Insight into Construction in Portugal by the European Construction Sector Observatory
The Portuguese construction sector was hit very hard by the economic crisis. The unstable macroeconomic situation was accompanied by a 19.1% decrease in the number of companies in the broad construction sector between 2010 and 2013, with the construction sub-sector suffering the greatest loss (-23.8%). Productivity also experienced a significant decline in 2008-2014, particularly in building construction (-56.6%), and the gross operating rate fell from 36.7% in 2008 to 8.5% in 2013, signalling a severe fall in the sector’s profitability.
Housing supply and affordability are very important challenges for the government. New housing supply fell by 83.3% between 2008 and 2015 and 58% of young people aged 18-34 are still living with their parents. Another contributory factor is the decline in the mean equivalised net income since 2008. In parallel, public and private investment in the sector has also significantly declined, with inland infrastructure investment falling from 1% to 0.2% of GDP in 2008-2013.
To address these issues, the government has introduced a number of housing schemes to stimulate the construction of affordable social housing (Programa Especial de Realojamento), to help young people and low-income households to access rental housing (Porta 65 Jovem and Mercado Social de Arrendamento), and to improve the rental market and encourage and support residential building renovations (Reabilitar para Arrendar).
The New Urban Lease Regime has introduced more flexible legislation to make the rental market more dynamic and competitive. The legislation is intended to encourage new building construction, without forcing developers to sell at a low price. The new regime also aims to encourage urban rehabilitation and mobility by encouraging the provision of housing solutions that are aligned with demand and needs and are more affordable to tenants.
To tackle the declining investment in infrastructure, in particular railways, the government introduced the Strategic Plan for Transport and Infrastructure 2014-2020 (PETI3+). The plan defines the EUR 6.7 billion priority investments in transport infrastructure, as well as the Railway Investment Plan 2016-2020, which is specific to the railways sector. The latter benefits from EUR 1.1 billion from the Connecting Europe Facility. EU-funds play an important role in infrastructure investment in Portugal, with EUR 859 million from the ESIF earmarked for transport and energy infrastructure for 2014-2020, and are driving the sector’s recovery.
Portugal is very active in the field of sustainable construction. Initiatives include the Sustainable Habitat Cluster, which promotes eco-innovation in the built environment, and the Energy Efficiency Fund, which co-finances energy efficient residential building renovations. Portugal has also developed two voluntary systems to assess the environmental performance and sustainability of buildings.
However, the Portuguese construction sector is still affected by the administrative burden imposed by the restrictive regulatory framework for the provision of construction services, as well as late payments and the tight national budget, which may hinder future investment in civil engineering.
The European Construction Sector Observatory is helping the construction value chain to confront the economic and social challenges that impact the construction industry. Through regular analysis and comparative assessments, the initiative aims to inform European policymakers and industry stakeholders on the market conditions and policy developments in the European construction sector. The key outputs of the Observatory include Country Fact Sheets that profile and analyse the construction sector in each Member State, Policy Fact Sheets on key sector-related policies in each Member State, and a series of Analytical Reports on the implementation of Construction 2020 Strategy objectives.
Visit the Observatory website to download analytical fact sheets and reports on Portugal and other Member States, and gain insight into the European construction sector.