FRANKFURT (dpa-AFX) – Despite increased construction prices and loan interest rates as well as many canceled residential construction projects, experts expect slight growth in building construction this year. According to a study published on Wednesday by the strategy consultancy EY-Parthenon, the prospects for the industry are not that bad in the medium term either.
According to the study, the volume of construction work performed this year is likely to increase by one percent in real terms compared to the previous year to almost 318 billion euros. Large construction companies reported only isolated project cancellations, it said. While private residential construction is showing a slump, public construction remains stable. According to a survey of more than 100 companies, construction companies could largely pass price increases on to customers or even increase their margins. In it, 18 percent of those surveyed stated that they would not meet their sales targets, while 62 percent assume they will exceed them.
In the coming year, the volume of construction work in Germany will then stagnate, according to EY-Parthenon. Falling new orders and building permits weighed on the industry, while high new orders provided support. “For the first time in many years, a decline in the volume of new residential construction is expected for 2023,” said Björn Reineke, partner at EY-Parthenon. But here, too, the volume declines with a minus of 3 percent are not landslide-like. “For 2024, growth is then expected again in all segments.” Residential construction is also coming back, said Reineke. According to EY-Parthenon, the volume of construction work performed in 2024 should increase by 1.3 percent on the previous year, adjusted for price.
Supply bottlenecks and expensive materials in the wake of the Ukraine war are causing problems for the construction industry. Many projects are being canceled due to high building prices and higher interest rates, and there is uncertainty on the real estate market. The Central Association of the German Construction Industry (ZDB) expects that 245,000 apartments will be completed in the coming year, a good 12 percent less than this year. This would fall far short of the federal government’s target of 400,000 new apartments per year. The ZDB expects a price-adjusted drop in sales this year.
EY-Parthenon still sees reason for optimism. “The sharp rise in energy prices creates additional incentives to invest in buildings in order to reduce energy requirements,” said partner Volkmar Schott. “With energetic renovations, for example in windows, heating systems or solar roofs, the trade is busy for years.”/als/DP/zb
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