Construction profitability in Hesse, notably residential construction, has taken a hit, registering a 4.9% dip in total earnings compared to the same period in 2023. The latest stats from the Hessian State Statistical Office indicate that residential construction revenues plummeted by a staggering 12.1%, amounting to 0.6 billion euros.
The construction industry in Hesse shows a bit of resilience, with a 4.0% increase in orders to 2.7 billion euros. However, the workforce count saw a 3.2% decrease, ending up with approximately 33,000 employees in companies with at least 20 staff members.
The Association of South West German Housing Companies (VdW) had warned earlier about a steep drop in building permits issued in Hesse. During the first half of 2024, a whopping 26.5% fewer permits were issued compared to the previous year. This drop was even more pronounced when compared to 2022, with a staggering drop of 41.8%. The VdW pointed out heightened competition in the sector as construction and maintenance costs skyrocketed.
Despite the moderate increase in orders, the decline in residential construction revenues, as per Hessian State Statistical Office's data, remains a concern. The dramatic decrease in building permits, as per the VdW, further raises the alarm.
Several factors contribute to the ongoing decline in residential construction revenues in Hesse. These include fiercely competitive land markets, lengthy regulatory approvals, economic uncertainty, fluctuating interest rates, supply chain disruptions, digitalization, sustainability initiatives, and the revitalization of old industrial sites.
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