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The Swedish building and construction market has a turnover of approximately SEK 800 billion, of which the civil engineering market has a turnover of approximately SEK 175 billion.
The Swedish Transport Administration buys for approximately SEK 57 billion, which accounts for approximately 30 per cent of the civil engineering market's turnover.
Size of the market
According to Byggföretagen, the total building investments have a turnover of approximately SEK 600 billion. Total building investments consist of the building of new and the conversion of existing housing and premises, as well as investments in civil engineering construction.
In recent years, civil engineering investments in Sweden have had a turnover of approximately SEK 120 billion per year (according to Byggföretagen). Included in the construction sector – apart from roads, streets and railways – are power stations and district heating plants, water and wastewater treatment plants, structural engineering activities linked to transportation, and post and telecommunications. In the construction market, large resources are used to maintain and repair facilities. However, the exact amount used for maintenance and repairs is difficult to measure. An approximate estimate suggests that this is SEK 55 to 65 billion per year. In total therefore, the construction market turns over approximately SEK 175 billion per year.
Economy and price development for building investments in Sweden
The economic situation for total building investments (housing, premises and facilities) has a major impact on the price development of civil engineering investments, as total construction investments make up such a large part of the Swedish building market.
After a number of years of rising construction investments, the economy in construction has rapidly changed through a change in economic conditions. High inflation with rising costs for materials, fuel, electric power and sharply higher interest rates is dampening demand in the construction sector. The economic downturn began in 2022 and will be more noticeable in 2023.
The increase for total building investments has been strong for many years, but is now reversing and will decrease cooling down and is expected to decrease by a total of 10 percent. Civil engineering investments are expected to decrease by a total of approximately 2 percent in 2023, with a two-tier development where private civil engineering investments are expected to increase by 2 percent and public civil engineering investments decrease by 4 percent.
In the middle of June 2022 the government decided a new national plan for transport infrastructure for the period from 2022 to 2033. The plan has a value of SEK 799 billion, of which SEK 437 billion is for investments, SEK 165 billion will be used for operations and maintenance railway and SEK 197 billion will be used for operations and maintenance roads.
The new government, which took office in October 2022, has decided not to pursue plans for new high-speed lines. The government wants the investments in the railway to facilitate more climate-smart commuting and freight traffic, which means that the reinvestments and maintenance of existing railways should be prioritized.
Investment index Roads and Railways
In 2021-2022, the Swedish Transport Administration's investment index for railways increased by 11,1 (4.2) per cent and the road investment index increased by 18,6 (14.8) per cent. The consumer price index with constant tax (KPI-KS) increased by 8,7 (2.1) per cent during this period. The road investment index increased, largely due to a sharp increase in the price of oil (oil and bitumen are a significant part of the cost of building roads).
The Swedish Transport Administration's investment index is the standard index for railway and road projects as well as operational and maintenance measures based on contract. If the infrastructureindex (investment-and operationindex) increases, this means that input goods for the contracts, and thus the implementation itself, will be more expensive. In general, the Swedish Transport Administration is responsible for the suppliers' index-related cost changes, based on the risk allocation determined at the time of signing the contract.