The economic growth outlook remains good both globally and in Finland. For now, the accelerated inflation, productional bottlenecks and the rising number of COVID-19 infections have not resulted in downward revisions to economic forecasts.
In Finland, construction will increase both this year and the next. The growth is driven by residential construction this year and by commercial construction next year.
Construction equipment rental grew by approximately 3% in 2020. The forecast for 2021 is +2% (+1% in June). Since construction in 2022 will focus on commercial construction, which is rental equipment intensive, the volume growth in the rental market will accelerate next year and even reach 6%.
Economic forecasts have been raised over the summer – potential economic threats have not yet translated into lower economic forecasts
Massive reflationary measures and zero interest rates in various countries have boosted the economy. Accelerated inflation and problems with product availability have continued after the summer but have not yet led to slower economic growth predictions than previously. The confidence and Purchasing Managers’ Indexes remained high among businesses in October but have somewhat reduced after the summer. Low interest rates and loose monetary policy still continue even though interest rates are now predicted to rise earlier than in previous projections. As regards construction, investors’ interest in dwellings and properties persists.
Construction will grow both in 2021 and 2022
Construction in 2021 has been driven by the construction of new housing. The growth has been produced by consumers and investors alike and it also covers 1+2 family houses and attached houses. The number of building licences for housing construction rose to the level of 46,000 dwellings in September. It is predicted that there will be 43,000 construction starts this year and 38,000 starts next year. The reduction marks a return to a demand-based level from overly high production volumes. The level will also continue to even out after next year.
The strong economic growth, the high utilisation of capacity by businesses and public sector investments in construction will be reflected in strong growth in commercial construction next year. The volume will remain unchanged in 2021 while a growth of nearly 10% will be seen next year. Commercial construction will drive construction next year and heavily support equipment rental. Construction equipment is used more in commercial construction than in residential construction. The growth in commercial construction is broad-based and covers more or less all subsectors, including business, office, public and industrial buildings. Investors’ interest in commercial buildings has also returned to an uptrend.
Renovation is on the rise and will further accelerate next year. Last year, renovation was mostly kept going by DIY projects. Professional renovation has clearly picked up this year, which has caused labour shortage, rising prices and problems with receiving quotes. Renovation intentions will also be on a clear rise among housing companies next year. Major renovation projects are under way or about to be launched, such as those of the Finlandia Hall, Hotel Grand Hansa/Seurahuone, the University of Helsinki and Women’s Hospital.
The volume of civil engineering construction will remain high but reduce slightly both this year and the next. The number of traffic infrastructure projects in large cities is high (tramlines, metro, etc.).
Construction equipment rental market will grow by 2% in 2021
– growth will pick up next year and even reach 6%
The value of rental activities totalled €880m last year, marking a 3% growth from the year before. Construction is by far the largest sector of rental equipment users, valued at approximately 590 million euros. A third of rental equipment use, 300 million euros, comes from non-construction areas, such as maintenance, installation and other work in industry, the service and events sector, public administration and consumer projects.
The field of construction equipment rental has experienced more positive developments in the COVID-19 era than most other sectors. The rental market will grow by 2% in 2021. Growth will be highest in non-construction fields and housing construction. The growth will pick up clearly in 2022 and total approximately 6%. Growth will be highest in commercial construction, at nearly 20%.
Construction equipment rental for other fields will increase with economic growth. Scaffold rental, for example, will benefit from the higher number of public events after the slow COVID-19 era. The use of rental machinery in other fields is becoming increasingly common and it is also used for an increasing number of tasks. Machinery use during a major downtime at the Porvoo refinery significantly increases machine use in 2021. The total rental for other fields will grow by +10% this year but decrease by -1% next year.
Equipment rental for renovation has suffered from the reduction in professional renovation but it has started to grow this year and will pick up speed next year. COVID-19 boosted the number of self-directed renovation projects to a notable degree but related equipment rental is only minor.
The rental of scaffolds and weather protection equipment will continue to increase more than that of other equipment types.
Last year, the sales and imports of construction machinery did clearly better than expected and ended up in a slight growth. This year’s assessments predict growth, and the growth expectations have risen to +2–5%. The growth expectation for next year exceeds 5%.
Table: Construction equipment rental market and volume changes (excluding price changes).
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