Market
GRK is one of the leading Finnish companies specializing in infrastructure construction. The company’s core expertise includes the execution of both large and small infrastructure construction projects, project management of projects of various sizes, and extensive railway construction expertise.
GRK’s target markets are Finland, Sweden, and Estonia
GRK’s target market had a total estimated value of approximately 30.2 billion euros in 2023. In total, GRK’s target market grew at an average annual rate of approximately 6.7 percent between 2019 and 2023. The market is expected to remain stable and grow at an average annual rate of approximately 3.2 percent between 2023 and 2026. In addition to volume growth, the historical market growth between 2019 and 2023 has also been influenced by the general increase in construction material and labor costs, due to, for example, the coronavirus pandemic and the war in Ukraine. Approximately 69 percent of the target market consisted of new infrastructure construction, while the remaining approximately 31 percent was related to maintenance and renovation in 2023. Road and energy construction were the largest sub-segments of the target market in 2023.
Growth drivers
IAccording to GRK’s management, market demand in the coming years will be driven particularly by the green transition, urbanization, increasing investments in defense and critical infrastructure, the large infrastructure maintenance backlog, and major publicly funded infrastructure investments.
1. The green transition
The emission reduction targets of Finland, Sweden, and Estonia are expected to drive governments to increasingly invest in low-emission public transport, which would increase the demand for railway construction and maintenance. Investments in renewable energy are expected to impact demand in the form of various power plants and the surrounding infrastructure. A large number of private sector projects related to the green transition, as well as other industrial investments, are planned in the target markets, involving significant investments in infrastructure. Additionally, several industrial projects related to the green transition involve the improvement or expansion of public infrastructure, such as roads, railways, or ports
2. Urbanization and the increasing complexity of infrastructure construction
The population is expected to grow in all the largest cities of the target market (Finland approx. 20%, Sweden approx. 8%, Estonia approx. 2%) between 2024 and 2040. This is expected to impact the growth of the overall infrastructure construction market. As a result of urbanization, large infrastructure projects, such as light rail lines, are being implemented in Finland, for example, in Helsinki and Tampere, and are planned to be implemented in Turku and Vantaa. In Sweden, urbanization is expected to increase investments in transport infrastructure, and for example, Stockholm’s metro network is being expanded. In addition to transport investments, urbanization is expected to increase investments in other urban and municipal infrastructure, such as groundwork and utility networks for new residential areas and addressing the infrastructure maintenance backlog in cities.
3. Investments in defense and critical infrastructure
The focus on critical infrastructure, defense infrastructure, and national security has increased significantly since the start of the war in Ukraine and as Finland and Sweden have joined the defense alliance NATO, offering opportunities for infrastructure constructors. Investments in improving transport connections and, for example, ports provide significant potential for GRK according to the company’s management. Several potential projects aimed at improving transport infrastructure are located in GRK’s geographic core areas. The Finnish and Swedish defense forces and border guards plan to invest more in, for example, new military bases and border surveillance. GRK has participated in border fence projects in both Finland and Estonia, and according to the company’s management, it has the existing relationships and capabilities to be involved in defense and border guard projects in all its operating countries in the future.
Source: Third-party market research, Forecon Infrastructure Construction Report, October 2024. The historical market development in euros for the years 2019–2022 is based on Forecon’s report (Infrastructure Construction Report, October 2024), adjusted to real prices using historical inflation. The size of the Finnish market has been adjusted based on the Earthworks Cost Index (Statistics Finland, 2015=100 index points), the size of the Swedish market has been adjusted based on the Construction Cost Index (Statistics Sweden), and the size of the Estonian market has been adjusted based on the Construction Cost Index (Statistics Estonia) for the years 2019–2022. The forecast for the years 2024–2026 is based on Forecon’s projection and has not been adjusted for inflation.
4. Large infrastructure maintenance backlog
In Finland, the estimated maintenance backlog in infrastructure-related transport construction is currently approximately 4.2 billion euros, of which around 2.6 billion euros are related to the road network and 1.6 billion euros to the rail network. In Sweden, prolonged neglect of infrastructure maintenance has resulted in an estimated construction maintenance backlog of 10.1 billion euros, of which approximately 2.4 billion euros relate to the road network, around 4.3 billion euros to the rail network, and approximately 3.4 billion euros to municipal technical infrastructure. In Estonia, the estimated construction maintenance backlog for the state road network exceeds 4.4 billion euros. GRK participates annually in multiple construction projects in its target markets related to the refurbishment of aging infrastructure, including improvement and renovation work on roads, streets, and municipal infrastructure. The company’s management assesses that GRK is well-positioned for these projects in the future due to its extensive service offering and expertise, particularly in urban construction.
5. Public infrastructure construction investments in GRK’s target markets
In Finland and Sweden, publicly funded investments are primarily driven by the countries’ 12-year transport system plans. In Finland, the Finnish Transport Infrastructure Agency is preparing an investment program for the years 2025–2032, which includes 1.5 billion euros in investments for the road network and 1.4 billion euros for the development of the rail network. In Sweden, the government’s approved national transport infrastructure plan for 2022–2033 amounts to approximately 88 billion euros. Within this program, planned investments in the road network total around 9 billion euros, while investments in the railway network amount to approximately 14 billion euros. Estonia has received around 3.5 billion euros in funding support from the European Commission for economic, social, and regional development, a significant portion of which has been allocated to infrastructure projects, such as railway and road network expansions to complete the TEN-T core network. In Estonia, major investments are being made in railway electrification, with GRK involved in related projects. The largest single project in Estonia, the Rail Baltica railway project, is expected to drive demand for infrastructure construction services, according to the company’s management.