Crisis in the Baden-Württemberg Construction Sector Intensifies
The crisis in the Baden-Württemberg construction sector is reaching a critical point. According to data from the State Statistical Office, in the past year, construction authorities approved just over 6,600 residential buildings and more than 2,600 non-residential buildings, such as office and administrative buildings. This represents a decline of around 4,200 new construction projects, or 31.2%, compared to the already weak previous year.
This marks a historic low. A spokesperson for the statistical office confirms that there is no lower value in the time series of statistics dating back to 1950 for any of the categories. This also applies to the number of apartments approved for construction in single- and multi-family homes. This figure dropped by more than a quarter, from over 28,300 in the previous year to just under 20,700. Since 2021 alone, the number has more than halved.
However, the number of new apartments approved in existing buildings or non-residential buildings in 2024 has not yet been listed. Previous statistics show that a few thousand apartments fall into these categories each year.
The crisis is also evident in the data from the 50 savings banks in the southwest. Their new business in loans for private residential construction has recovered somewhat. According to the data, the volume in 2024 reached 8.5 billion euros, around 30% more than the weak previous year. However, a good 85% of this was used to finance existing properties. "Unfortunately, there is a lack of momentum for new construction," said Matthias Neth, President of the Savings Banks Association, recently.
The construction industry has been in a state of alarm for some time now. Rising material and energy prices in particular, as well as higher interest rates, are making construction unprofitable for many clients. The industry recently estimated that the downturn in residential construction will continue this year.
According to Markus Böll, President of the Baden-Württemberg Construction Industry Association, order intake is still declining. Accordingly, they expect a further slight decline in sales in the industry in 2025.
According to the State Statistical Office, in 2024, the main construction sector comprised almost 8,500 companies. This sector, which the association represents, includes, among others, companies that construct shell structures. In the past year, just over 116,000 employees worked in this industry.
Causes of the Crisis
The causes of the crisis in the Baden-Württemberg construction sector are complex and multifaceted. The sharp rise in material and energy prices is a major factor. In addition, the war in Ukraine has led to further supply bottlenecks and price increases. Higher interest rates are also making financing new construction projects more expensive.
In addition, there is a lack of skilled workers in the construction industry. This makes it difficult for companies to carry out orders on time and within budget. The shortage of land for construction is also a problem, especially in densely populated areas.
Consequences of the Crisis
The crisis in the construction sector is having a negative impact on the entire economy. Construction companies are postponing or canceling projects, which is leading to job losses. In addition, supply chains are being disrupted and prices for construction products and services are rising.
The shortage of housing is also a major problem. In many cities and municipalities, there is a high demand for apartments and houses, but not enough new construction is being built to meet the demand. This is leading to rising rents and purchase prices, making it increasingly difficult for people to buy or rent their own homes.
Measures to Address the Crisis
The Baden-Württemberg government and the construction industry are working together to address the crisis. The government has introduced a number of measures to support the construction industry, including subsidies for energy-efficient construction and grants for the training of new skilled workers. The construction industry is also calling for measures to increase the supply of land for construction and to simplify planning and approval procedures.
It remains to be seen whether these measures will be sufficient to overcome the crisis in the construction sector. However, it is clear that something must be done. If the crisis continues, it will have serious consequences for the entire economy and for the people of Baden-Württemberg.
