explore our market researches

Market reports

See all
usp

Blogs I published 09 July 2024

Non-residential Construction Forecast for 2024

The cityscape is an active organism with an ever-changing skyline. You see the well-known scenery just by stepping out of your home: cranes along the skies, scaffolding clinging to buildings and construction equipment as a soundtrack to our urban spaces. Constant transformations of our surroundings aren’t a cosmetic whim, but a clear indication that our needs and priorities change, and with them – our ways of life.

While 2023 has seen robust and somewhat unexpected growth, 2024 is expected to shift gears and head into a slight decrease in building volumes across a majority of European countries. So let’s go over upcoming industry trends and underlying factors that influence these dynamics.

 

construction site

 

Prognosis and State 

Our metrics show that 2024 faces certain pressures and will be a year of adjustments. With reference to 2023, a noticeable slowdown will befall European construction (most noticeably in the UK and Germany, with -3.8% and -2.5% respectively). While not necessarily as extreme in all countries, these changes are mostly due to a decreasing volume of newbuilds, along with other long-term indicators, like building permits. 

This shift in the 2024 market is impacted by a number of other aspects, many of which already surfaced in 2023, so below we’ve prepared a short overview to keep you in the loop.

Interest Rates 

A significant bump in the road is rising interest rates, and it’ll be an ongoing challenge for construction. Funding new projects has become more expensive and higher financing costs will inevitably dictate development pace, especially hurting newbuild. Streamlining construction will require some finesse, so keep an eye out for alternative opportunities. 

Material Prices

Despite a moderate decline, the industry still acutely faces higher material prices. In the past two years, the global humanitarian crisis (the Russo-Ukrainian war) has had a profound impact on the market and construction experienced a significant disruption in supply chains.

Labour Shortage

Along with the challenges mentioned above, the non-residential construction industry grapples with an ongoing labour shortage. This is by no means a new issue, but it’s become particularly evident in recent years, spiralling into an increase of labour costs. By addressing this gap head-on, the industry can ensure it has the skilled workforce needed to navigate future challenges and maintain a healthy pipeline of talent.

Uncertainty About Economic and Political Development

Steering away from material product prices, a growing concern about the European economic and geopolitical landscape certainly ripples out to construction. This can cause hesitation to commit to large-scale construction projects. Geopolitical tensions, inflationary pressures, an unstable economic environment and government regulation all turn into unforeseen challenges, eliminating informed decision-making.

Sustainability Decline

Despite efforts to swiftly tackle climate change, we’re seeing an unfortunate drop in sustainability, namely its level of adoption in construction practices (e.g. heating systems). Combined with the aforementioned factors, or rather due to their synergy, a heavy influence over the market is more than evident.

Peak Bias

Considering a stellar 2023, the stats on 2024 don’t seem all that impressive. But this is only because the 2023 boom exceeded expectations in many ways. The building volume for 2024 may be lower, but this doesn’t necessarily translate to a failing industry. Instead, it underlines that the recent experience was an unrealistic benchmark, so current trends may represent a return to a more regular growth pattern. 

 

construction workers

 

2025 Coming Up Strong

It’s not all bad news. Research so far suggests an upcoming rebound, with the construction industry again expecting growth in 2025. So compared to 2024, an increase of total production is projected throughout European countries (Netherlands +1% France +2%, Germany +3%, Italy +3.9%, Spain 6.0%), with the exception of the UK (expected to continue a downward trend of another -2%). Here’s what’s driving the upswing.

Affordable Housing

Northern Europe is faced with a unique and pressing shortage of housing. The construction timelines can only be postponed so long before projects are carried through to completion, and 2025 is expected to see a surge in project finalization to address this critical need. By tackling the housing shortage, 2025 could mark a significant step towards a more equitable and inclusive housing market, while serving as a model for other regions facing similar challenges.

Drop in Material and Building Costs

What’s stifling 2024 will most likely loosen its grip come 2025, so the overall costs of construction will be impacted greatly. Lower material and building costs, coupled with a stabilized supply chain, will significantly impact construction budgets.

Interest Rate Drop

An anticipated decrease in interest rates will be a welcome catalyst for new builds and overall housing market activity. Lower borrowing costs will make it more affordable for developers to secure financing for new projects, ultimately leading to an increase in construction starts. Additionally, lower interest rates will incentivize potential homeowners to take out mortgages, boosting demand for newly built properties

Sustainability Uptick

After a noticeable slump in 2024, we expect to see a renewed focus on sustainable construction practices. This means investors are swaying towards projects committed to eco-conscious efforts, energy-efficient technological advancements, boosted by favourable government incentives. Stay tuned for these developments.

Renovation Gaining Momentum

The sector is poised for a renovation wave. This trend could lead to a revitalization of existing structures, fostering a more sustainable and cost-effective approach to non-residential construction in 2025.

