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Construction industry: increase in bankruptcies alarms - analysis shows dramatic development
Uncertainty continues to prevail in the construction industry as bankruptcies rise and the crisis extends into the long term. Find out more in this article.
Construction industry: increase in bankruptcies alarms - analysis shows dramatic development
The construction industry is in a serious crisis, characterized by dramatic scenes, a lack of orders and the threat of bankruptcies. In the first quarter of 2024, 630 companies in the real estate industry have already gone bankrupt, an increase of 18.6 percent compared to the previous year. The wave of bankruptcies particularly affects large companies with sales of over ten million euros. Experts predict that the crisis will extend well into 2026 and there is no sign of a turnaround yet.
The current construction crisis appears to be a perfect storm, caused by rising construction costs since 2020 and a lack of funding programs. The traffic light government has ended important measures such as the KfW 55 funding, which has increased uncertainty in the industry. In addition, the European Central Bank's increased key interest rates contribute to unrealistic financing of real estate for most people. All of this is leading to a standstill in the construction industry, causing further bankruptcies and uncertainty.
Despite the serious situation in the real estate industry, there are hopefuls, such as companies in the areas of energy renovation and warehouse and logistics construction that have so far been largely spared from insolvency. However, bankruptcies have also increased in other industries, with a 25 percent increase across all sectors and company sizes in the first quarter of 2024. The ongoing crisis and uncertainty in the construction industry suggest that there is no end in sight.