Only moderate growth in demand to construction industry

According to the ifo institute, demand to the construction industry in Germany is going to grow by just 0.5% in real terms each year over the next ten years. The ifo experts believe that the current government programmes will not give significant new stimulus to the economy, given that demand for residential buildings but also for office buildings is expected to be permanently weak. Experts even think that the German construction industry is going to shrink this year given that all the government programmes are expected to show effect only from 2010.

After the end of government investment programmes experts expect a significant drop in investment in the construction industry on the part of federal and regional authorities. In the long run public building demand is going to remain at the low level of the year 2008.

Already today most activities in the construction industry refer to already existing buildings. Given that there are already about 39 million flats in Germany, the situation is not expected to change significantly over the next ten years to come.

According to estimates by ifo, by the year 2018 about 160,000 flat in single-family and two-family houses and about 115,000 flats in apartment buildings will be completed. This will be about 100,000 flats more than in the year 2008, but about 180,000 less as compared to the average of the period between 1993 and 2000. Residential building activities are expected to increase more than in the other two sectors of the building industry, in particular due to high spending on modernization. The volume of residential buildings is expected to increase by about 0.7% each year over the next ten years to about 140.5 billion Euros (price level of 2000) by the year 2018.

The construction volume with regard to buildings for business use is expected to reach 77.5 billion Euros in the year 2018 which is only a slight increase as compared to the year 2008. GERMAN