Country report

The German economy recorded a GDP decline of 0.5% in 2023. After more than a decade of low interest rate policies, the economy is now preparing for noticeably higher interest rates once again. Energy prices remained high by international standards, accompanied by persistently high inflation. At the same time, companies were faced with considerable challenges from national and European regulations with regard to climate protection measures. Nevertheless, Euroconstruct expects slight growth of 1.0% again as early as 2024. In the medium term, the growth rate is likely to stabilise between 1.0% and 1.5% a year.

The German construction industry recorded a 2.3% decline in construction output in 2023 – due primarily to the situation in building construction and, in particular, residential construction. Construction companies with diversified service portfolios continue to benefit from well-filled order books. In addition to the ECB’s interest rate turnaround, the construction sector also had to deal with a shortage of skilled labour, a significant rise in construction costs and continued high inflation. Encouraging signs for the future come from the federal government’s financing commitments for railway expansion and the continuing high demand for infrastructure. Euroconstruct is forecasting a decline of 2.2% for the sector in 2024, followed by a decline of 0.9% in 2025 and 0.6% in 2026.

In residential construction, the construction volume fell by 3.1% in 2023. Against the backdrop of significantly higher mortgage interest rates, lower public subsidies and higher construction prices, both private clients and residential construction companies refrained from new construction projects. On the other hand, the sector received a boost from government subsidies for renovations and the thermal refurbishment of buildings. Euroconstruct expects the residential construction sector to reach a temporary low of -4.5% in 2024, with a smaller downturn of 2.5% and 1.3% per year forecast for 2025 and 2026 respectively.

Non-residential construction, which shrank by 2.4% in 2023, suffered from the economic uncertainty and partial investment restraint on the part of companies and the public sector, especially at the local level. Despite this, Euroconstruct expects the sector to continue to grow by 0.1% and 0.9% in 2024 and 2025 respectively, with the trend turning slightly negative at -0.1% in 2026.

The civil engineering sector recorded slight growth of 0.3% in 2023. The long-term government investment programmes in rail and road infrastructure continue to have a positive effect. Investments in energy transition projects are giving the sector a new tailwind. Local governments, on the other hand, remained cautious in some cases due to higher construction prices for road and hydraulic engineering projects. Civil engineering is expected to grow by 1.7% in 2024, followed per year by 1.2% in 2025 and 0.5% in 2026.

The STRABAG Group has a market share of 2.0% of the total construction market in Germany. Its 12.9% share of the German road construction sector is significantly higher than that of the market as a whole. With € 9,045.59 million, around 47% of STRABAG’s total Group output volume was generated in Germany in 2023 (2022: 47%). Most of the output is allocated to the North + West segment, while the property and facility services provided in Germany are allocated to International + Special Divisions.

With a GDP decline of 0.8%, the Austrian economy experienced a mild recession in 2023. The energy price shocks of the previous year and a sharp reduction in inventories led to an industrial recession in Europe in 2023 that affected Austria as well. At 7.7%, inflation remained above the EU average. The increased workforce retention during the downturn nevertheless ensured a robust labour market. Euroconstruct forecasts growth of 1.2% for 2024, 1.6% for 2025 and 1.7% for 2026.

The Austrian construction industry experienced a decline of 2.7% in 2023. Construction investment – especially in building construction – was noticeably dampened by the European Central Bank’s interest rate hikes. The rise in construction costs also impacted real growth in the construction industry. The introduction of stricter lending guidelines for residential construction loans (Regulation on Real Estate Financing Measures in Credit Institutions – KIM-VO) was a source of additional pressure. In this environment, Euroconstruct continues to expect a significant decline of 4.1% for 2024. Positive momentum is forecast again for 2025 and 2026, with growth rates of 0.4% and 1.9% respectively.

Among the individual construction sectors, residential construction saw the sharpest decline in 2023 at 4.7%, as expected. In Austria, the impact is even more pronounced than in other European countries due to a combination of persistently high inflation, higher mortgage interest rates and stricter lending guidelines. New construction suffered the greatest losses, while renovation still showed slight growth due to ecological and energy-related factors. Overall, a further sharp decline of 6.0% is forecast for residential construction in 2024. The downward development will continue in 2025 at 0.5%. The trend is not expected to turn positive again until 2026 with slight growth of 1.4%.

The construction volume in non-residential construction in 2023, which was negatively impacted by the combination of the economic downturn, higher construction costs and rising interest rates, fell by 2.1%. While high order backlogs from the previous year were still being fulfilled in the industrial sector, some of the planned investments in office and commercial buildings were postponed for the time being. Euroconstruct expects the downturn to intensify in 2024 with a decline of 3.7% before investment recovers in 2025 with an increase of 1.7%, followed by a return to strong growth of 3.9% in 2026.

Civil engineering showed a clearly positive trend of 2.8% in 2023 due to strong government investment in infrastructure programmes. The further expansion of the road and, in particular, the rail network was a fixed item in the Austrian budget. Investments in the energy sector for the expansion of renewable energy sources and investments in the telecommunications sector for a nationwide broadband network are becoming increasingly important. Growth of 0.9% is expected in 2024, followed by a plus of 0.2% in 2025 before the trend turns slightly negative with -1.0% in 2026.

The STRABAG Group generated 16% of the total Group output volume in its home market of Austria in 2023 (2022: 17%). Austria thus continues to be one of the Group’s top three markets along with Germany and Poland. The output reached a volume of € 3,069.61 million in 2023. This gives STRABAG a 5.8% share of the construction volume in the overall market in Austria. In road construction, the market share stands at 47.3%.