 

construction site

 

Conclusion 

While 2024 might be a year of tightening belts, it’s not a sign of total stagnation. It’s a year of recalibration, a chance to address long-standing challenges and embrace innovative solutions. As we move into 2025, the forecast brightens with the promise of lower costs, renewed focus on sustainability and a surge in affordable housing projects. The construction industry is poised for a transformation, not just in the buildings it creates, but in its approach to the ever-evolving urban landscape. Stay tuned – the future of non-residential construction is about to get interesting.

 

 

Fresh Insights Await

Our latest reports

Delve into the newest findings across various market segments, crafted for a cutting-edge overview. Explore our latest reports, brimming with up-to-date data, trend analyses, and in-depth examinations, all tailored to provide you with a comprehensive understanding of the current market dynamics.

Construction

Home Improvement

Installation

Construction

Trends in material usage Q1 2024

2024 102 pages

Explore the evolving trends in material usage among European architects in Q1 2024. Delve into the factors driving material preferences and the impact on construction aesthetics and sustainability.

Construction

Media orientation H2 2021

2024 161 pages

Explore the media engagement patterns of contractors to optimize your marketing strategies. Dive into a pool of insights that unveils how contractors interact with different media channels.

Construction

European Green Deal Q4 2021

2024 88 pages

Explore the impact and reception of the European Green Deal among architects. Understand how the initiative is influencing architectural practices and sustainability measures.

Construction

BIM Q4 2023

2024 246 pages

Key insights regarding the BIM usage and behaviour of European architects, and our latest future building volumes prognoses

Construction

Purchase Channels H2 2023

2024 123

Explore the buying and ordering behaviour among contractors in H1 2023. Uncover the key channels used, share-of-wallet and much more.

Construction

Behavioural segmentation and media usage report 2023

2023 75 pages

This report provides a comprehensive overview of purchase behaviour, products, and media usage, specifically focusing on European handymen. It delves into how handymen use media, and for what purposes, and examines their habits and preferences in terms of purchasing behaviour.

Home Improvement

DIY versus DIFM Q4 2021

2024 113 pages

This report is a must-have if you’re in the home improvement industry. It provides a wealth of information on the behaviour of DIY and DIFM consumers, their motivations, and the factors that influence their purchasing decisions.

Home Improvement

DIY or DIFM Q4 2023

2024 70

Explore the prevailing trends between DIY and DIFM in Q4 2023. Understand consumer preferences and the factors influencing their choice between DIY and DIFM.

Home Improvement

Branding Q3 2023

2023 93 pages

This report offers an extensive overview of the home improvement industry, with a focus on branding and the most popular brands within different categories. Within this report, you will gain insights into how customers perceive home improvement brands and what motivates them to buy certain products.

Home Improvement

Purchase channels Q2 2023

2023 114 pages

The European Home Improvement Monitor offers valuable insights on purchase channels in the European home improvement industry, examining the evolving preferences and behaviors of consumers across traditional retail and emerging online platforms.

Home Improvement

Purchase Channels Q2 2022

2022 124 pages

Uncover the prevalent purchase channels in the home improvement sector during Q2 2022. Delve into consumer preferences and the factors influencing their purchasing decisions.

Home Improvement

Do-it-yourself or do-it-for-me Q4 2022

2022 93 pages

Explore the prevailing trends between DIY and DIFM in Q4 2022. Understand consumer preferences and the factors influencing their choice between DIY and DIFM.

Installation

Sustainability Q1 2024

2024 81 pages

Delve into sustainability trends in the home improvement sector in Q1 2024. Discover consumer preferences and the shift towards eco-friendly home improvement solutions.

Installation

BIM Q1 2024

2024 84 pages

The European Mechanical Installation Monitor report provides a detailed analysis of the plumbing and HVAC industry. This report specifically focuses on BIM adaptation in the industry.

Installation

Sustainability Q1 2024

2024 99 pages

The European Electrical Installation Monitor report provides a detailed analysis of the sustainable solutions in the installation industry. This report specifically focuses on sustainability aspects in the industry.

Installation

Challenges toward sustainable future Q4 2021

2024 111 pages

Installation

Purchase channels Q4 2021

2024 106 pages

Delve into the training needs within the electrical installation sector. Understand the areas requiring skill development to meet the evolving demands of the industry.

Installation

European Heat Pump Monitor: Homeowners’ insight

2024

The European Heat Pump Monitor: Homeowners’ insight is an annual survey based on about 4.000 online interviews with homeowners, conducted in 8 European countries. The report covers a range of topics, relevant to understand the sentiments, buying behaviours, concerns, and evolving needs of the target group. It includes 8 country-specific insights, with cross-country comparisons, and provide guidance for shaping successful and sustainable strategies for business growth.