Market Size of Germany Residential Construction Industry
Study Period | 2020 - 2029 |
Base Year For Estimation | 2023 |
Forecast Data Period | 2024 - 2029 |
Historical Data Period | 2020 - 2022 |
CAGR (2024 - 2029) | 5.50 % |
Market Concentration | Low |
Major Players*Disclaimer: Major Players sorted in no particular order |
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Germany Residential Construction Market Analysis
The Germany Residential Construction Market is expected to register a CAGR of 5.5% during the forecast period.
The Germany Residential Construction market is driven by the huge number of immigrants residing in the country demanding new homes. Furthermore, the market is driven by government initiatives to provide affordable housing and fulfill the housing demand increasing in the country.
- Expectations for the construction industry in 2023 remain optimistic. This expectation must be revised in light of the conflict in Ukraine. At the moment, it is difficult to predict how the Russian invasion of Ukraine will affect the German construction industry. In some materials (steel for concrete reinforcement), nearly half of the material used comes from Russia or Ukraine. Until 2021, real construction investment increased by 39%, and the number of new flats and houses on the market more than doubled to more than 300,000 units. The most important reasons for this development have not changed during this time. A large number of immigrants, the record low mortgage rates, the extremely high demand for new apartments in agglomeration areas, the rising disposable incomes of private households and the search for investments with higher yields than the capital market has to offer.
- Furthermore, the government has significantly increased affordable housing subsidies. To ensure that the new affordable housing goals are met, the government has established a new ministry to oversee the sector's development. Based on current migration trends, Germany is expected to require at least 400,000 new housing units per year for the next decade or more. The publisher anticipates that the new government's increased emphasis on affordable housing and the need for new housing units due to increased migration will continue to support the country's industrial growth in the short to medium term. As a result, keep a positive outlook for the German residential construction sector over the next four to eight quarters.
- The German housing market has been remarkably strong for decades, but it faces a significant price decline in the coming years. According to the Cologne Institute for Economic Research, approximately 5 million people in Germany earn a living from renting, and the country has the second-lowest share of homeowners among all OECD countries, according to the Bundesbank. Because fixed-rate mortgages account for more than 80% of mortgages in Germany, many households have locked in the very favourable financing conditions that existed until very recently for five to ten years. Housing scarcity, rising rental prices, and a strong labour market will continue to support the market, even if house prices fall, it wouldn't necessarily be a bad thing.
Germany Residential Construction Industry Segmentation
Residential construction includes construction on single-family or two-family dwellings that are occupied or used or are intended to be occupied or used, primarily for residential purposes. A complete background analysis of the Germany Residential Construction Market, including the assessment of the economy and contribution of sectors in the economy, market overview, market size estimation for key segments, and emerging trends in the market segments, market dynamics, and geographical trends, and COVID-19 impact, is covered in the report.
The Germany Residential Construction Market is segmented By Type (Apartments & Condominiums, and Landed Houses & Villas), By Construction Type (New Construction, and Renovation). The report offers market size and forecast values (USD) for all the above segments.
By Type | |
Apartments & Condominiums | |
Landed Houses & Villas |
By Construction Type | |
New Construction | |
Renovation |
Germany Residential Construction Market Size Summary
The Germany Residential Construction Market is poised for growth, driven by a combination of factors including a significant influx of immigrants, government initiatives aimed at providing affordable housing, and a robust demand for new homes. The market's expansion is supported by record low mortgage rates and rising disposable incomes, which have made real estate an attractive investment option. Despite the optimistic outlook, geopolitical tensions, such as the conflict in Ukraine, pose challenges, particularly in the supply of construction materials like steel. The government's increased focus on affordable housing, coupled with the establishment of a new ministry to oversee sector development, is expected to sustain market growth in the short to medium term. However, the market also faces potential price corrections, with housing scarcity and rising rental prices continuing to support demand even as house prices may decline.
The German residential construction sector is characterized by a competitive landscape with numerous local and regional players, alongside a few global entities. The market is experiencing increased infrastructure spending and new government initiatives, which are likely to attract more investors. The green transition is another significant trend, with the government promoting energy-efficient housing to reduce greenhouse gas emissions. This shift is supported by financial incentives for energy-efficient building refurbishment and new construction. Despite the challenges posed by rising interest rates and bureaucratic hurdles, the market offers opportunities for investors, particularly in the rental apartment sector where scarcity has improved long-term income prospects. The collaboration between NREP and Artisa Group to develop co-living apartments in Germany exemplifies the market's potential for growth and innovation.
Germany Residential Construction Market Size - Table of Contents
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1. MARKET INSIGHTS DYNAMICS
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1.1 Current Market Scenario
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1.2 Market Overview
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1.3 Market Dynamics
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1.3.1 Drivers
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1.3.2 Restraints
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1.3.3 Opportunities
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1.4 Value Chain / Supply Chain Analysis
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1.5 Porter's Five Forces Analysis
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1.5.1 Threat of New Entrants
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1.5.2 Bargaining Power of Buyers/Consumers
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1.5.3 Bargaining Power of Suppliers
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1.5.4 Threat of Substitute Products
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1.5.5 Intensity of Competitive Rivalry
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1.6 Current Economic Scenario and Consumer Sentiment
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1.7 Residential Real Estate Buying Trends - Socio-economic and Demographic Insights
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1.8 Government Initiatives and Regulatory Aspects for the Residential Real Estate Sector
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1.9 Insights into Size of Real Estate Lending and Loan to Value Trends
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1.10 Insights into Interest Rate Regime for General Economy and Real Estate Lending
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1.11 Insights into Rental Yields in the Residential Real Estate Segment
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1.12 Insights into Capital Market Penetration and REIT Presence in Residential Real Estate
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1.13 Insights into Affordable Housing Support Provided by Government and Public-private Partnerships
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1.14 Insights into Real Estate Tech and Startups Active in the Real Estate Segment (Broking, Social Media, Facility Management, and Property Management)
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1.15 Impact of the COVID-19 Pandemic on the Market
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2. MARKET SEGMENTATION
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2.1 By Type
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2.1.1 Apartments & Condominiums
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2.1.2 Landed Houses & Villas
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2.2 By Construction Type
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2.2.1 New Construction
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2.2.2 Renovation
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Germany Residential Construction Market Size FAQs
What is the current Germany Residential Construction Market size?
The Germany Residential Construction Market is projected to register a CAGR of 5.5% during the forecast period (2024-2029)
Who are the key players in Germany Residential Construction Market?
Arup, BAUER Spezialtiefbau GmbH, GOLDBECK GmbH, KAEFER Construction and Max Bogl are the major companies operating in the Germany Residential Construction Market.