The construction crisis continues unhindered and the level of frustration is constantly increasing. There is growing fear in the construction industry of a wave of bankruptcies that threaten to permanently lose skilled workers.
Wiesbaden – There is still no end in sight to the construction crisis in Germany: the downward trend in building permits for new apartments continued in February. Their number fell by 18.3 percent or 4,100 compared to the same month last year to 18,200, as the Federal Statistical Office announced on Thursday (April 18). Compared to February 2022, there was even a drop of 35.1 percent. Expensive materials and increased financing costs deter many potential home builders and investors.
“It annoys me”: Construction industry hit by wave of cancellations
For single-family homes, the decline in building permits was greatest in the first two months of the year at 35.1 percent compared to January/February 2023 to 6,100. A decline of 15.4 percent to 2,200 was reported for two-family homes. The number of approvals also fell significantly for multi-family houses – the largest type of building in terms of numbers: here it fell by 21.5 percent to 18,600.
There is currently no significant improvement in sight. In German housing construction, almost every fifth company is currently affected by canceled orders. In March, 19.6 percent complained about this, as the Munich Ifo Institute found in its company survey. “The situation in housing construction remains tense,” said Ifo survey chief Klaus Wohlrabe. “There are too few new orders added to the cancellations.” In March, 56.2 percent of companies reported a lack of orders.
When asked by IPPEN.MEDIA
, Thomas Reimann, President of the Hessian and Thuringian construction industry, is
displeased about the latest figures from Wiesbaden: “It annoys me when I see that the entrepreneurial commitment of many colleagues in the construction industry is due to a lack of reliability the political leaders in Berlin are being trampled on.” The lack of political measures would destroy trust and thus further slow down housing construction.
Bankruptcies in the construction industry are increasing: a wave of bankruptcies will appear in 2024
Meanwhile, bankruptcies in the construction industry are increasing. In a new risk analysis, the insurer Atradius states: “We expect an increase in insolvencies in the construction industry of between 10 and 15 percent this year compared to the previous year.” That's what Michael Karrenberg, director of risk management at the credit insurer, says. In 2023, the number of bankruptcies in the construction industry rose by around 21 percent to 2,900 company bankruptcies compared to the previous year. This exceeded the pre-Corona level by a mid-single-digit percentage range - in 2019 the number of insolvencies in the construction industry was 2,770. “I fear that the wave of bankruptcies will only really become apparent this year,” predicts Michael Karrenberg.
In his opinion, this is not a healthy market adjustment. The industry is losing too many companies that are actually needed - after all, there is a shortage of living space and the country has to extensively renovate and upgrade the building stock over the next ten years.
The expert Thomas Reimann also sees this danger: “We run the risk of losing trained specialists over many years and no longer being able to convey the attractiveness of our industry for qualified training,” he tells
IPPEN.MEDIA.
Construction crisis: High interest rates and construction costs have got the ball rolling
The increased interest rates and higher construction costs have caused a lull in construction, especially residential construction. Because many private individuals can no longer afford to build, and it is currently hardly profitable for investors. The industry is therefore calling for political measures to stimulate the construction industry. The federal government originally set itself the goal of 400,000 new apartments annually in order to meet the growing demand, especially in large cities. According to experts, it is likely to miss this mark by 2024.
With material from Reuters