Polish construction and assembly production prices continue to rise in March 2025

According to preliminary data, prices in the construction and assembly production sector in Poland increased both on a monthly and annual basis in March 2025.

Compared to February 2025, overall prices rose by 0.5%. This increase was driven by a 0.6% rise in the construction of buildings, while prices in civil engineering and specialised construction activities each grew by 0.5%.

On an annual basis, the sector recorded a 3.8% price increase compared to March 2024. This annual growth was consistent across both civil engineering and building construction. Prices in specialised construction activities also saw a similar increase, rising by 3.7% year-on-year.

The data suggests a continued upward trend in construction costs across all major sub-sectors, reflecting ongoing pressures in the industry.

Source: GUS

Czech Republic’s government deficit reaches 2.2% of GDP in 2024

The general government sector in the Czech Republic recorded a deficit equivalent to 2.2% of GDP for the year 2024, according to data confirmed by Eurostat during its regular consultation process. The total government debt stood at 43.6% of GDP by the end of the year.

The Czech Statistical Office (CZSO) reported that Eurostat has verified the figures previously released on 2 April 2025. The validated deficit amounted to CZK 177.2 billion. Helena Houžvičková, Director of the Government and Financial Accounts Department at CZSO, noted that the data had been reviewed and confirmed as part of the routine consultation with the European statistics authority.

During the verification process, only a minor technical adjustment related to interest payments in the central government subsector was made for the years 2023 and 2024. This adjustment did not affect the reported balance or debt ratios presented in the official notification.

The figures reflect the first notification of government deficit and debt for 2024 as submitted to Eurostat, forming part of the European Union’s regular reporting framework.

Source: CZSO

New apartment sales in Brno double year-on-year as prices reach record high

Demand for new apartments in Brno surged in the first quarter of 2025, with 479 units sold—nearly matching total sales for all of last year. The average asking price per square meter also reached a record high of CZK 134,900, according to a report by a development company that regularly monitors the city’s residential market.

The growth in sales comes despite continued increases in apartment prices and only gradual declines in mortgage interest rates. According to Dalibor Lamka, the company’s director, the primary factor driving prices is the limited number of new apartments being released onto the market.

“Buyers remain active despite higher prices and the cost of financing. The real issue is the consistently low volume of new housing being built,” said Lamka. “With only slightly more than 1,000 apartments currently available, the market lacks sufficient supply. Improving the housing situation will require significantly greater construction volumes each year.”

The average price per square meter rose by 3 percent compared to the previous quarter. Lamka attributed the faster pace of price growth to the launch of new, more expensive projects and the persistent imbalance between demand and supply, which is partly due to lengthy permitting processes.

While 334 new apartments were added to the market since the beginning of 2025, overall supply remains stagnant. As of the end of March, there were 1,179 units available. Prices vary depending on location. In some central districts such as Brno-střed and in Kníničky, the average asking price exceeds CZK 140,000 per square meter. In contrast, areas such as Bystrc, Maloměřice and Obřany, Komín, Černovice, and Brno-jih offer new housing priced about 10 percent below the citywide average.

Source: CTK

YIT advances construction on Sija Kamýk residential project in Prague

Construction on YIT’s Sija Kamýk residential development in Prague 12 has reached the rough construction stage. The project includes 122 housing units, of which less than 30% remain available for sale. Completion is expected by the end of 2025, with occupancy planned for spring 2026.

The milestone includes the completion of the reinforced concrete structure across two underground and ten above-ground floors. Current work is focused on roofing, façade installation, and technical infrastructure. Interior work on individual apartments is also underway. The developer is simultaneously preparing a private courtyard for residents, which will include seating and facilities such as a bicycle and dog wash area. Public areas surrounding the building, including an adjacent park, will be renovated with new landscaping, a workout area, and a children’s playground. Additional amenities will include four retail units and repaired sidewalks.

The residential building offers a range of apartment layouts from one- to four-room units, with sizes ranging from 30 to 116 square meters. Most homes come with a balcony, terrace, or front garden. Selected units include recuperation systems or are pre-fitted for blinds and air conditioning. Storage cubicles, a stroller room, and underground parking will also be part of the development.

Environmental features are integrated into the project, such as rainwater collection for irrigation, LED lighting in shared areas, water-saving fixtures, and rooftop solar panels. Recycled concrete has been used in construction to support resource conservation. The development will also include infrastructure for electric vehicles, with outdoor fast-charging and up to 31 indoor charging stations.

