OSLO, NORWAY: Veidekke expects activity in the Scandinavian contracting markets to remain at current levels until the end of 2023, with generally similar headline developments all three countries.

“The markets are returning to normal, pre-pandemic conditions. Our forecast in the spring that activity levels would remain high and stable has been confirmed thus far, and we expect strong momentum in the construction and civil engineering sector going forward,” says Veidekke ASA Chief Analyst Kristoffer Eide Hoen.

The big topic in the construction and civil engineering industry in 2021 – both in Scandinavia and globally – has been sharp price increases driven by restricted supplies of building materials and other input factors. Prices of materials like rebar and lumber remain far higher than normal.

In addition, increased taxes and CO\2\ emissions quota prices are increasing the cost of energy-intensive products like metals and cement. Various additional factors also require clarification, including the situation of the cement producer Cementa. However, most identified delivery challenges appear to be temporary and are expected to be resolved, provided that society continues to reopen following the pandemic.

Demand in the contracting markets has remained strong despite rising prices, and Veidekke expects stable markets for the next two years. The estimated order intake has exceeded expectations in most segments of the commercial buildings sector. The residential segment has also reported strong demand, and indicators of overheating are on the decline in all three countries.

Investment levels were very high in the civil engineering market at the beginning of the year. In Sweden, previously strong growth is expected to slow somewhat going forward, while further growth is anticipated in Norway following a temporary slowdown in 2020.

Continued growth is expected in the transport infrastructure sector. Road investment will slow somewhat in Sweden, while railways investment growth is predicted to remain strong throughout the forecast period. While the recent change of government in Norway may result in some revision of adopted plans, transport infrastructure looks set to remain a priority.