As growth slows in the West, new opportunities are opening up eastwards where PWC research points to an 'infrastructure gap'

Construction firms should be looking at central and eastern Europe for business opportunities as growth slows in the USA and UK, according to research by PricewaterhouseCoopers.

An estimated €500m (£396m) of investment is needed to modernise the region’s infrastructure, particularly in transport and water supply.

The European football championships, planned for 2012 in Poland and Ukraine, are also providing impetus for investment in roads, airports and rail in addition to stadiums and hotels.

The report, Builiding New Europe's Infrastructure, points to a a so-called "infrastructure gap" in countries such as Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia and Ukraine.

A significant proportion of the infrastructure investment needs will be funded from public sources backed by European Union funding, but Public Private Partnerships are also emerging as popular models for investment.

Jonathan Hook, global engineering and construction leader, PricewaterhouseCoopers LLP, commented: “The potential opportunities for international construction companies in infrastructure projects in Central and Eastern Europe are extensive.

"The expanding size of some of these projects and the need for technical expertise to implement them will present further potential for consortia led by global construction companies, many of which are already active in the region.”

Hook said the credit crunch did not appear to be affecting PPP deals in the region.

To date PPP activity in central and eastern Europe has been limited, with about a dozen PPP transactions completed, mainly in Hungary’s transport sector.

However, there are currently more than 50 ongoing and upcoming PPP projects expected to be completed during or after 2008.