Construction in Argentina - Key Trends and Opportunities to 2022

Construction in Argentina - Key Trends and Opportunities to 2022

Summary

Argentina’s construction industry recovered in 2017, and registered a growth rate of 12.4% in real terms, following a steep decline of 12.2% in 2016. This recovery was driven by positive developments in economic conditions, revival in investor confidence and investments in transport infrastructure, energy and housing. Additionally, government efforts to attract foreign investments to develop the country’s overall infrastructure supported the industry's growth. Consequently, the country’s construction industry’s output value, measured at constant 2017 US dollar exchange rates, increased from US$43.7 billion in 2016 to US$49.1 billion in 2017.

However, the recovery has been short-lived, with the pace of expansion slowing sharply in 2018. High inflation and the devaluation of the currency continue to hold back investment growth and create a challenging business environment for investors. In June 2018, the government secured a US$50.0 billion credit line from the International Monetary Fund (IMF) - which was increased to US$57 billion in September 2018 - which aimed at bolstering confidence and stabilizing the economy. In addition, the Central Bank of Argentina raised its benchmark rate from 45% to 60% in August 2018, in an effort to curb inflation and halt a slide in the peso. To meet the IMF’s requirements for the standby agreement, the government announced new austerity measures last September to cut the budget deficit and restore investors’ confidence, including new taxes on exports and the elimination of several ministries. Consequently, in October 2018, the lower house of Congress approved the government austerity budget.

Although growing at a slow pace in the early part of the forecast period, over the whole five-year period, the industry’s output value in real terms is expected to rise at a compound annual growth rate (CAGR) of 5.10%, compared to -0.64% during the review period (2013-2017). The expansion will be driven by the government’s efforts to develop the country’s infrastructure and improve the housing sector. With its public private partnership (PPP) initiative, the government plans to attract ARS438.9 billion (US$26.5 billion) in infrastructure investment by 2022. Additionally, the government’s focus on the development of renewable energy infrastructure under the Renovar program is expected to drive industry growth.

GlobalData’s "Construction in Argentina - Key Trends and Opportunities to 2022", report provides detailed market analysis, information and insights into the Argentine construction industry, including -
- The Argentine construction industry's growth prospects by market, project type and construction activity
- Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Argentine construction industry
- Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Key Highlights

- GlobalData expects the residential construction market to retain its leading position over the forecast period driven by government’s effort to reduce the housing deficit in the country, through the construction of affordable housing units under the ProCreAr and ProDeVi programs. The government aims to attract private investors under the ProDeVi program to build 10,200 affordable houses in the country by 2024. The government expects an investment of ARS3.7 billion (US$130.0 million) for the first set of 2,600 houses by 2021-2022, which is expected to support the expansion of residential construction output over the forecast period.
- Forecast-period growth in the energy and utilities construction market will be driven by public and private sector investments in energy construction project, especially investment in renewable energy projects. The government is currently seeking to expand the country’s power transmission network, with 3,300km of transmission lines expected to be built by 2021-2022. Investments in the oil and gas sector are also expected to drive growth over the coming years.
- GlobalData expects the infrastructure construction market to expand over the forecast period, driven by public and private sector investments in transport infrastructure. The government efforts to attract private sector investment in order to develop road, rail, airport and other transport infrastructure are expected to support the growth of the market over the forecast period. In 2017, the government launched the Safe Highways and Roads Network program as part of its PPP initiative. Under this program, the government aims to construct and modernize 810km of highways, 1,494km of roads and 252km of special routes through PPPs.
- Forecast period growth in the industrial construction market will be driven by the One Million Plan through which the government aims to double the country’s car production from 472,776 vehicles in 2016 to 1.0 million by 2023. In October 2017, General Motors Co. and its suppliers announced a plan to invest ARS8.3 billion (US$500.0 million) to produce a new Chevrolet model in the country by 2020.
- The total construction project pipeline in Argentina - as tracked by GlobalData, and including all mega projects with a value above US$25 million - stands at ARS1.4 trillion (US$85.8 billion). The pipeline, which includes all projects from pre-planning to execution, is relatively well balanced, with 47.7% of the pipeline value being in projects in the pre-planning and planning stages as of January 2019.

Scope

This report provides a comprehensive analysis of the construction industry in Argentina. It provides -
- Historical (2013-2017) and forecast (2018-2022) valuations of the construction industry in Argentina, featuring details of key growth drivers.
- Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
- Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
- Listings of major projects, in addition to details of leading contractors and consultants.

Reasons to buy

- Identify and evaluate market opportunities using GlobalData's 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 strategy using GlobalData's critical and actionable insight.
- Assess business risks, including cost, regulatory and competitive pressures.
- Evaluate competitive risk and success factors.