Download Zależność płynność – rentowność ponowna analiza

The impact of the business
cycle on the construction
companies’ sector in selected
states
Rafal Wolski
Magdalena Zaleczna
Introduction
After the strong increase in economic activity, which in
many countries was connected with the boom in the real
estate market, the activity was rapidly reduced also
within the broadly understood construction sector. This
contributed to the slowdown of the growth rate or the
economic downturn.
Authors have undertaken the analysis of impact of
business cycle on conditions of residential real estate
markets and the construction sector in selected European
states.
The research questions:
• Authors searched for an answer to the questions:
– how much residential markets reacted for the
economic slowdown,
– how much the construction sector and the enterprises
changed their activity in the recent years.
For the purpose of the analysis a database of over 99274
construction enterprises from the Czech Republic,
Poland, Slovakia, Hungary, Ireland and Spain was
created.
Business cycle and construction sector
• The economic revival and the boom in the real
estate market in the years 2000-2008 were
strictly related. In some countries the increased
activity of the construction sector, significantly
involved in the residential market, played an
important role in those processes. These
countries include: Ireland, Spain and Cyprus, and
among the post-socialist states – the Baltic States
and Croatia [SUN, MITRA, SIMONE 2013].
Business cycle and construction sector
• On the eve of the crisis, in 2007, according to
Eurostat data, the construction sector of the
EU states gave employment to 14.8 million
employees (11.5% persons employed in nonfinancial sectors) and provided EUR 562 billion
in value added (9.3% of total value added
brought by non-financial sectors).
Business cycle and construction sector
• In 2010, the employment in the construction
sector in the EU states amounted to 13.4
million (10% persons employed in nonfinancial sectors), and the value added
generated by that sector amounted to EUR
496 billion (8.4% of the total value added
generated by non-financial sectors).
Business cycle and construction sector
• The largest part of the sector, concerning
construction of buildings, clearly felt the
effects of the crisis – the comparison of the
beginning of 2007 and 2010 indicates a drop
in activity by 16.5%. The only country which
did not show a decrease was Poland.
Share of the construction sector in the generation of GDP in selected
countries (%). Source: own study based on data from the European
Construction Industry Federation
The construction sector structure in the analysed countries - a great
majority of enterprises in this sector are small entities, employing up to 9
people
Czech Republic
Poland
(data in thousands)
Slovakia
Hungary
Ireland
(data in thousands)
Spain
Changes in the level of employment in construction in the years
2003-2012 (%).
Source: own study based on data from the European
Construction Industry Federation
Value of construction output in the years 2003-2012 (EUR
million).
Source: own study based on the Eurostat data.
New residential units in the years 2003-2012 and changes of prices in the
housing market in the years 2003-2012 (%) in the Czech Republic and Poland
45,000
35
30
25
20
15
10
5
0
-5
-10
-15
-20
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2003
2004
2005
2006
2007
2008
2009
2010
change in nominal prices
change in real prices
total number of new residential units
including: new detached houses
including: new multi-residential houses
2011
2012
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
80
60
40
20
0
-20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
change in prices in secondary market
change in prices in primary market
total number of new residential units
including: for sale or for rent
New residential units in the years 2003-2012 and changes of prices in the
housing market in the years 2003-2012 (%) in Slovakia and Hungary
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
80
70
60
50
40
30
20
10
0
-10
-20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
50000
15
45000
10
change of average price of 1 sq. m. of a flat
40000
change of average price of 1 sq. m. of a higher standard house
35000
residential units handed over for ocupation
30000
0
25000
-5
20000
-10
5
15000
-15
10000
-20
5000
0
-25
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
change in price of residential units
total number of new residential units
including: constructed by companies
New residential units in the years 2003-2012 and changes of prices in the
housing market in the years 2003-2012 (%) in Ireland and Spain
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
20
10
0
-10
-20
-30
-40
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
700,000
20
600,000
15
500,000
10
400,000
5
300,000
0
change of price on the primary market
200,000
-5
change of price on the secondary housing market
100,000
-10
number of new houses nad flats in total
new flats
0
-15
2003
2004
2005
2006
change of price of 1 sqm
2007
2008
2009
2010
2011
2012
number of new houses nad flats in total
Data
• 99274 companies (5416 from Czech Republic, 7927 from
Poland, 2798 from Slovakia, 15385 from Hungary, 7900
from Ireland and 91374 from Spain)
• Period: 2003 to 2012
• Financial data are derived from the Amadeus database.
