Rising interest rates and prices in commodities, global shortage of labour: is the construction sector affected by a crisis on all fronts? The sector is facing many difficulties that we expect to persist this year. However, there are plenty of opportunities for growth, in particular thanks to the growing needs associated with the energy transition.
Residential & commercial real estate: crisis intensifies
Affected by rising interest rates, commodity prices, changes in the labour market and the limited access to credit, the construction and real estate industries are going through a period of intense economic tension, both in the residential and commercial sectors.
“The residential market is facing a double constraint: the rapid rise in interest rates and a global shortage of labour. Commercial real estate companies, for their part, have been particularly impacted by the spread of teleworking - which resulted in a rapid deterioration of demand for working spaces - and high interest rates, which have significantly slowed the number of property transactions," points out Jonathan STEENBERG, Economist for the United Kingdom, Ireland, the Nordic countries and the construction sector.
These issues are also affecting the diversified construction sector, with concrete impacts on performance. Rising construction and land prices have pushed up investment prices, while rising interest rates are reducing the creditworthiness of commercial real estate companies.
"Within GSE, we are experiencing an average 40% drop in commercial property projects. And this applies to all the countries and markets in which we are operating", notes Roland PAUL,Chairman of the Global Solutions & Engineering group (GSE), a global contractor specialising in commercial property projects with turnkey solutions (design, construction, extension, renovation, fit-out): factories, business premises, logistics centres.
Energy transition: opportunities for building professionals
The numerous stimulus plans in Europe and the United States show that investment in the energy transition is now at a high level, and can generate concrete opportunities or key growth drivers on which to capitalise.
Today, the trend is more towards renovation than construction.
Energy efficiency is being increasingly emphasised in residential and commercial property, particularly with the development of industrial sites, which is a major challenge for the industry.
explains Abou DEMBELE, Head of construction industry & Surety bond Risk Underwriting.
The same applies to the reindustrialisation process, which is already underway in several countries, and not just in the big cities. This trend is being confirmed in many sectors of activity. While the energy transition is creating major constraints for the construction industry (environmental standards, administrative procedures, etc.), the opportunities identified are plentiful, and provide new sources of growth for players in the sector:
- clean construction worksites in terms of environmental management;
- preserving biodiversity in construction and renovation projects;
- the use of materials that reduce the carbon footprint;
- taking into account the well-being of professionals in the sector.
"The market can be driven into a virtuous dynamic. However, simply complying with standards will not be enough. Today's construction industry has a role to play in advising its clients, who have high expectations when it comes to environmental aspects. From now on, you can't build without thinking about your CSR impact", analyses Roland Paul.
