2023-09-02 22:00:00
Above all, construction activity in residential construction declined significantly. The slump in orders in Austria might once once more make owner-occupied and rented accommodation more expensive.
The construction industry is currently facing turbulent times. From a global perspective, it is increasing slightly, but Europe is lagging behind and in Austria the numbers are falling sharply. This is confirmed by national and international analyses.
Global construction activity: trends and developments in construction in 2023
The results of the RICS Global Construction Monitor (GCM) for the second quarter of 2023 continue to show a slight increase in global construction activity. Infrastructure continues to lead, with solid growth in most countries. In contrast, construction activities in the residential and commercial sectors vary worldwide.
“Credit conditions have deteriorated around the world and respondents expect further tightening of lending over the next three months, no doubt weighing on activity,” the report said.
At a regional level, the Middle East and Africa (MEA) continues to be one of the strongest regions in the world. At the same time, the global construction activity index CAI in North, Central and South America moved somewhat further into expansionary territory in the second quarter.
Across Europe, CAI continues to be flat, with a number of larger European markets showing either flat or negative CAI numbers in the second quarter. These include the UK, Germany, France, Italy, Spain and the Netherlands. In most cases, construction activity in residential construction fell significantly and stagnated in the area of commercial real estate. This is also reflected in the subdued 12-month expectations outside of the infrastructure sector in Europe.
In contrast, markets in the Middle East such as Saudi Arabia, United Arab Emirates and Oman are seeing increasing construction activity across all sectors. In the APAC region, the strongest momentum can be seen in India, while construction activity has weakened in China.
Material costs and construction activity: prospects for the coming year
The cost of materials remains the most cited barrier constraining construction activity on a global scale. However, the proportion has fallen from 75 percent to 71 percent. Although forecasts for material cost inflation for the coming year remain high, they have been further reduced in all world regions compared to earlier in the year.
Latest results in Europe show construction activity struggling for momentum, with rising material costs and a deteriorating credit environment. The outlook for the next 12 months paints a similarly muted picture, with the exception of infrastructure, where respondents expect continued growth in activity at the European level.
Across Europe, the index for construction activity is minus one. “This value thus shows a flat trend in construction activity, a trend that has already been observed in the last three quarters,” says the report. At the national level, Germany, the Netherlands and Italy are showing a decline, while France, Great Britain and Spain are experiencing a largely stagnant environment. In contrast, the CAI in Ireland rose to +24 following an already positive reading of +18 in the last quarter.
In Europe, the infrastructure sector recorded an increase in construction activity, which was also reflected in most countries. In contrast, residential construction fell in markets such as France, Germany (from -25% to -33%), the Netherlands and the UK as rising interest rates weigh on prospects, sales and prices. The construction of commercial real estate in Germany and the Netherlands shows a similarly muted trend. Housing activity remained stable in France and the UK, with a modest increase in Italy. Again, Ireland stood out as the only European market where construction activity increased across all sectors.
The twelve-month expectations in Europe show a largely stagnant picture with net balances of minus four percent and minus five percent for construction activity in the residential and commercial sectors. In contrast, the prospects for the infrastructure/public buildings sector remain positive. In Germany, the picture is more negative, with net balances of minus 60 percent for residential construction, minus 25 percent for commercial construction and no change in infrastructure/public buildings.
68 percent of respondents in Europe and 67 percent in Germany describe material costs as a barrier to market activity.
Susanne Eickermann-Riepe, Chair of the RICS European World Regional Board (EWRB): “Global construction activity is stable, driven by infrastructure measures in many parts of the world. In contrast, Europe is showing a very flat trend that is still in negative territory has not left. The outlook remains subdued given the macroeconomic environment.”
The analysis “Global Powers of Construction” by the consulting firm Deloitte comes to similar conclusions. “The numerous hurdles such as the shortage of skilled workers, disrupted supply chains and price increases have left their mark on the international construction industry, and yet it continues on its growth course. In the past financial year, total sales of 1.9 trillion US dollars were achieved,” emphasizes Gabriele Etzl, partner and Head of Real Estate at Deloitte Legal. The Chinese construction giants are primarily responsible for the steady increase in sales, which is also reflected in the global ranking. Places one to six are occupied exclusively by companies from China. The company with the highest turnover in Europe is in seventh place with the French Vinci Group and a turnover of 64.970 billion US dollars.
The current developments in the Austrian construction industry give cause for concern
Industry spokespersons only recently reported on a slump in orders and a decline in sales. And yet two Austrian companies made it into the top 100 ranking. Strabag ranks 21st with annual sales of 17.936 billion US dollars. Compared to the previous year, it loses slightly by two places. Porr AG was able to defend its position: With a turnover of 6.095 billion US dollars, it is once more in 55th place.
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