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Internal Market, Industry, Entrepreneurship and SMEs
15 DECEMBER 2020
Portugal - ECSO country fact sheet

Since 2010, Portugal’s GDP has decreased by 1.4%, amounting to EUR 184.9 billion in 2020. This represented a 7.6% decline as compared to the 2019 level (EUR 200.0 billion).

In line with the overall economy, the number of enterprises in the broad construction sector decreased by 3.6% between 2010 and 2020, totalling 174,298 in 2020.The largest drop was reported by the architectural and engineering activities (‑33.7%) sub‑sector, followed by the manufacturing (‑30.2%) and the narrow construction (‑10.4%) sub‑sectors. In contrast, the real estate activities sub‑sector registered a 65.5% increase over the same reference period.

Conversely, the volume index of production in the broad construction sector slightly increased by 0.7% over the 2015-2020 period, primarily driven by a 1.0% and 0.1% increase in the production of construction of buildings and construction of civil engineering between 2015 and 2020, respectively.

In 2018, the total turnover of the broad construction sector stood at EUR 40.3 billion, representing a decline of 21.1% as compared to 2010 (EUR 51.1 billion). It further increased to EUR 41.0 billion in 2020, registering an overall decline of 19.7% over the 2010-2020 period. This decrease was primarily due to a 32.7% drop in the narrow construction sub-sector, followed by the architectural and engineering activities (‑20.9%) and the manufacturing (‑16.0%) sub‑sectors over the same reference period. In contrast, the real estate activities sub‑sector posted a growth of 53.4% between 2010 and 2020.

In parallel, the gross operating rate of the broad construction sector, an indicator of the sector’s profitability, increased from 9.7% in 2010 to 12.1% in 2018, well below the EU‑27 average of 16.7%.

In the context of employment, there were 545,060 persons employed in the Portuguese broad construction sector in 2020, representing a decline of 15.6% since 2010. This was mainly due to reductions recorded in the employment for the manufacturing (‑28.8%), the architectural and engineering activities (-28.8%) and the narrow construction (‑18.4%) sub-sectors over the 2010‑2020 period. In contrast, employment in the real estate activities sub‑sector experienced an increase of 42.7% during the same reference period.

Number of enterprises in the narrow construction sub-sector between 2010 and 2020
Total turnover in the broad construction sector between 2010 and 2020
Persons employed in the broad construction sector between 2010 and 2020

In order to provide housing to everyone and make it affordable, the Portuguese government has taken several measures. In August 2020, the Portuguese Government announced its plans to create a pool with currently vacant (or available) properties across the country, that will be turned into affordable rental housing. The investment is expected to reach EUR 2.3 billion.

With regards to the civil engineering market, the National Investment Programme 2030 (PNI) is designed to provide investments worth EUR 22.0 billion into the areas of transport, energy and environment projects. It represents a total estimated investment of EUR 43.0 billion.

Portugal will receive up to EUR 13.9 billion in grants and EUR 2.7 billion in loans as part of the Recovery and Resilience Facility.

The plan, approved by the European Commission in June 2021, includes key measures to foster Portugal’s green and digital transition. An overall EUR 610 million will be allocated for energy efficiency renovation interventions of public and private buildings. The plan also includes infrastructure investments worth EUR 690 million, aimed at improving the country’s road transport connectivity by expanding the road network by completing missing links. It also invests in the expansion of the network of publicly accessible electric vehicle charging stations.

Currently, the Portuguese construction companies are struggling with a shortage of craftsmen (in particular bricklayers, electricians). In order to compensate for the shortage of labour, companies are relying on foreign workers. However, such a process is undermined by several barriers such as low salaries (in comparison to some other European countries) and a complex tax system. Finally, the issue of late payment, coupled with the limited access to finance (both issues disproportionally affecting SMEs) undermine the liquidity of the sector. Both factors limit the growth of the SME segment in the construction sector.

The outlook for the Portuguese construction sector remains positive, driven by housing and non-residential markets. The former is driven by: i) foreign investment in high quality real estate projects; and ii) government policy as the Instrumento Financeiro para a Reabilitação e Revitalização Urbanas - IFRRU programme, a financial instrument aimed to support investments in urban renewal, but also policy initiatives related to supporting energy efficiency renovation, and planned investments in affordable housing. The non-residential market is also expected to grow, with tourism-related investments such as hotels, restaurants and more generally hospitality facilities.