Construction industry outlook to 2026: Between challenges and opportunities

A comprehensive new report on the future of the construction industry was unveiled at the BAU's November 7-8, 2024 BAU Information Conferences. The analysis, carried out by reputed ifo german instituteprovides a detailed outlook for the market up to 2026.

Key trends until 2026

Civil construction on the rise

The civil construction segment remains one of the most promising, with an estimated growth of 7.8%. This is underpinned by substantial investments in transportation and energy infrastructure, both public and private.

Residential pressurized construction

The residential sector, which accounts for almost half of all construction projects in Europe, is going through a difficult period:

• Decrease of 10% in 2023-2024
• New construction declined by 18%
• Recovery prospects remain limited with an estimated fall of 4.3%

Significant regional disparities

Poland stands out with the strongest projected growth (+15.21 Q3Q3), followed by:

• Ireland (+9.5%)
• Czech Republic (+8.3%)
• Sweden (+8.0%)
• Norway (+7.6%)

In contrast, major markets such as Italy (-6.7%), Germany (-4.1%) and France (-4.0%) are experiencing downward trends.

Situation in Germany

The German market presents specific challenges:

• Non-residential construction stabilizes at 2023 level
• Civil infrastructure continues to grow, underpinned by investment in telecoms and railways
• The residential sector remains problematic, with an estimated decline of 14% since 2021

Factors influencing the market

• Rising interest rates
• High inflation
• Rising construction costs
• Reducing subsidies for new buildings
• Challenges in financing public transport projects

ifo expertise in market analysis

The ifo Institute, based in Munich, is one of the most prestigious economic research centers in Europe. Under the motto "Shaping the economic debate", the institute combines excellence in research with practical relevance in economic policy. Its close collaboration with the Ludwig-Maximilians-University (LMU) in Munich and long-standing experience in analyzing markets make the Institute's forecasts an essential benchmark for industry leaders and policy makers.

BAU München - The global platform for the construction industry

BAU München, which will open its doors from January 13-17, 2025, is the world's leading trade fair dedicated to architecture, building materials and systems. The event brings together market leaders in a unique global multi-specialized exhibition, serving as an engine for innovation and networking. With a structure organized by building materials, products and specific themes, BAU attracts professionals from all areas of construction: architects, planners, investors, industry and trade representatives as well as tradesmen. The program is complemented by numerous side events, including forums with international experts, making BAU Munich an essential barometer for trends and innovations in the construction industry.