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The Construction and Architecture sector in Portugal

The construction and architecture sector is usually a sector that works as a barometer of the economy in Portugal. However, and differing from others, the crisis that we suffered because of the Covid-19 pandemic, did not affect the construction sector directly, because it was not a crisis of economic origin.

Despite the pandemic, the economic capacity continued to exist as well as the will to build. This brought the sector to a great challenge: if the construction activity is not compatible with remote work, what should we do now?

The construction and architecture sector in Portugal came from an upward economic path, with a bustling market, but which could not withstand stops for medium or long periods of time.

Thus, the need to survive boosted creativity, and forced the sector to adapt, creating various mechanisms to overcome the challenges that arose, such as the scarcity of labor and materials. During the pandemic, many factories were forced to close and stop their activity, and then had to resume their work with working shifts, with a reduced production capacity, as this industry is not compatible with remote work.

Nevertheless, as it is distinctive in the Portuguese people, creativity was combined with resilience, and construction was once again one of the main drivers of the Portuguese economy, bringing dynamics and entrepreneurship to the market. Several investment projects, both public and private, which were on hold, were quickly put into operation. In addition, the Covid-19 pandemic generated new behaviors and needs, and business areas emerged, boosting the growth of new sectors, especially logistics and the construction of Data Centers, to which the construction sector needed to respond.

The services sector has also been under profound requalification and reorganization, in accordance with the new workplace strategies. Today’s corporate world asks for a response to concepts such as bringing people together, improving connections, or retaining and attracting new talent. This translates into a greater demand and reformulation of offices that encourage different forms of work, promote creativity, sharing and new behavioral and interaction experiences, competing directly with the increasingly attractive remote work.

Confronted with the new demands from the market, and in the midst of the pandemic, the construction sector faced several challenges: shortage of qualified labor; difficulty in attracting and retaining talent; increase in the cost of materials and labor, dictated by high demand and scarcity in supply.

To face these difficulties, the market itself, and taking into account everything we have learned about the fluctuation of material prices, needs to reinvent itself, through a solution that may involve the search for new construction materials, maintaining the same standards of quality, but with new and more sustainable solutions. In terms of human resources, the market must become more attractive, in order to attract new talent, which needs to be increasingly specialized and trained.

There is a strong market trend towards the adoption of “collaborative” contracting models, in which it is the responsibility of the builder to guarantee both the price and construction deadlines, assuming any losses due to the high fluctuation of the market in values and scarcity of labor and materials. This model, in the current market as it is, represents a high risk for the sector. The positive part is that this promotes teamwork in increasingly close partnerships with subcontractors, to jointly think of new solutions and, in the face of critical activities, outline new strategies.

In addition to all these challenges, the War in Ukraine increased even more the prices of materials and the shortage of manpower, adding to these difficulties the uncertainty regarding the near future in Europe and in the world. The construction sector today has to adapt to a major challenge, which seems to be here to stay: dealing with an increasingly volatile and uncertain market, heavily impacted by imponderable external factors.

On the other hand, the construction sector is one of the sectors with the greatest potential to provide significant reductions in its carbon footprint, which can represent a great opportunity for growth and development. This sector is currently responsible for about 40% of the world’s carbon footprint, so there is a long way to go, towards a more sustainable sector. A vital aspect of this shift is the adoption of mandatory industry standards, such as Leadership in Energy and Environmental Design (LEED) or BREAM certification, in line with industry standards.

It is now up to the construction sector to boost energy efficiency gains in the long term, in order to reduce operating costs and making the initial investment profitable. To this end, it is important to use sustainable building materials, with sustainable life cycles and with the least possible environmental impact.

At the same time, the area of rehabilitation of urban spaces and buildings in Portugal has also given rise to several new projects, which, through the integration of technology and the expansion of digital infrastructure, have the potential to transform our cities, which are the true engines of growth of the global economy.

One of the innovations in the sector during these last two years was the great growth in the construction of Data Centers. The need to create more reliable and faster digital communication systems fueled this growth, as well as the emergence of the new 5G telecommunications standard.

Without a doubt, technology is a perfect tool to make our cities smarter and more sustainable, and the construction and architecture sector need to go hand in hand with technological advances. In an ideal smart city, everything is interrelated: lighting and public signage, buildings, waste management, renewable energies… Smart cities depend heavily on data, so we need these new technologies to accompany this development, and respond to the ultimate goal of a smart and sustainable city: to make our lives easier, anticipating needs and optimizing resources. For this, considerable investments in infrastructure are needed in the coming years to make our cities suitable for the increasingly technological future.

We cannot forget that Portugal, as a country belonging to the European community, was still far from its parameters in terms of touristic, residential, logistics and office supply. But the situation has changed in recent years. The geographic, climatic and economic conditions make Portugal a very attractive market for foreign investment – Portugal is a trendy, safe destination and here comes the opportunity to position ourselves in Europe as a “green” and relevant destination. It is imperative that we stop ourselves to think, anticipate and outline a strategy, so that our actions are guided by a plan to revitalize the country, which promotes sustainability and is supported by the opportunity we now have to stand out.

Where is the construction and architecture sector heading? With the pandemic, the human being has become the center of concerns and the way we think and live in cities, positioning himself now as the protagonist. There is a strong concern for our well-being and the sustainability of the entire universe that surrounds us. Our workplace and our needs are changing as we know it. The lifestyles and mindsets shift across individuals, and we are all searching for confidence in returning to familiar routines and places that will be anything but familiar. Connect, discover, focus and restore are the essential needs that we try to meet every day in the places we occupy.

Derived from a greater environmental awareness, new lifestyles and behavioral trends are increasingly emerging, focused on the well-being of human beings and environmentally friendly, which require a greater balance between the economy and the quality of life.

There is still a long way to go, both in terms of the rehabilitation of our country and in terms of strategy and critical thinking. It is important that cities are living cities, thought and designed for those who inhabit them. It is also mandatory that our actions move towards sustainability and the preservation of our world, reducing our carbon footprint. More than ever, all eyes are on this sector and in its potential for creating and inspiring solutions, behaviors and actions, that contribute to building a better world.

 

Opinion article by Joana Cid Barreto – Head of Architecture at Worx, published in Investment Reports, March 2022.

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