Data on GDP at market prices, denominated in euros,
derived from the database Eusostatu
• Companies in the sector marked by Eurostat NACE Rev. 2 statistical classification of economic activites in the
European Community with codes: 4110 - Development of
building projects, 4120 - Construction of residential and
non-residential buildings.
The Pearson correlation between GDP and the
subsequent selected balance sheet positions
Correlation coeficient, N=10
ROE using Net ROA using Net
GDP at market prices, at current prices, millions of euro Total assets
income
income
Czech Republic
Pearson correlation
,701*
,730*
-0,024
Significance (two-sided)
0,024
0,016
0,948
Poland
Pearson correlation
,713*
,665*
-0,496
Significance (two-sided)
0,021
0,036
0,145
Slovakia
Pearson correlation
,680*
,707*
-,828**
Significance (two-sided)
0,031
0,022
0,003
Hungary
Pearson correlation
0,458
0,501
-,651*
Significance (two-sided)
0,183
0,14
0,042
Ireland
Pearson correlation
,772**
,799**
-0,452
Significance (two-sided)
0,009
0,006
0,19
Spain
Pearson correlation
,862**
,835**
-0,325
Significance (two-sided)
0,001
0,003
0,359
* Correlation is significant at level of 0.05 (two-sided).
** Correlation is significant at level of 0.01 (two-sided).
Czech Republic
Poland
8.00%
8.00%
6.00%
ROA using Net
income
4.00%
7.00%
ROA using Net
income
6.00%
5.00%
2.00%
4.00%
Real GDP growth rate
- volume percentage
change on previous
year
2012
2011
2010
2009
2008
2007
2006
2005
2004
-4.00%
3.00%
Real GDP growth rate
- volume percentage
change on previous
year
2.00%
1.00%
Hungary
12.00%
6.00%
10.00%
ROA using Net
income
2.00%
2012
2011
6.00%
2.00%
-6.00%
-4.00%
-8.00%
-6.00%
2012
2011
2010
2009
2008
2007
2006
-2.00%
2005
0.00%
2004
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Real GDP growth rate
- volume percentage
change on previous
year
2003
-4.00%
ROA using Net
income
8.00%
4.00%
0.00%
-2.00%
2010
Slovakia
8.00%
4.00%
2009
2008
2007
2006
-6.00%
2005
2003
0.00%
2004
-2.00%
2003
0.00%
Real GDP growth rate
- volume percentage
change on previous
year
Ireland
Spain
10.00%
5.00%
8.00%
ROA using Net
income
6.00%
4.00%
-6.00%
-8.00%
ROA using Net
income
2.00%
-3.00%
-4.00%
-5.00%
2012
2011
2010
2009
2008
2007
-2.00%
2006
-1.00%
2005
0.00%
2004
Real GDP growth
rate - volume
percentage change
on previous year
2003
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0.00%
-4.00%
3.00%
1.00%
2.00%
-2.00%
4.00%
Real GDP growth rate
- volume percentage
change on previous
year
Construction enterprises’ results
In general the profitability ratio like ROE or ROA stayed
positively correlated with real GDP growth rate - volume
percentage change on previous year. In all cases, except
Hungary, the correlation was statistically significant.
There is pone case which drew attention: Poland. Positive
correlation with a GDP growth that is also positive means
that companies noted slower development, but not
recession. The results indicate a strong dependence of
the sector from the whole economy. And almost all the
countries surveyed, with the exception of Hungary.
Conclusions:
The residential markets activity changed in analysed postsocialist states in moderate way:
- the growth and decrease of new residentail units
number was moderate
- the incease of prices was dynamic and the fall was not
deep
The case of Ireland and Spain was different:
- the growth and decrease of new residentail units
number was extremely high
- the change of prices was dynamic and
the fall was high
Conclusions:
• The construction sector analysed by the changes in
employment, number of construction enterprises and
value of construction output indicates Poland as a
country with the best situation in construction sector;
• Ireland and Spain are countries having dramatically
decreasing construction sector activity;
• the financial condition of enterprises in post-socialist
countries is quite good, but in Ireland and Spain the
situation seemed to be quite dramatic.
Thank you for your attention