The Czech Republic’s construction industry is expected to recover between 2016 and 2020 due to investment in road, rail and energy infrastructure expansion projects, according to a recent report by Timetric.

Discussing the industry’s performance from 2011 to 2015, the report titled "Construction in the Czech Republic – Key Trends and Opportunities to 2020" examines the factors behind slow growth during that period.

A weak economy undermined by inadequate demand, low-business confidence and an uncertain political scenario led to a flat out-turn, with the industry registering a compound annual growth rate (CAGR) of just 1.18% during the period.

According to the Czech Statistical Office (CZSO), the country witnessed a slump in its construction industry as evident by the fall in the number of building permits issued. A decrease of 6.5% was registered in 2015 including both residential and non-residential buildings.

The sector is, however, expected to register higher growth starting this year, on strong economic cues such as an increase in export demand and better employment opportunities, with investments anticipated in the industrial and residential segments. It is also anticipated to receive a boost through the government’s National Development Strategy 2011-2016, National Tourism Development Strategy 2014-2020 and the European Union (EU) Cohesion Policy 2014-2020. All these schemes are expected to attract investments in the public and private sector.

The Timetric report further highlights that demand for energy is expected to spur the growth of the construction industry with development anticipated in the energy and utilities construction market. The share of nuclear energy in the total electricity generation mix is forecasted to rise from 35% in 2014 to 46-58% by 2040.

Czech authorities have already initiated the financing of infrastructure projects leading to a slight increase in the building permits during 2015. Residential property prices also increased during this period buoyed by low-interest rates and improved business confidence.

Investment in road construction projects is also expected to yield good results in the coming years with major developments including the construction of the Prague bypass road and R35 expressway section, and repair of the D1 motorway between Mirocovice and Kyvalka, which will commence shortly.