Over the 2010-2020 period, Spain’s GDP declined by 1.3%, standing at EUR 1.1 trillion in 2020. In 2020, it declined by 10.8% compared to the previous year. In 2021, however, it was expected to grow by 5.9%.
The number of enterprises in the Spanish broad construction sector grew by 3.2% between 2010 and 2020, totalling 658,351. This growth was primarily driven by an increase in the number of enterprises in the real estate activities sub‑sector (+45.4%) between 2010 and 2020. The manufacturing, architectural and engineering activities and narrow construction sub‑sectors experienced declines of 26.9%, 12.2% and 2.8%, respectively, over the same reference period.
The volume index of production in the broad construction sector declined by 9.7% during 2015‑2020, mainly due to the declines experienced in the construction of buildings (-10.3%) and the construction of civil engineering (-5.6%) over the same period.
Turnover in the broad construction sector amounted to EUR 226.7 billion in 2018, registering a decline of 18.2% compared to the 2010 level (EUR 277.3 billion). It further decreased to EUR 216.5 billion in 2020, marking to a 21.9% decline since 2010. This downturn was primarily due to a 31.6% decline in turnover in the narrow construction sub-sector between 2010 and 2020, followed by a 14.7% decline in the manufacturing and a 4.2% decline in the architectural and engineering activities sub-sectors over the same reference period. Conversely, the real estate activities sub-sector grew by 39.1% over the same reference period.
In parallel, the gross operating rate of the broad construction sector, which is used to assess the profitability of the sector, stood at 12.4% in 2018, lower than the 2010 level of 13.0%. The real estate activities sub-sector registered the largest profit margin on sales (42.2%) in 2018, followed by the architectural and engineering activities (15.5%), the narrow construction (10.4%), the manufacturing (8.0%) sub-sectors.
In terms of employment, there were 1,911,053 persons employed in the Spanish broad construction sector in 2020, representing a decline of 20.0% compared to the 2010 level of 2,389,628 persons. This was mainly due to the decline registered in the number of persons employed in the manufacturing (-29.8%), the narrow construction (-27.0%) and the architectural and engineering activities (-7.2%) sub‑sectors, respectively, over the 2010-2020 period. The real estate activities sub‑sector witnessed growth of 34.4% in the number of persons employed in the same reference period.
In the context of the housing market, the Spanish government has taken several measures to ensure the availability of affordable and quality housing. For instance, in December 2020, the government introduced amendments to the State Housing Plan 2018-2021 including the extension of the programme until 31st December 2022. The country also receives financial support from the European Investment Bank (EIB) for the development and construction of social housing.
In June 2021, the EIB signed an agreement to support Barcelona City Council in the construction of nearly 490 new public rental homes with an investment of EUR 36.2 million .
As per the agreement, the EIB will finance the construction of 11 developments and 489 affordable social rental homes in various locations across the city. Also, if required, the financing could be increased to EUR 65.0 million. The project will be implemented up to the end of 2023, helping to create more than 570 jobs per year during the construction phase.
Under its 2021-2026 National Recovery and Resilience Plan (NRRP), the Spanish government has allocated EUR 1.0 billion towards the construction of affordable, energy efficient rental housing.
This measure is aimed at building at least 20,000 new dwellings for social rental purposes, or at affordable prices compliant with energy efficient criteria. These houses will be built in areas where social housing is currently insufficient and on publicly owned land.
As part of the RRP, the government has also granted an allocation of EUR 300.0 million towards the Energy Rehabilitation of Buildings Programme (PREE), aligned with energy efficiency criteria with on average primary energy savings of at least 30.0%.
Spain has allocated 28.2% (around EUR 19.6 billion) of the total grant towards digital activities. This will be used for the promotion of business digitalisation, including SMEs. The aim is to strengthen the digital skills of the Spanish population, improve country‑wide digital connectivity, continue the digitalisation of the public administration, and support digital-related R&D, as well as the deployment of digital technologies.
The civil engineering segment is expected to benefit from investment in the areas of transport infrastructure and urban development, partly driven by EU funds. As of December 2020, financing under European Fund for Strategic Investments (EFSI) amounted to EUR 13.0 billion and is set to trigger additional investments of EUR 63.0 billion. Under the infrastructure and innovation window, 136 projects have been financed by the European Investment Bank (EIB) with EFSI backing.
In December 2021, the Spanish government announced that it would invest EUR 24.2 billion in rail infrastructure over the next five years. This will go towards both the high-speed lines and the regular Spanish rail network.
While the Spanish construction sector’s prospects are expected to be positive on the mid to long-term, it faces some key challenges. These include skills mismatch and the issue of late payment. As for skills, while the number of job vacancies in the narrow construction sub-sector has decreased by 57% between 2010 and 2020, the Spanish construction sector risks of being affected by skills mismatch. As per a 2019 report by CEDEFOP (European Centre for the Development of Vocational Training), demand for highly qualified workers (47.0% of total job openings in 2016-2030) and medium qualified workers (37.0%) is expected to exceed supply by 2030. Low qualified workers will remain in surplus and will need upskilling/re-skilling. With regards to late payment, according to the Survey on the Access to Finance of Enterprises (SAFE) 2021 report, 29.2% of SMEs reported that their payments to suppliers have been affected as a result of late payments by customers.
Overall, the Spanish broad construction sector has a positive outlook. Investment in public sector infrastructure, digitalisation, energy efficient housing renovations as well as a green circular economy, backed by EU funding, is projected to drive the future growth of the sector.