"France Infrastructure Report Q2 2013" now available at Fast Market Research

From: Fast Market Research, Inc.
Published: Tue May 07 2013


BMI View: Despite five consecutive years of contraction between 2008 and 2012, we see little scope for recovery in the construction sector during 2013. France's weak macroeconomic outlook remains the most significant impediment for construction sector growth over the near-term. However, the outlook is brighter long term, as the country's hosting of the UEFA Euro 2016 Football Championship will provide a welcome source of new contracts for developers.

Latest available estimates from the French National Institute for Statistics and Economic Studies indicate that the domestic construction sector failed to post any recovery during 2012 and contracted by an estimated 0.4% year-on-year (y-o-y) in real value terms. With the residential and non-residential construction sub-segment accounting for an estimated 83.1% of total construction industry value in 2012, it is unsurprising that the weaknesses in the housing sector are dampening growth in the industry. House prices in France reportedly dropped 1.7% y-o-y during 2012, marking the fastest decline since Q409, according to INSEE estimates.

Full Report Details at
- http://www.fastmr.com/prod/584512_france_infrastructure_report_q2_2013.aspx?afid=303

As such, much of our optimism for the French construction industry comes on the back of growth in the infrastructure industry, which we will outperform the overall construction sector. Buoyed by growth in the transport segment, we expect the share of infrastructure industry value in the total construction industry to increase from an estimated 13.4% in 2012 to 20.1% by 2022. This will lead to average annual real growth of 4.5% in the construction sector over the period.

Key projects and developments that prompt this view are:

* Three high-speed lines (LGV Sud Europe Atlantique, Contournement Nimes-Montpellier (CNM) and Bretagne-Pays dela Loire), costing a total of EUR29bn, will be a key thrust behind value creation for the French infrastructure sector. At a time when funding of projects is a key concern, the high-speed project connecting the cities of Le Mans and Rennes proved its worth in October 2012, when the European Investment Bank (EIB) signed the first instalment of EUR100mn (US$129.1mn) out of a total EUR300mn (US$387.4mn) loan to finance the project.
* The government's commitment towards the railway sector has remained intact in 2013, with Prime Minister Jean-Marc Ayrault announcing the plans to proceed with the Nouveau Grand Paris project. The programme entails construction of a network of orbital automatic metro lines stretching nearly 200km and serving the outer suburbs of the capital. The project has a budget of EUR26.5bn and is due to be completed by 2013. In addition to this, the programme will also see nearly EUR7bn being allocated towards improving some existing routes by 2017.

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