On the other hand, the outlook for the forecast period up to shows an even slower development, in a context of a weakening economic expansion. In the first signals of a new slowdown appeared in some regions like in UK and several Nordic countries where production growth in some areas stopped. Nevertheless, total construction output in increased and summed up to a total volume of 1, billion Euro in the Euroconstruct region. After five years of continuous growth it is still far below peak level, with significant different regional dynamics. Some of the downward risks already materialised since the autumn conference, adding elements of concerns and uncertainty to an overall scenario characterised by structural factors, like demographic pressure, market saturation, a slow realisation process among other bottlenecks. The leading market in the next three year period will be infrastructure.
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Around billion euros excluding taxes are currently flowing into this segment. A gigantic market not only for finishing trade companies, but above all for the supply industry.
Data problems are one issue, future bottlenecks in this area another. The sector must get along with considerably fewer craftsmen especially in the long-run. This applies, in particular, to the building construction sector, in which almost two thirds are accounted for measures on existing buildings and only one third for construction of new residential and non-residential buildings. Thus, as far as the use of labour or the production of building materials is concerned, music clearly plays in the renovation sector.
However, this segment is fundamentally more difficult to grasp, since unlike in new construction, units such as buildings, surfaces or volumes cannot simply be counted. In fact, there is little available information on this area. At best, reliable data exists on the construction output of finishing trade companies who focus on repairs, refurbishments and conversions of buildings, although they are also involved in new construction projects at the same time.
Therefore, the following procedure is used to estimate the renovation volume: First, the scope of the entire building construction output is calculated, including associated additional costs such as for planning or official fees this is due to European statistical guidelines. After this, the value for the statistically very well recorded new construction sector is then determined.
In a third step, the volume of new construction is subtracted from the value of the total building construction output which results in the size of the renovation market. Further subdivisions of the renovation segment are difficult due to a lack of further information.
Nevertheless, surveys and special evaluations cf. Restrained outlook for both building renovation sectors From onwards, significantly more funds were invested in the renovation of buildings cf. Chart 1. This was mainly due to the economic recovery after many years of stagnation and growing unemployment. Against this backdrop, numerous owners again dared to make more extensive investments. At the same time, however, construction demand was driven by exorbitantly high energy prices.
This also included building-based solar power projects, which were generously subsidized. The financial crisis and the recession that followed in were not able to permanently stifle demand for renovation works. Renovation volumes in both building construction segments reached new highs in Since , the market has only developed sideways.
Many companies have apparently done their "homework" so far or do not see enough reasons to justify major investments. On the one hand, this may have to do with creeping migration of energy-intensive industries abroad, but on the other hand it may also have to do with regional developments - e.
In addition, despite the significantly improved financial situation, municipalities have great difficulties with finding contractors for energetic renovation of administrative buildings, schools or sports facilities.
And there is evidence of a very high need for investment here. Due to a regular survey among municipalities cf. KfW-Kommunalpanel the total investment backlog in amounted to 43 billion euros for education, to 14 billion euros for public administration, to 9 billion euros for sports facilities and pools and to 8 billion euros for childcare.
The majority of this need should account for renovation measures. It can be assumed that a substantial investment backlog had built up by In the years to , however, housing renovation measures greatly expanded, namely from billion euros in to billion euros in in prices.
The average annual refurbishment volume for the whole period to amounted to over billion euros. This means that in the past 13 years additional 20 billion euros have been invested in the housing stock each year compared to It can therefore be assumed that in the meantime the need for renovation has been substantially reduced due to the strong expansion of financial means being invested.
With regard to the changes in the individual subgroups, speculation is the only option. Thus, the work on external wall insulation or window replacement may have lost importance in the past, whereas presumably more measures were carried out in the area of age-appropriate reconstruction, as well as, of building extension including adding additional floors.
For example, the increase in the renovation volume from onwards can be linked to the significantly higher number of permits for residential units in existing residential buildings.
The outlook for the future must not be too optimistic. This is because in the past one and a half decades the "low-hanging fruits" should have been harvested in particular. Nowadays, on the other hand, it is more important to provide incentives for those owners whose properties offer only manageable incentives for modernisation e. It will therefore be more a question of maintaining the exorbitantly high level currently achieved at all, rather than increasing it substantially.
Growing shortage of craftsmen Even if policymakers, under the pressure of their own climate constraints, significantly increase the requirements placed on existing buildings, the question of implementation remains unresolved.
Most of the measures still require the use of craftsmen who already show a very high utilisation. But today their work can only be relieved to a limited extent by means of serial prefabrication, digital means or other technical progress. In fact, the number of employees within the German construction industry has developed quite differently since cf. Chart 2. In contrast, the finishing trade, which concentrates heavily on the renovation of buildings, has hardly increased its number of employees since Since , the main construction industry has on balance recruited three times as many workers than the finishing trade companies.
On the one hand, finishing trade companies, which usually consist of only a handful of employees, have fewer good contacts abroad and typically hardly any personnel resources to act in this field.
On the other hand, there is often no interest in significantly increasing the number of employees. At the same time, the number of apprentices has fallen dramatically in the finishing trade since the mids, even though there has been a slight increase recently. Chart 2 Germany also faces immense challenges in the light of ageing population. Most other European countries are facing a similar fate so that labour migration cannot be a major solution. But also in the distant future the building stock in Germany wants to be well maintained.
Unfortunately, we do not yet know how this can be achieved. Send us your opinion or share the blog:.
EURO CONSTRUCT TRADING 98 SRL
Help us Corrections Found an error or omission? The market across Western Europe is in a very weak position. This allows to link your profile to this item. Please note that corrections may take a couple of weeks to filter through the various RePEc services. Corrections All material on this site has been provided by the respective publishers and authors. The volume of construction output in the 15 Western European countries is expected to contract by 8 percent this year and a further 1.
EUROCONSTRUCT 2009 PDF
At that time GDP at constant prices fell by 5. In the period , annual growth of GDP ranged between 5. Increase of GDP has been influenced since by exports. Production enhanced by higher labor productivity, better work organization, more working shifts and the use of new machinery and equipment. On the other hand new buildings were only built in small range. Despite the recent economic growth in Slovakia, it was not possible to revive the pre-crisis level of construction output. Within the period construction volume has been declining from 2.
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Around billion euros excluding taxes are currently flowing into this segment. A gigantic market not only for finishing trade companies, but above all for the supply industry. Data problems are one issue, future bottlenecks in this area another. The sector must get along with considerably fewer craftsmen especially in the long-run.
Europäischer Wohnungsbau im SinkflugAusgewählte Ergebnisse der Euroconstruct-Sommerkonferenz 2009