The construction industry in transition: strategies and prospects for a key sector

The traffic light government’s ambitious targets – 400,000 new homes per year – remain out of reach. Instead, the industry is struggling with a structural downturn, stagnating investments and a great need for transformation.

⚙️ Challenges

Lack of orders & high costs:

According to the ifo Institute, every second construction company reported a lack of orders in July 2025. Despite ECB interest rate cut to 2.25 %, lending remains restrictive – high construction costs & ESG requirements exacerbate the situation.

Shortage of skilled labour:

Planning, trades, implementation – there is a lack of qualified personnel. Demographics & low training figures exacerbate the bottleneck.

Declining commercial building construction:

Declines in turnover of -7 % (2024) & -4.5 % (2025) expected. In contrast to residential construction, there is hardly any flexibility with interest rate changes.

⚡️ Opportunities & bright spots

Civil engineering as an anchor of stability:

Infrastructure projects (railway, broadband, energy) grow: +9 % (2024), +4.5 % (2025). Public projects secure basic capacity utilisation.

Interest rate turnaround with prospects:

The ECB interest rate cut in April 2025 is a first step. Further cuts could make construction financing easier – especially for residential construction & municipalities.

💡 Strategies for the future

Strengthen municipal investment power:

60% of public construction investment comes from municipalities – with an investment backlog of €186 billion (KfW, 2024). Planning security, funding commitments & skilled administrative staff are needed.

Digitalisation & sustainability drive change:

BIM, drone surveying & AI-based planning increase efficiency & CO₂ reduction.

Securing skilled labour:

Strengthen training, recognise professional qualifications, promote new working time models & automation.

The construction industry is facing structural change in 2025. The future will be created by investing in digitalisation, sustainability & skilled workers – with an active role for the public sector.