Dublin, Jan. 05, 2024 (GLOBE NEWSWIRE) -- The "Germany Construction Industry Databook Series - Market Size & Forecast by Value and Volume (area and units), Q2 2023 Update" report has been added to ResearchAndMarkets.com's offering.
The construction industry in Germany is expected to grow by 4.0% to reach EUR 262,113 million in 2023. Despite near-term challenges in certain construction sectors, medium to long term growth story in Germany remains intact. The construction industry in Germany is expected to grow steadily over the next four quarters. The growth momentum is expected to continue over the forecast period, recording a CAGR of 3.4% during 2023-2027. The construction output in the country is expected to reach EUR 299,089.6 million by 2027.
Construction-related businesses are collapsing at a rapid rate in the German market. The trend, which picked up pace in H1 2023, has further continued in H2 2023 in Germany. Rising interest rates, surge in construction material, slowing demand, and shortage of skilled workers are among the primary reasons resulting in the downfall of many developers over the last few quarters.
The housing market is one of the worst-hit sectors in the German construction industry.
Several developers have cancelled the projects with the number hitting a new high in August 2023. Based on the data revealed by the Munich-based Ifo economic institute, one in five companies canceled their projects in August. To support the growth recovery of the construction market, government intervention will become crucial from the short to medium-term perspective in Germany.
Rising interest rates and construction material prices led to the downfall of developers in Germany
Builders, in Germany, have been facing the perfect storm in rising interest rates, expensive construction materials, slowing demand, and a shortage of skilled workers. All of these factors have resulted in severe financing problems across the construction market. The financing issues have subsequently resulted in the downfall of several developers including Centrum Group and Development Partner and Project Immobilien Gruppe. The publisher expects the trend to further accelerate in Q4 2023 and Q1 2024, meaning further troubles for the German construction industry.
The demand has slowed significantly in the German market. This is evident from the significant decline in new permits, which fell 31.5% in July 2023, compared to the same period last year. The authorities have granted permits for only 21,000 apartments in July, which is 9,600 fewer than the year before. In the first seven months of 2023, permits have declined 28% in the German market. Annually, Germany aims to construct 400,000 apartments. However, the country is struggling to meet the goal due to the current macroeconomic environment. For years, the period of low-interest rates has fueled the growth of the construction market. But the sharp rise in interest rates has put an end to it.
The German government is working on a relief package to revive the struggling construction industry
With the construction market facing severe headwinds due to rising interest rates and material prices, which has led to the downfall of several businesses in the sector, the government is now working on a relief package aimed at reviving the industry growth in Germany.
- In September 2023, the government announced its decision to set aside proposed building regulations, opting instead for a $47 billion relief package to support the construction market. Berlin is expected to allocate 18 billion euros for affordable housing until 2027, with more investment expected from federal states and municipalities.
- Furthermore, the government also stated that it will oppose the new European Union legislation proposals that could mandate upgrades for millions of buildings, including measures like insulation or efficient heating systems. The legislation is expected to put too much burden on the government and homeowners. The authorities are also planning to convert vacant offices and shops into housing units by allocating 480 million euros over the next two years.
The construction sector is in dire need of liquidity in Germany. The market does not need subsidies, but rather incentives for investment to support the growth recovery of the residential construction market in Germany.
The surge in construction costs is also affecting the renovation rate in the German market
Revamping buildings through deep renovation, which drastically cuts down energy usage for heating and cooling, is deemed essential in achieving climate goals and alleviating pressure on energy infrastructures. The European Union intends to tackle this challenge by increasing renovation rates to 2% of the total housing stock.
The effects of rising construction costs are also reflected in renovation works. Orders for energy modernization measures have decreased significantly in the German construction industry. The publisher expects the trend to continue over the next few quarters, as interest rates are projected to remain higher for longer globally.
This market intelligence report provides a detailed view of market opportunities in the building and infrastructure construction industry at country level. With over 100+ KPIs, covering growth dynamics in building construction, infrastructure construction, construction cost structure analysis and analysis by key cities in Germany, this databook offering primarily provides data-centric analysis with charts and tables.
- Market Dynamics by Value, Volume, and No. of Units: Provides a comprehensive data-centric view of size and structure, industry dynamics, and end market opportunities in the building and infrastructure construction industry in Germany.
- Residential Construction Outlook: Provides market analysis by type of construction, development stage, price point, and key cities. KPIs include value, volume and number of units.
- Commercial Construction Outlook: Provides construction outlook by value and volume across office buildings, retail buildings, hospitality buildings, restaurant buildings, and sports facilities.
- Institutional Construction Outlook: Provides construction outlook by value and volume across manufacturing plant buildings, metal & material processing buildings, chemical & pharmaceutical buildings.
- Industrial Construction Outlook: Provides construction outlook by value and volume across manufacturing plants, educational buildings.
- Infrastructure Construction Outlook: Provides growth dynamics and market analysis by three key sections such as marine and inland, utility system and transport infrastructure construction.
- City Level Analysis: Provides outlook of top 10 cities in Germany by construction value.
- Construction Cost Structure Analysis: Provides outlook of different construction cost like material, labour, equipment, and others costs by construction value. At granular level, this module provides in detail material cost analysis by type of materials and labour cost by type of work by construction value.
In-depth Understanding of Construction Cost:
This report provides in depth analysis of construction costs by type of cost. It also provides data points by different material costs involved and different labour cost. This report further provides information by type of construction and Cost by type of worker.
- Top Ten Cities Construction Value Data: Construction market size by key sectors at city level.
- Volume and Value Data: Get detailed understanding of the market both from value and volume (both by activity and units) perspective for historical as well as forecast period
- Develop Market Specific Strategies: Identify growth segments and target specific opportunities to formulate your strategy; assess market specific key trends, drivers, and risks in construction industry.
- City Level Insights: Get city level trend analyses by tier-1, tier-2, and tier-3 cities.
For more information about this report visit https://www.researchandmarkets.com/r/yqr5ct
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