Some businesses in Nordrhein-Westfalen are already in deep trouble due to the ongoing construction.
Foto: Rolf Vennenbernd / dpa
Many construction companies in Germany are complaining about canceled projects and lack of orders. In August, 20.7 percent of the companies reported canceled projects, up from 18.9 percent the previous month, according to the Munich-based Ifo Institute. „The cancellations in residential construction are reaching a new record high,“ said Klaus Wohlrabe, head of Ifo surveys. „Since the start of the survey in 1991, we have not observed anything comparable. The market uncertainty is enormous.“
Due to the rapidly increasing construction costs and significantly higher interest rates, many projects that were still profitable in early 2022 are currently no longer feasible. „The reduction in subsidies due to stricter energy efficiency requirements also burdens the calculation of the builders,“ added Wohlrabe.
The construction companies were increasingly getting into trouble. Some businesses still had a lot of orders. However, already 44.2 percent of the surveyed companies reported a lack of orders, compared to 40.3 percent in July. For comparison: At the same time last year, the share was only 13.8 percent. „Some companies are already up to their necks in water,“ said Wohlrabe.
Currently, 11.9 percent of companies in the housing construction sector are reporting financing difficulties. „This is the highest value in over 30 years,“ said Wohlrabe. For the next six months, the majority of companies fear further declines in business. The business expectations index is at an „exceptionally weak level“ with a score of minus 60.1 points, according to the Ifo Institute.
Leading institutes have a negative outlook on the German economy, partly due to the construction crisis. The Ifo Institute, for example, predicts a 0.4 percent contraction in the gross domestic product for the current year.