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There is a huge construction gap in this country: Because increased interest rates are making financing more difficult and building materials have become rapidly more expensive, many construction sites are lying idle and many project developers have stopped their planning for the time being. Now there are figures on the exact extent – and they actually sound dramatic: New residential construction is the second largest area of the German construction industry and the number of construction starts fell by almost 30 percent last year. “They have virtually come to a standstill,” is how Felix Embacher from the real estate analysis company Bulwien Gesa puts it. “The number of construction starts has never been as low as in the last six months.”
The experts there use current, regular data from project developers to evaluate where new construction is currently taking place in Germany – and to what extent. The market is extremely fragmented due to the many small development companies; there are around 9,400 developers in this country and they are working on around 23,000 projects. What sounds like a lot is put into perspective when you know that around 11,800 of these buildings have already been completed – and only around 4,800 properties are still under construction. 6,500 new projects are currently being planned, but their implementation will probably take several years. The evaluation here includes projects that will most likely be completed in 2027 or shortly thereafter.
In addition, the database has long since contained not only residential real estate projects, but also many office and commercial properties. That is why the current figures somewhat obscure the true extent of the housing crisis. If you break the numbers down just by residential construction, then only around 3,250 new projects are planned for the coming years. In addition, there are currently only 911 projects under construction that are actually intended for sale to buyers.
In residential construction in particular, the number of new buildings fell particularly significantly, especially where apartments are needed most: in the A locations, i.e. the seven largest German metropolises Munich, Stuttgart, Frankfurt, Düsseldorf, Cologne, Hamburg and Berlin. The already weak construction volume there fell by eleven percent in the last six months. In the B cities, construction activity – measured in terms of the total square meter number of ongoing projects – fell by 6 percent, and in the C cities by eight percent. The D cities are recording a contraction of almost 4 percent in construction.
On the other hand, the number of new buildings has increased in rural areas where there is already more vacancy and population shrinkage. And that doesn’t mean the suburbs of the big cities, but the really remote regions of the republic.
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