Construction, Italian market growing until 2030

The long wave moved by the NRP has a time horizon extending to 2030: in the next six years the Italian construction industry is set to grow at an even faster rate than the EU average, with an important innovation compared to the past, namely that this growth will largely take place on the domestic market, traditionally stagnant, to which strong demand from abroad will however be added, with the global construction market expected to increase by 4.5% by 2030 and by 5.5% for infrastructure alone.

The estimates come from an analysis by Bain&Company on the challenges and opportunities facing Italian companies in the sector. "We are facing a particularly positive and in some respects unprecedented moment in history," explains Marta de Battisti, associate partner at Bain&Company. "Before the pandemic, Italian companies had a very small and weak domestic market, which was also burdened by bureaucratic obstacles, long start-up times and payment delays. This had a negative impact on profitability and financing, so that they necessarily had to open up to foreign markets to develop'.

With Covid, and in particular with the funds allocated by the NRP, the scenario has completely changed and many construction sites have also started up in our country, moreover with payment standards and financial conditions in line with the rest of Europe: "If in the 2015-2019 period the incidence of the domestic market on the total revenues of Italian companies was 14%, by 2023 this percentage will have reached 35%, bringing it to the levels of the other main European competitors, such as France and Germany," says Paolo Cerini, partner at Bain&Company. The domestic market has even become the engine of growth, especially thanks to investments in infrastructure and thus in major public works. Even on future prospects in the medium term, the Bain study is optimistic: total real spending on infrastructure in European countries is expected to increase at an annual rate of 3.5% in the period 2022-2026, with Italy showing the most significant growth (5.2%), almost doubling the European average.

A figure only apparently in contradiction with the one reported by Anac (and published in Il Sole 24 Ore on 6 July), according to which, one year after the entry into force of the new Procurement Code (1 July 2022-30 June 2023), the number of tenders has plummeted by 49%, while the value has fallen by 32%. Cerini observes: 'Large projects have multi-year cycles, so there is a marked asynchrony between the moment when the order is placed and when the work is grounded. The tenders for the large construction sites financed by the NRP, which are scheduled to be closed by 2026, have therefore been awarded mainly in the past few years and will translate into work, recruitment and revenue in the next five to six years.

The point, if anything, is to understand what will happen after that: 'On the period after 2030 there is more uncertainty,' Cerini explains. Certainly this 5% annual growth will not be maintained,' Marta de Battisti predicts. 'The market will be more stable in Italy: some estimates speak of a 'flat' situation from 2026 to 2030, so the scenario will change again in the Italian market, which will inevitably slow down. Today, on the other hand, Italian companies have two clear advantages from the situation that has been created: they have significant and still growing investments at their disposal, and "they can plan their activities on the domestic market because they have medium-term visibility on the works," adds de Battisti. "In the past there was a strong search for volumes and therefore they tried to take contracts outside Italy to make up for a latent domestic market, now there is a great opportunity for companies, which can make a selection and choose the best projects in terms of profitability as well.