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Germany’s building industry embraces prefabrication and digitalisation for future growth.
The role of digitisation and prefabrication in Germany’s construction industry is becoming increasingly significant as the industry navigates a challenging period with prospects of prosperity on the horizon.
A recent survey conducted by the German Economic Institute (IW) revealed that over half of German construction companies expect a decline in output this year, while only 15% anticipate business expansion. About a third of companies predict output stagnation, and a quarter expect growth.
Industry professionals are cautious about the future due to unforeseen challenges such as the war in Ukraine, which has impacted the industry. Despite these challenges, Peter Hübner, President of the Federation of the German Construction Industry (HDB), remains optimistic, citing a historically high order backlog that is currently supporting the industry.
HDB anticipates a decline in sales for 2023, largely due to the shortage of skilled workers, increased energy costs, and material shortages. Hübner expects a similar situation to last year, with a projected decline of -5% in the industry.
Germany is also plagued by a housing shortage, and the German federal government aims to create 400,000 apartments annually to address the housing shortage in Germany. However, industry groups, including HDB, consider this target unrealistic for 2023. HDB suggests a more realistic goal of 250,000 apartments, which is far from the government’s promise of 400,000 apartments, according to Germany’s Building Minister Klara Geywitz.
Hübner emphasises that achieving such ambitious targets requires funding incentives, including €15 billion annually to subsidise new housing and transportation infrastructure such as rail, waterways, and roads, and an additional €25 billion, totalling a €40 billion package.
In addition to funding incentives, the industry requires further incentives for awarded projects. Hübner believes that innovation, shorter construction times, and incentives for reducing CO2 emissions are crucial for the construction sector to achieve its climate goals.
The industry is also grappling with a skills shortage, which is considered a self-made problem by the trade union IG Bau. Unattractive working conditions are believed to be a significant factor contributing to the shortage of skilled workers in the industry.
However, digitisation and prefabrication are emerging as solutions to overcome these challenges. According to the survey, as the industry continues to digitalise, there will be a greater adoption of prefabrication in new construction and renovation projects, and this trend is expected to continue to grow.
