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Fri December 04 2020

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Moderate increase predicted for French construction

17 Sep 18 French construction activity is predicted to rise at 2.6% this year after last year’s 4%, according to new analysis by construction equipment trade association CISMA.

image by CISMA; click to enlarge
image by CISMA; click to enlarge

New housebuilding had boomed in 2017 (+12.8%), said CISMA. However, activity is expected to grow at a much slower pace this year (+3.4%) as some programmes are being cut. The forecast shows a reduction of 10,000 starts in dwellings. Incentives, such as the Zero Rate Loan (PTZ) and the rental investment initiative Pinel will be refocused on areas where the demand for housing is the strongest. The reforms will also affect the social housing sector with an increase in the reduced rate of VAT and a drop in revenue from rent. In addition, the market is expected to suffer from the global deterioration in household income because of a sustained rise in house prices, while credit conditions will not improve.

After years of decline, non-residential construction recovered in 2017 with growth of 3.7%, said CISMA. The growth should continue in 2018, according to the figures for permits granted at the end of 2017. Overall, in 2018, non-residential construction should increase by 8.9% in volume, but the level of activity in 2018 will remain low compared to the past. All market segments, excluding agricultural premises, should contribute to this growth: industrial buildings is expected to perform the most strongly (+16.9%), followed by offices (+9.4%), administrative buildings (+7.1%) and retail stores (+1/5%).

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In 2018, civil engineering turnover is expected to continue rising (+4% in nominal terms). One major infrastructure project in particular - the Greater Paris project - will boost activity and generate 1.2% in additional growth. Excluding this project, the outlook remains positive (+2.8%), said CISMA. Activity will likely be driven by local government investment spending, private investment and ongoing infrastructure.

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