After difficult years: Mood on the construction site is brightening

The construction industry has been showing signs of growth and improved business for some time now. The sector is optimistic. To ensure this continues, reforms are needed: "Build, don't hold back!" says ZDB President Wolfgang Schubert-Raab.

The construction industry has been able to report positive sales figures again for the first time in a long while: The Central Association of the Construction Industry (ZDB) The industry expects sales of €168 billion in 2025, representing a nominal increase of three percent and a real increase of 0,6 percent. For 2026, the association forecasts sales of €178 billion (a nominal increase of six percent and a real increase of 2,5 percent). Growth will continue to be driven primarily by civil engineering, which will be further strengthened by the Special Fund for Infrastructure and Climate Neutrality (SVIK). 

But there are also signs of life in the residential construction sector. According to a survey of 1.500 companies by the ZDB (Central Association of the German Construction Industry), over half of the companies rate their business situation as good or satisfactory. The downward trend of recent years has been halted. 

This is a first for the industry after several difficult years, generating renewed optimism. ZDB President Wolfgang Schubert-Raab says: "The construction industry has passed the low point. Infrastructure investments, in particular, can give our businesses a new perspective. Nearly 70 percent of companies expect a stable or improved situation in the coming months – compared to just over half last year. However, this stabilization should not obscure the fact that we experienced a real decline of 17 percent between 2021 and 2024. Therefore, we continue to need reliable long-term investment incentives – in both housing construction and infrastructure."

According to the German Construction Industry Association (ZDB), order intake rose by a nominal amount of just over ten percent by the end of September 2025. In real terms, this corresponds to an increase of almost eight percent – ​​in both building construction and civil engineering. "This development was primarily driven by large projects in commercial and public construction."

Recreation in residential construction

For the first time in three years, the housing construction sector is sending positive signals. "Investors seem to be accepting the changed conditions – but we are still lacking more than 100.000 building permits annually for a real turnaround," said Schubert-Raab.

The planned EH-55-Plus funding (Provided that heat is generated using 100 percent renewable energy) this could help to quickly bring the backlog of construction projects into the market. Crucially, the interest rate support must be significantly below market levels when the program starts on December 16th.

"However, we are concerned about the first-come, first-served principle for applications – the funding pool will be quickly exhausted. Reliability is crucial, especially for families, to take the step towards homeownership. Therefore, the EH 55-Plus standard should remain eligible for funding in new projects as well," the building contractor emphasizes.

In the residential construction sector, the association expects a turnover of just under 54 billion euros for 2025. This represents a nominal decrease of 1,5 percent and a real decrease of four percent. Turnover is projected to rise to around 56,3 billion euros in 2026.

Completions are projected to fall from 252.000 residential units in 2024 to between 225.000 and 230.000 in 2025, and only between 215.000 and 220.000 in 2026. This decline is a direct consequence of the massive drop in building permits in 2023 (minus 27 percent) and 2024 (minus 17 percent).

Due to the long lead time, the ZDB does not expect positive figures until 2027.

Commercial construction: Differences between building construction and civil engineering 

Demand in commercial construction in 2025 was driven by large-scale projects. In building construction, the weak economy dampened demand for commercial buildings, while the trend towards AI promoted the construction of data centers.

Demand remains strong in civil engineering – supported by major projects and investments in energy and heating networks, as well as by the railway.

The funds from the special fund for infrastructure and climate neutrality provide massive impetus: the railway will receive around 22 billion euros each this year and next, more than double the amount received in 2023.

For the commercial construction sector as a whole, a turnover of around 65,4 billion euros is expected in 2025 (plus 6,3 percent nominal, plus four percent real), and for 2026 an increase to just over 70 billion euros (plus seven percent nominal, plus four percent real).

Public construction: Federal government is stepping up its efforts, municipalities are struggling.

Demand in the public construction sector presents a mixed picture.

Im building construction, which accounts for around 20 percent of public construction revenue, order intake increased by 13 percent by the end of the third quarter of 2025 - characterized by major projects.

Im Civil engineering Developments fluctuate: road construction contracts fell by over twelve percent between May and August due to a temporary halt in tendering, while other civil engineering contracts, particularly in bridge construction, increased significantly.

"The federal funds are having an effect, but municipalities remain under considerable pressure. Despite the 60 billion euros promised to them from the SVIK, a decline in investment will be unavoidable in the coming years," emphasizes ZDB President Wolfgang Schubert-Raab.

According to forecasts by leading municipal associations, municipal investments will decline from €44,5 billion in 2024 to around €31 billion in 2028 – thus maintaining the investment backlog of €216 billion that accumulated by 2024. Overall, public construction is expected to generate around €49 billion in revenue in 2025 and €51,6 billion in 2026. Schubert-Raab: "Now consistency is key. Build, don't brake!"

"Lower taxes, lower levies, lower energy prices"

The president of the construction industry is calling for comprehensive reforms: "Taxes down, levies down, energy prices down. And especially: Streamline bureaucracy, consistently and permanently."The 500 billion euro special fund is a great opportunity. "But only if the money is actually invested additionally, instead of being shifted between households."

In housing construction, the Building type E for simple and fast construction It needs to be implemented quickly: "A law by the end of 2026 is too late. Developers need clarity now. Employment also depends heavily on the order situation: Many companies say they want to hire more again, but only if construction actually takes place."  

Source: ZDB

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