Maceira e Pataias, SAFabrica Maceira Liz-Maceira Liz
2405-018 Maceira Lra
Tel + 351 244777200
Fax + 351 244777533
Betão Liz, SAR Qtª Paizinho-Bloco 2,1º-E
Tel: + 351 214247500
Fax: + 351 214247500
BETECNA-Betão ProntoRua Quinta das Palmeiras nº 91-1º A-B-C, Torre Madrid
Tel:21 456 94 10 - Fax:21 456 94 39
SECIL-Companhia Geral de Cal e CimentoDirecção Comercial/Commercial Department
Av. das Forças Armadas, 125 - 6º
1600 - 079 Lisboa
Tel: +351 21 7927100
Fax: +351 21 7936200
General e-mail: firstname.lastname@example.org
Direcção Comercial/Sales & Marketing Department- email@example.com
Cimpor Betão-Indústria de Betão Pronto, SAAv Alm Gago Coutinho
Tel + 351 219105540
Fax + 351 219242516
AECOPS - Associação de Empresas de Construção e Obras Públicas
AEP – Associação Empresarial de Portugal
AICCOPN - Associação dos Industriais da Construção Civil e Obras Públicas
Associação Portuguesa dos Comerciantes de Materiais de Construção
GEE - Gabinete de Estratégia e Estudos - Ministério das Actividades Económicas e do Trabalho