Sija Kamýk is situated in a residential part of the Kamýk district, offering access to green areas and full civic amenities. The location is connected to Prague’s transport system by bus routes and will be further supported by the future D-line metro station Nové Dvory. Nearby recreational options include the Lhotka biotope, Kamýk Forest, and Hodkovičky Forest Park.

Newgate Investment acquires retail park in Piła, expanding Polish portfolio

Newgate Investment has acquired a retail park located at 135 Bydgoska Street in Piła, adding to its growing portfolio in Poland. The property, with a leasable area of 15,943 square meters, is situated in a well-established commercial area formerly occupied by a Tesco hypermarket. The site currently houses several national and international retailers, including Castorama—the only location of the brand within an 80-kilometer radius—alongside Biedronka, Pepco, RTV EURO AGD, Rossmann, Sinsay, and DOZ pharmacy.

This transaction marks Newgate Investment’s second retail property in Piła and its thirty-fourth in Poland, bringing its total gross leasable area (GLA) in the country to approximately 181,000 square meters. The company continues to pursue acquisitions and is engaged in ongoing negotiations for further property investments.

The Piła retail park joins a portfolio that recently expanded with the addition of Ozimska Park in Opole, Comfy Park Bielik in Bielsko-Biała, and Smart Park in Zgorzelec. These acquisitions align with Newgate Investment’s strategy of focusing on properties that are either dominant in their local markets or located in key commercial zones.

According to Robert Dudziński, Director of Asset Management at Newgate Investment, the company plans to invest around EUR 100 million in 2025 toward the acquisition of additional properties in Poland.

Currently, the company reports a portfolio occupancy rate of over 99.7%, which it attributes to a combination of location-focused investments and continued demand from retail tenants. This figure compares favorably with the national market average of approximately 94%.

Recent market data also indicates a shift in retail development patterns in Poland. In 2023, the volume of retail parks delivered to the market surpassed that of shopping centers by more than twofold. Retail parks and convenience centers now make up 28% of Poland’s modern retail space, which totals 15.5 million square meters.

Newgate Investment sees continued potential in this segment and plans to maintain its investment activity in the Polish retail market in the years ahead.

Market experts react to ECB’s interest rate cut

The European Central Bank (ECB) announced a 25 basis point reduction in key interest rates today, a decision that was broadly anticipated by financial markets. Analysts and industry figures from across the real estate and finance sectors offered their perspectives on the move and its potential implications.

Prof. Dr. Felix Schindler, Head of Research & Strategy at HIH Invest, noted that the ECB’s decision aligns with expectations given the recent easing of inflation in the eurozone. He pointed to the influence of ongoing international tariff discussions and the potential for increased imports of Chinese and European goods as contributing factors to lower inflationary pressures. However, Schindler cautioned that rising prices in food and services require continued monitoring. He added that the impact of deglobalisation and tariff policies remains uncertain over the long term. Despite this, he emphasized the importance of focusing on resilient sectors and structurally undersupplied markets in real estate, which are likely to offer stable returns and long-term value.

Francesco Fedele, CEO of BF.direkt AG, welcomed the rate cut, describing it as a necessary move in a context where inflation risks have diminished. He highlighted the benefit for property developers, who will likely experience some financial relief as borrowing costs ease.

Prof. Dr. Steffen Sebastian of the IREBS Institute for Real Estate Economics at the University of Regensburg also supported the ECB’s decision, though he expressed caution regarding the potential effects of new trade tensions initiated by the United States. He warned that these developments could trigger stagflation—a mix of economic stagnation and rising prices—which would require a reassessment of current monetary policy.

Michael Morgenroth, CEO of CAERUS Debt Investments, expressed some surprise at the ECB’s action, suggesting that current inflation and economic data did not necessarily call for an immediate rate reduction. He pointed out that yields on German government bonds, a key reference for mortgage markets, had recently normalised following temporary fluctuations. Morgenroth expects the ECB to adopt a more neutral stance in the short term, especially in light of shifting global capital flows influenced by U.S. fiscal and trade policies.

While the ECB’s move was largely anticipated, the responses reflect a mix of cautious optimism and concern about external pressures that could influence monetary policy going forward.

Gulf Cooperation Council projects market update – Q1 2025

The total value of contracts awarded across the Gulf Cooperation Council (GCC) countries declined in the first quarter of 2025, falling by 26.8% year-on-year to USD 52.4 billion. This marks the lowest figure recorded over the past two years and is primarily attributed to a sharp decline in contract activity in Saudi Arabia. In contrast, the United Arab Emirates recorded a modest increase in awarded contracts, helping to partially offset the regional downturn.

