German property boom to boost construction sales to 23-year high (updated)
18/01/2018 14:39
* Building associations see sales up 4 pct in 2018
* Construction prices to jump by 3.5 pct this year
* Firms struggling to find skilled workers
* Capacity bottlenecks also limit growth
(Adds quotes, sectoral breakdown)
By Michael Nienaber
BERLIN, Jan 18 (Reuters) - German construction companies
expect sales to grow by 4 percent this year, reaching their
highest level since 1995, industry associations said on
Thursday, suggesting the sector will continue to propel growth
in Europe's biggest economy this year.
Germany is enjoying a construction boom due to higher state
spending on roads and bridges, increased company investment in
buildings, and a real estate bonanza.
The construction boom has been encouraged by the European
Central Bank's ultra-low interest rates, a growing urban
population and high immigration over the past five years.
The ZDB and HDB construction associations said in their
joint forecast that nominal sales would rise by 4 percent to
117.2 billion euros in 2018, close to levels last seen during
the boom times following unification and the economic upswing in
East Germany in the mid-1990s.
"Construction companies are confident about the year 2018,"
said Peter Huebner, president of the HDB association, which
represents large industrial construction firms such as Hochtief
HOTG.DE .
"The order books are well-filled," said Hans-Hartwig
Loewenstein, head of the ZDB association, who speaks for more
than 35,000 small- and medium-sized firms that form the backbone
of Germany's construction sector.
Sales in residential construction are expected to grow by
3.5 percent to 43.1 billion euros this year. Company investments
are seen rising by 4 percent to 41.2 billion euros while state
spending on roads and bridges is forecast to increase by 4
percent to 32.9 billion euros.
With construction prices expected to rise by 3.5 percent
this year, however, overall sales in real terms are likely to
grow by only 0.5 percent to reach 98 billion euros ($120
billion), the associations added.
Employment in construction is expected to rise by 15,000 to
820,000 people, although a growing number of companies are
struggling to find skilled workers, they added.
"There are now two vacancies for every unemployed
construction engineer," Huebner said. "At some point we won't
find any unemployed engineers at all; we'll have full employment
here."
Construction was one of the main growth drivers in Germany
last year when the euro zone's largest economy expanded by a
calendar-adjusted 2.5 percent, the strongest since 2011. For
2018, the Ifo institute has forecast 2.6 percent growth.
($1 = 0.8185 euros)
(Additional reporting by Michael Nienaber; Editing by Gareth
Jones and Angus MacSwan)
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Keywords: GERMANY ECONOMY/CONSTRUCTION