Construction industry saw stabilization last year in Latvia

Last year, construction sector turnover was 3.2 billion euros, and compared to 2022, growth was more than half a billion euros. This year is not likely to bring such significant growth of turnover to the sector, rather stabilization, according to industry representatives surveyed by Latvian Radi February 14.

Last year, the construction sector ended with significant growth, reaching a turnover of more than three billion euros. That allowed the industry to catch its breath after the past tough years.

“We had a fall in 2021 as a result of the Covid-19 pandemic but it was not as painful, about a 6% decline in the construction industry. We saw quite a sharp drop in volume in 2022. But in the past year, both the sector has stabilized and we also see a rapid increase in production, which reached nearly 19% last year according to statistics,“ Olga Feldmane, director of the Ministry of Economics Construction Department, told Latvian Radio.

Construction production volume in actual prices (billions)


She predicted that positive growth in the construction sector is expected also in this and future years, given the availability of European Union funds and the implementation of the ambitious Rail Baltica project.

Normunds Grīnbergs, head of the Latvian Builders Association, agreed that last year there was indeed stabilization and even an increase in volume in the sector. In addition, many sites that were either temporarily stuck or stopped altogether in the last two or three years due to rising construction costs, continued work.

“So a lot of the structures were finished. But this season - autumn 2023/winter 2024 - saw a drop in the volume of construction in some ways as previous sites were completed, while the number of new sites is small.

“Builders say that there are few construction tenders announced this winter. And there are very many applicants – more than ten applicants per construction. It's a signal that there are few tenders for the foreseeable future. When there is little work, there is dumping. Then the quality is gone, the builders are fighting for survival,” said Grīnbergs.

Grīnbergs emphasized that the drop in volume and fluctuations are closely related to the transition of European Structural Funds periods. While construction should currently have active facilities co-financed by the Structural Funds money available for the period 2021-2027, the reality is different.

“Nothing from the Structural Funds is in construction yet. No shovel has been put to the ground by anyone to absorb any of the funds. [..] There are three years left and we will now try to do the seven-year plan in three years. There will be another climb again. There will be plenty of work. There will be one or two bidders per tenner. Prices will go up,” said Grīnbergs.

Experts surveyed by Latvijas Radio agree that the number of objects as high as last year is not expected yet, however, this year work will continue on several ambitious projects.

“Last year we started the great construction of Rail Baltica and in Riga we see the construction site of the station. It will also continue throughout this year, which is very significant. In the context of Rail Baltica, I would also like to mention the the ambitious expansion of Riga airport. We know a structure that was planned a long time ago and is now underway. It is the construction of the Liepaja Prison complex. In Stradiņš hospital, construction continues unsuccessfully, with difficulty,“ Grīnbergs noted.

Ints Dālderis, head of the Real Estate Alliance, also said this year will bring the implementation of several ambitious projects in the office, trade, and industrial facilities segments. “But if we're talking about bigger ones, one would have to mention the Novira Plaza project, which is outside the station with 20 thousand square meters. The Skanste neighborhood has a second “Verde” office center, the second round with nearly 14 thousand square meters. We have a Depo DIY shop in Marupe planned,” Dālderis said.

There will also be three major industrial logistics centers in the airport district this year.

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