Swedish apartment construction takes off

Construction of new apartments in Sweden is approaching levels not seen since the height of the mid-2000s boom, with industry groups forecasting a need for thousands of new workers as a result.

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“New production of tenant-owner apartments is back at the high-levels from 2005 to 2007, in particular in greater Gothenburg and greater Malmö,” said Hans-Åke Palmgren of the National Board of Housing, Building and Planning (Boverket) to the Dagens Industri (DI) financial daily.

Increased optimism about the economy combined with a current housing shortage in Sweden’s major cities are two contributing factors to the housing board’s decision.

The agency’s new forecast is set to be presented on Thursday.

The Swedish Construction Federation (Sveriges Byggindustrier – BI) also expects a boost in the building sector. According to a recent forecast by the organisation, the sector is set to expand due to a steep increase in renovation investments.

The Construction Federation figures reveal a roughly 40 percent increase in the number of apartments under construction compared to last year.

At the same time, the construction of offices and other facilities has slowed or remains stagnant.

The current recovery underway in the Swedish economy is in the process of petering out, according to the federation.

Overall construction investment is expected to increase 3 percent in 2010 and 5 percent in 2011, which will lead to an increase in employment in the construction sector of up to 20,000 by the start of 2011.

However, the head of the Byggnads construction workers union, Hans Tilly, doesn’t believe the signs of a full recovery in the construction sector are all that clear, at least not across the entire country.

“We haven’t really noticed all that much other than there are lots of positive reports of various sorts. But even if the residential sector recovers quickly, there was basically a complete stop in the autumn of 2008. And recovering from a low point like that takes time,” he told the TT news agency.

During the financial crisis, the construction of tenant-owner apartments (bostadsrätter) dropped, while the building of rental units continued.

But now tenant-owner apartment construction has taken off again, according to Johan Deremar, an economist with the Construction Federation.

“Building companies think it’s hard to make money on rental apartments, the figures often don’t add up. It’s much more attractive for companies to build tenant-owner apartments,” Deremar told TT.

At the same time, construction firms believe they will need plenty of new recruits when the economy turns upward, in part because of a wave of retirements expected to take place in the coming years.

But the high number of people enrolled in construction training programmes is likely to protect against any labour shortages for firms.

“When it comes to tradesmen, we don’t see any shortage. On the other hand, there may be problems with foremen. Companies have a difficult time finding people who can lead work crews,” said Deremar.