The value of construction investments in sports, hotel and transport infrastructure (including roads, railways and airports) related to the organisation of Euro 2012 in Poland and Ukraine will near €38 billion. But for Poland and Ukraine, the tournament is much more than just a prestigious football competition; indeed, the costs related to the construction and modernisation of stadiums will account for less than 10 percent of the total value of planned investments. Instead, Euro 2012 will be an opportunity for the two countries to take a major step forward and make up for decades of underinvestment in the transport infrastructure. The vast majority of investments (four fifths of the funds) will be allocated to projects of this type.
In Poland, the value of road construction projects related to the organisation of the European football championships may total as much as €12 billion. In addition to the construction of sections of the A2 motorway (eastern section) and the A4 motorway (western section), virtually the entire length of the A1 motorway and the expressway network remain to be constructed, with the S5 expressway linking Wroclaw, Poznan and Gdansk as the key project. Additionally, a substantial portion of investments will go into road construction projects in the cities hosting Euro 2012 matches, which will also encompass the construction of municipal ring roads. Ukrainian road construction projects may total more than €5 billion; the Lviv-Krakovets and the Lviv-Brody sections, which stand the greatest chance of being completed, are expected to cost €800 million in total.
The largest railroad construction projects in Poland include the modernisation of the main railway lines linking the cities hosting Euro 2012 matches, the construction of the second line of the Warsaw underground, as well as the construction and modernisation of several railway stations and railway links between the airports and the city centres. Projects in Ukraine include the electrification of railway lines totalling several hundred kilometres in length, the construction of fast-train routes linking the main cities, extensions of the underground lines in Kiev, Kharkiv and Dnipropetrovsk, as well as the completion of the construction of the first line of the Donetsk underground. Both Poland and Ukraine plan to expand their municipal tramway networks by 2012. However, contrary to the pattern expected in Poland, Ukrainian railroad construction projects are expected to be more valuable than those related to the construction of roads.
PMR analysts believe that key airport construction projects for Euro 2012 include projects to be carried out at eight airports in Poland (in addition to the six airports in the main cities, new airports will be built in Modlin and Gdynia) and eight airports in Ukraine. In total, the value of airport-related projects in Poland and Ukraine will near €2 billion.
However, transport projects are the ones that raise the greatest concerns regarding on-time delivery. At the present moment, the most uncertain project in Poland is the construction of the eastern section of A4 and the southern 180km stretch of A1 from Strykow to Pyrzowice. On the Ukrainian side, some of the railway projects can face problems because no reliable sources of funding for them have been identified yet. The capital city of Ukraine struggles against serious obstacles as the issue of land purchase for the Grand Ring Road around Kiev still remains undecided; likewise, the construction of a shopping centre by the Olimpiysky Stadium is still up in the air. This may mean that the final match of Euro 2012 will have to be played somewhere else.
2008 will be a decisive year in the preparations for Euro 2012. For stadiums, roads, airports and railway lines to be ready for the event, it is crucial to submit designs for the relevant investment projects as soon as possible; even a slight delay may lead to a failure to complete projects on time. While the concerns regarding investment projects in transport are substantiated, no obstacles are expected to stand in the way of investments in the hotel industry as they will be made mostly by private investors. Additionally, in the event of any shortage of accommodation, missing rooms can be provided by small private investors and city residents, says Bartlomiej Sosna, construction market analyst at PMR and author of the report on Euro 2012 in Poland.
Robert Obetkon, construction market analyst at PMR and author of the report on Euro 2012 in Ukraine, has noted that the absence of a clear division of decision-making powers by the authorities is currently the greatest threat to the timely completion of investment projects in this country. Moreover, problems in identifying sources of funding for individual Ukrainian investment projects have a negative impact on the progress of investment projects; as opposed to Poland, Ukrainian investments will be financed chiefly by private funding and bank loans.
Out of all planned investment projects, the highest priority has been recently given to the construction of stadiums, which are essentially inevitable for the tournament to take place. Though obstacles are expected in the execution of the projects, PMR analysts believe that they will be completed before the beginning of Euro 2012, though with some delay.
Poland: a country on the up
Despite a number of pain points – mounting costs of building materials and workforce shortages – 2007 was a very good year for the Polish construction market.
The period to 2013 will be a boom time for the Polish civil engineering sector, with a few years of exceptionally good market conditions. It will be a time of large EU co-financed infrastructure projects and of industry players executing giant investments. To the end of 2010, capital expenditure channelled to civil engineering by the enterprise sector and public institutions might be worth as much as €65 billion.
Optimistic forecasts for the aviation sector and Poland’s co-hosting of the 2012 European Championships are the two driving forces behind the launching of investment projects at Polish airports, whose value will top €1.8 billion by 2013. Regional airports will continue to post higher growth rates than in Warsaw. In a few years’ time the position of regional ports will further strengthen thanks to new airports, whose construction will take up nearly one-third of the investment outlays. The largest projects in the pipeline are at Euro 2012 venues.
Talking of football, the aggregate value of investments related to the organisation of Euro 2012 in Poland and Ukraine will near €38 billion; projects executed in Poland will account for approximately 60 percent of the amount. As much as one-third of total costs of preparatory work for Euro 2012 will comprise road construction projects in Poland; these are expected to amount to twice as much as those planned in Ukraine.
By 2010, Polish civil engineering investment will total €65bn
By 2013, Polish airport investments will top €1.8bn
Organisation of Euro 2012 in Poland will cost €23bn