Saudi Arabia experienced the largest decline in contract awards, with a 49.9% decrease compared to Q1 2024. The country’s contract value dropped to USD 17 billion from USD 33.9 billion in the previous year, reducing its share of total GCC project awards to 32.4%, down from 47.4%. The contraction was primarily felt in the Construction and Gas sectors. Despite the downturn, Saudi Arabia remains focused on long-term infrastructure and energy transition plans. Major contracts awarded during the quarter included Siemens Energy’s USD 1.6 billion agreement for power plant upgrades and a USD 301 million contract for the second phase of the Avenues Riyadh development.

The UAE was one of only two GCC countries to post year-on-year growth in awarded contracts, increasing by 11.7% to USD 26.1 billion. This expansion elevated the UAE to the largest project market in the GCC for the quarter, surpassing Saudi Arabia. Growth was supported by strong performance in the Power sector and continued momentum in Abu Dhabi’s infrastructure investments and ADNOC Gas’ expansion plans.

Kuwait posted the highest percentage increase in contract awards among the GCC countries. The value of awarded contracts rose by nearly 200% to USD 1.4 billion. The increase was largely driven by activity in the Transport and Power sectors, in line with Kuwait’s Vision 2035. Projects such as the South Saad Al-Abdullah City infrastructure development and the anticipated Dorra Field Development are expected to maintain this positive trajectory.

Qatar, however, experienced a 37.9% decline in awarded contracts, totaling USD 5.2 billion in Q1 2025. The drop was largely due to lower activity in the Transport, Water, and Construction sectors. Nonetheless, the Gas sector in Qatar saw a notable surge, with contract awards rising significantly on the back of major developments in the North Field Production Sustainability project.

Across the GCC, the Construction and Oil sectors were among the hardest hit, with year-on-year declines of 50.4% and 54.6%, respectively. Despite these drops, Saudi Aramco signaled its intention to maintain capital expenditure, particularly in petrochemical projects.

Looking ahead, the GCC projects market is expected to remain active in 2025. Around USD 235 billion worth of contracts are currently under tender or evaluation, with Saudi Arabia accounting for the majority of this pipeline. There is also a strong outlook for healthcare, hospitality, and transport projects. Approximately USD 1.54 trillion in contracts are in pre-execution phases, with Saudi Arabia leading with more than half of that value. While the risk of a slowdown exists due to fluctuating oil prices and global economic uncertainty, the GCC’s overall project market remains resilient, supported by ongoing diversification efforts and long-term infrastructure plans.

Government shifts economic strategy toward national interests ahead of elections

Prime Minister Donald Tusk has recently presented a shift in Poland’s economic direction, emphasizing a greater focus on national interests and the role of the state. Describing the current phase as the end of “naive globalization,” the Prime Minister called for the reconstruction of the national economy and increased reliance on domestic capital. In this context, Tusk promoted the idea of “repolonization” of markets, asserting that capital and the economy carry national identity.

A key element of the Prime Minister’s statements included tighter oversight of investments made by state-owned enterprises. He advocated for prioritizing Polish capital and businesses in public tenders and strategic projects. The energy sector has become a particular focus, with the Prime Minister urging energy firms to lower electricity prices, suggesting that these companies have responsibilities that go beyond financial performance.

These remarks were followed by a decline in the share prices of major listed companies, reflecting concerns from investors about possible government interference in corporate operations and broader market implications. The emphasis on state-driven projects, such as the construction of a nuclear power plant with exclusive involvement from Polish companies, marks a notable departure from Tusk’s previously more market-oriented approach.

Observers have noted that the timing of these announcements, ahead of the upcoming presidential election, may be linked to political considerations. Support for the ruling party’s candidate has reportedly been falling, and the new economic narrative may be aimed at strengthening domestic political appeal.

While the government presents this strategy as a realistic response to global uncertainty, critics argue that it may signal a move toward economic nationalism and protectionism. The delayed announcement of a long-promised deregulation package further raises questions about the balance between market liberalization and increased state control.

Economic analysts warn that increased political involvement in corporate decision-making and shifting signals to the business community could weaken investor confidence. The current direction suggests a departure from Poland’s previously liberal economic model, with the state taking on multiple roles as regulator, market participant, and owner. The full implications of this approach will likely depend on how it is implemented in practice and how the private sector responds in the months ahead.

