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Construction in Argentina – Key Trends and Opportunities to 2018

65 pages report Published in Aug 2014
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Synopsis

This report provides detailed market analysis, information and insights into Argentine construction industry including:

  • Argentine construction industry's growth prospects by market, project type and type of construction activity
  • Analysis of equipment, material and service costs across each project type within Argentina
  • Critical insight into the impact of industry trends and issues, and the risks and opportunities they present to participants in the Argentine construction industry
  • Analyzing the profiles of the leading operators in Argentine construction industry.
  • Data highlights of the largest construction projects in Argentina

Summary

The Argentine construction industry increased in value, at a nominal compound annual growth rate (CAGR) of 21.55% during the review period (2009–2013). However, in real terms, the CAGR was only 3.54%, as a result of high inflation in the Argentine economy. This growth was supported by public investments in residential, infrastructural and commercial construction. Increased government investment, the adoption of a build-operate-transfer (BOT) model and private sector participation through public-private partnerships (PPPs) helped to increase infrastructure construction activity. Industry growth is expected to continue over the forecast period (2014–2018) as a result of the government’s focus on infrastructure and residential construction, improved investor sentiment, and an anticipated recovery in the global economy. The industry is anticipated to post a forecast-period CAGR of 22.53%. However, with high inflation in the country, the industry’s output growth rate in real terms is expected to be lower over the forecast period.

Scope

This report provides a comprehensive analysis of the construction industry in Argentina. It provides:

  • Historical (2009-2013) and forecast (2014-2018) valuations of the construction industry in Argentina using construction output and value-add methods
  • Segmentation by sector (commercial, industrial, infrastructure, institutional and residential) and by project type
  • Breakdown of values within each project type, by type of activity (new construction, repair and maintenance, refurbishment and demolition) and by type of cost (materials, equipment and services)
  • Analysis of key construction industry issues, including regulation, cost management, funding and pricing
  • Detailed profiles of the leading construction companies in Argentina

Key highlights

  • Since late 2013, construction activity in Argentina has been fairly weak, with the industry contracting by 2.1% and 9.9% in real terms in the first quarter of 2014 compared with the first and the fourth quarters of 2013 respectively. This followed an annual average growth of 1.8% in real terms in 2013. According to the country’s national statistical office, the Instituto Nacional de Estadística y Censos (INDEC), the construction industry’s output at constant prices fell from ARS37.8 billion (US$6.9 billion) in the fourth quarter of 2013 to ARS34.1 billion (US$5.3 billion) in the first quarter of 2014. With high inflation, a deteriorating business environment and depreciating domestic currency against the US dollar, the real growth rate of the construction industry’s output is expected to remain weak over the forecast period.
  • Under the Norte Grande III Infrastructure Program, the Inter-American Development Bank (IDB) granted an ARS1.6 billion (US$300.0 million) loan to Argentina in 2013 to enhance, improve and rehabilitate road corridors in the Norte Grande region. The tenure of the loan is 25 years, with a grace period of 5.5 years. The aim of the project is to improve the transport network, cut travel time, increase average annual traffic, and reduce transport costs and road accidents in Norte Grande. This is expected to drive growth in infrastructure construction over the forecast period.
  • According to the Central Intelligence Agency (CIA), 15.7% of Argentina’s population is aged 15–24 years, which has the potential to drive growth in the residential construction market. The growing young population resulted in a housing deficit of 2.5 million units in 2012. Despite a large number of housing units being built in the country since 2003, the supply is still not sufficient to meet the rising demand. Consequently, the government and private housing agencies are promoting various affordable housing projects in the country. These factors will support residential construction activity over the forecast period.
  • According to the INDEC, wholesale and retail sales turnover at constant prices grew by 1.7% in 2013 and 1.0% in 2012. The rise in retail sales represents a positive signal for the retail buildings construction category. Moreover, with a population of 42.2 million, Argentina has a large consumer base and its retail industry has the potential to expand. This will drive construction activity in the retail buildings category over the forecast period.
  • With the aim of promoting greater provincial and regional economic competitiveness, the Argentine government announced a total investment of ARS699.3 million (US$128.0 million) in 2013 under the Regional Highway Development Program, to improve, refurbish and expand road networks in the Jujuy and Santiago del Estero provinces. The project is co-financed by the Development Bank of Latin America, with a loan of ARS491.7 million (US$90 million). A contribution of ARS207.6 million (US$38.0 million) will be made by the Argentine government. The project involves the renovation and construction of 102.0km of roads in Jujuy and Santiago del Estero, which is expected to complete by 2015.

Reasons to buy

  • Identify and evaluate market opportunities using our 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 business strategies using Timetric's critical and actionable insight
  • Assess business risks, including cost, regulatory and competitive pressures
  • Evaluate competitive risk and success factors