Insight into Construction in the Czech Republic

After several years of downturn, the Czech construction sector is recovering and the outlook for the coming years is encouraging, with growth rates exceeding 2% for 2017-2018, driven by an overall strong economic outlook. The sector has recovered from productivity falls in building construction (-16.1%) and in civil engineering (-27.2%) between 2009 and 2014. Between 2008 and 2014, investment fell in both residential and non-residential building construction (-23.8%) and civil engineering (-23.9%). In contrast, there was a much lower fall in total construction sector employment (-6.7%) between 2009 and 2013.

To counter the lack of investment and to improve the underdeveloped infrastructure, the Czech authorities launched an ambitious policy initiative in 2013 to enhance the transport network – the Transport Policy of the Czech Republic for 2014–2020 with the Prospect of 2050. The Transport Policy aims to invest CZK 43 billion (EUR 1.6 billion) new transport infrastructure construction (particularly TEN-T) and maintenance.

The housing market is experiencing growing demand. The luxury housing market, in particular, is experiencing strong growth with prices of high-end apartments rising fast. In contrast, supply has been lagging behind, in part due to the lengthy and inefficient construction permits process. Demand for housing is fuelled by record-low mortgage rates and rising household incomes. These developments led to a strong recovery of house prices since 2013, which had fallen dramatically after the financial crisis in 2008.

The Czech housing policy relies on the ‘Housing Policy Concept of the Czech Republic to 2020’ which was launched in 2011. The State Housing Development Fund (SHDF) is the main housing support instrument, providing various forms of financing to support housing policy. PANEL 2013+ is one of the key SHDF-funded programmes that provides low-interest loans for energy efficiency renovations in residential buildings. The government is also working to strengthen the use of BIM in Czech construction projects by setting up an interdepartmental BIM expert group in 2015.

Despite the positive outlook, the Czech construction sector is still being hindered by a number of issues. One issue is that lengthy and inefficient administrative procedures mean that it takes nearly 250 days to obtain a building permit. Other issues include the low absorption of EU Funds and the critical shortage of qualified workers and craftsmen. The number of masons and flooring installers fell by 40% between 2005 and 2015, while plumbers and heating engineers decreased by 30%.

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 the Czech Republic and other Member States, and gain insight into the European construction sector.