Author: Łukasz Wojdyga, Director of the Center for Strategic Studies, Warsaw Enterprise Institute (WEI)

Slovakia’s general government deficit rises slightly to 5.27% of GDP in 2024

In 2024, Slovakia’s general government deficit amounted to nearly €7 billion, representing 5.27% of the country’s Gross Domestic Product (GDP), according to preliminary data released by the Statistical Office of the Slovak Republic. This marks a slight increase from the 5.19% deficit recorded in 2023. The country’s general government debt also rose to €77.65 billion, or 59.3% of GDP.

The data, part of the spring notification submitted to the European Commission, include updates for 2021–2024 and incorporate revised figures from the Ministry of Finance for 2025 based on the approved budget. The year-on-year increase in the deficit amounts to approximately €0.5 billion, with 2023’s deficit standing at €6.43 billion after revisions.

The central government contributed the most to the 2024 deficit, ending the year with a shortfall of €7.15 billion. This compares with €6.78 billion the previous year. Local governments posted a deficit of nearly €130 million, reversing a surplus of €81.3 million in 2023. Meanwhile, social security funds recorded a surplus of €370 million, about €100 million more than the year before.

Government debt as a share of GDP climbed from 55.64% in 2023 to 59.28% in 2024, reflecting a year-on-year increase of €8.75 billion. These figures are based on revised GDP data published as part of the spring revision process.

The Statistical Office noted that recent changes, including the reclassification of energy support expenditures and related reimbursements for 2023, had only a minor impact on the reported deficit and debt levels. These adjustments were recorded in line with the accrual accounting principle.

In addition to deficit and debt statistics, the report also includes data on selected financial assets held by the general government sector for the years 2021 to 2024. The updated GDP figures, which affected both quarterly and annual data from 2021 through 2024, were released simultaneously and indicated a stronger performance of the Slovak economy than previously estimated.

Source: SRSO

Czech housing support act passed, experts call for broader measures

The Czech Chamber of Deputies has passed the Housing Support Act, a measure aimed at addressing housing distress in the country. Experts from the initiative For Housing—which includes representatives from NGOs, social services, academia, and local government—have welcomed the law’s adoption but expressed concern that it falls short of earlier, more ambitious proposals.

The bill, originally prepared by the Ministry of Regional Development under former minister Ivan Bartoš (Pirates), underwent several changes after the Pirates left the government. Bartoš criticised the final version, calling it inadequate and significantly watered down from the original draft.

Mikoláš Opletal of For Housing emphasized the importance of passing the law during the current parliamentary term. He said the legislation provides a framework to support people at risk of housing exclusion and could help prevent exploitative practices in the housing market.

The act introduces several new tools, including the establishment of contact points to offer housing-related counselling, a voluntary system of housing guarantees for private landlords, and financial incentives for municipalities that rent to people in housing distress. The goal is to create a more coordinated approach between national and local levels in addressing housing challenges.

However, the bill has faced criticism from opposition parties ANO and SPD, which argue that it creates an expensive and complex bureaucracy without adding new housing units.

Some local officials support the bill. Kateřina Dobrozemská, Deputy Mayor of Olomouc, said the law offers municipalities useful tools for preventing housing loss. She also highlighted the need to encourage private landlords to make vacant apartments available for rent.

Originally, the bill proposed that 205 municipalities with extended jurisdiction would host contact points, creating 352 new positions with an estimated cost of CZK 348 million. However, following amendments by the parliamentary committee on public administration, the number of contact points was reduced to 115, to be located in areas with higher housing vulnerability and existing labor office branches. Municipalities will have the option to establish these contact points on a voluntary basis.

Bartoš criticised the final version on social media, claiming it had been stripped of key elements and would no longer deliver the projected cost savings. He argued the coalition had taken a short-term view and failed to prioritise long-term benefits for vulnerable populations.

Opponents of the law argue that it introduces new administrative layers without addressing core issues such as housing supply. They believe the initiative may result in inefficiencies and be open to misuse.

An amendment introduced by MP Jiří Havránek (ODS) extended eligibility for support to households earning up to 1.43 times the subsistence minimum. The For Housing initiative had previously warned this threshold was too restrictive. Regional Development Minister Petr Kulhánek (STAN) later announced that the government intends to raise the limit to 1.6 times the minimum, which the law allows through a government decision.

Martin Lux, a housing expert at the Czech Academy of Sciences, supported the law, describing it as a long-overdue step forward. He acknowledged that while some parameters might need adjustment, these can be modified by the government over time. He said the law lays a necessary foundation for addressing both acute and long-term housing needs.