Germany Construction Market Size, Trends, and Forecasts by Sector - Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional and Residential Market Analysis to 2029 (Q1 2025)
Summary
GlobalData expects the construction industry in Germany to fall in real terms by 1.8% in 2025, marking its fifth consecutive year of decline, owing to the headwinds caused by elevated inflation rate, high construction material costs, and weak demand especially from industrial and residential construction sectors. According to Destatis, the construction cost index for residential buildings rose by 1.6% year-on-year (YoY) in the first nine months of 2024, increasing from 116.9 in January-September 2023 to 118.7 in January-September 2024. Furthermore, rapidly falling building permits are also contributing to the decline of the German construction sector. According to Destatis, the total number of building permits issued in the country fell by 11.5% YoY in 2024, with residential building permits and non-residential building permits falling by 13.4% YoY and 5.8% YoY, respectively, during the same period. Moreover, rising political instability following the collapse of Chancellor Olaf Scholz’s government in December 2024 is exacerbating challenges for the construction industry. The new government, elected in February 2025, now faces multiple hurdles, including reducing high energy costs.
The German construction industry is expected to record an average annual growth rate of 3.1% between 2026 to 2029, supported by investments majorly in transport, energy, and industrial projects. In mid-December 2024, the government committed EUR40 billion ($43.6 billion) to modernize the country’s rail infrastructure by 2027, including major projects such as the Stuttgart 21 rail hub redevelopment and Munich’s Second S-Bahn Core Line. Recently, in February 2025, the European Commission (EC) approved a grant of EUR920 million ($1 Billion) to support the construction of a semiconductor plant in Dresden, Germany. The project is scheduled for completion by 2031.
GlobalData’s Construction in Germany - Key Trends and Opportunities to 2029 (Q1 2025) report provides detailed market analysis, information and insights into the German construction industry, including -
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