Following the strong economic growth in 2022, which was mainly due to post-Covid-19 effects, GDP growth in Poland weakened to +0.3% in the reporting year. Factors contributing to this development included the high inflation of 11.1%, higher interest rates and the associated weaker demand from the private sector. Uncertainties in connection with the Russian war of aggression in neighbouring Ukraine and the delayed impacts from supply chain disruptions also dampened growth. Government investments, anti-crisis programmes and net exports in particular had a positive effect. Euroconstruct is forecasting GDP growth of 2.9% for 2024, followed by 3.5% in 2025 and 3.0% in 2026.

The Polish construction industry grew by 2.2% in 2023, slightly outpacing GDP growth, but weaker than in the two previous years. Construction-specific products were less available and supply chains were disrupted, while the shortage of skilled labour remained high. In recent years, construction activity in Poland has been stimulated by government programmes, particularly for public buildings and facilities as well as infrastructure. Euroconstruct expects the Polish construction industry to grow by 2.5% in 2024, with growth of 3.4% and 3.5% respectively in the two following years.

Residential construction, with a decline of 3.1%, proved to be the weakest sector of the Polish construction industry in 2023. Contributing to this situation were rising loan instalments, stricter procurement rules and higher construction costs. Stability measures and government stimulus programmes have helped to slow the trend. Euroconstruct forecasts a further 2.0% decline in residential construction output for 2024. In 2025 and 2026, however, the expected reduction in lending rates should lead to growth of 3.0% and 1.5% respectively.

Non-residential construction in Poland grew by 1.0% in 2023, with the momentum almost exclusively due to the strong increase in public investments. High costs for building materials, wages, electricity and fuel hit this segment hard as well. The market for office and commercial buildings was the weakest, while growth was recorded among industrial, warehouse and agricultural buildings. Large companies in particular invested heavily in 2023. Euroconstruct expects non-residential construction to grow by 3.0% in 2024 and by 2.4% and 2.5% in the following two years.

Civil engineering, with growth of 7.6%, proved to be the strongest segment of the Polish construction industry in 2023. This performance was driven by the momentum of infrastructure projects, which are closely linked to Poland’s economic policy and the European Union’s climate policy. Road construction, which grew by 11.4%, and energy supply exhibited particularly strong growth. Further growth drivers include the government’s long-term programmes for the period until 2030, such as the new national road programme and the national railway programme. The election of a new government also increases the chances of previously withheld EU funds being released. In the field of energy supply, the planned construction of two nuclear power plants should provide further growth momentum. Euroconstruct is forecasting growth of 5.2% for Polish civil engineering in 2024, followed by a plus of 4.6% in 2025 and 5.6% in 2026.

As the number two in the construction sector in Poland, STRABAG realised a construction volume of € 1,328.83 million here in 2023, representing 7% of the Group’s total output volume (2022: 6%). Poland thus represents the third-largest market of the STRABAG Group. Its market share in the entire Polish construction market was 2.0% and its share of road construction was 8.7%.

The Czech economy in 2023 was seriously affected by higher interest rates and by the impact from the high rate of inflation of around 11.0% on both businesses and households. Despite high government spending and strategic investments, GDP was slightly negative at -0.3%. There are plans to gradually consolidate public budgets, which will also affect private households. By contrast, EU investments, particularly from the 2021–2027 programming period, as well as the Modernisation Fund and the EU’s recovery plan, are having a positive effect. Other contributing factors include the continued rise in exports, the stable import situation and low unemployment compared to the rest of the EU. Euroconstruct estimates that inflation will fall to between 2% and 3% as early as 2024, enabling GDP growth of 2.0% this year. An increase of 2.6% and 2.3% is then forecast for 2025 and 2026 respectively.

The output of the Czech construction industry fell by 1.8% in 2023. The ongoing shortage of skilled labour as well as price increases for materials, energy, fuel and loans posed major challenges for the sector. On the other hand, the government stimulated renovation projects with subsidies to increase energy efficiency. The construction industry also benefited from funding under several EU programmes. Euroconstruct expects a slight increase of 0.2% for the sector in 2024, with higher growth of 3.5% and 6.4% expected in the following two years.

Residential construction fell by 9.6% in the reporting year, having been particularly hard hit by persistently high loan instalments. Real estate prices fell in many regions of the country, and a massive decline was recorded in the volume of real estate loans. The market for renovations, in contrast, remained stable. Euroconstruct is therefore forecasting only a slight decline of 1.2% in residential construction for 2024, followed by strong growth of 6.2% and 10.1% for 2025 and 2026 respectively.

After several years of negative growth, non-residential construction experienced a significant plus of 4.5% in the Czech Republic in 2023. This development was mainly due to industrial and logistics buildings, which were positively influenced by the booming business of online retail. The public sector is also encouraging construction related to schools, universities and hospitals. The market for office buildings, on the other hand, remains weak. Non-residential construction is expected to grow only slightly by 1.1% in 2024, followed by stronger growth of 3.9% in both 2025 and 2026.

Output in the Czech Republic’s civil engineering segment remained stable in 2023 (+0.9%), mainly due to ongoing investments in the national and local transport infrastructure. Driving this development were railway systems, telecommunications and energy suppliers. The largest transportation infrastructure project is a new metro line in Prague. Civil engineering is also set to benefit from public funding and subsidies from the EU and from the European Investment Bank (EIB) in the future, not least with regard to the energy transition. For 2024 and 2025, Euroconstruct expects output in this segment to remain stable at +0.8% and 0.0% respectively, before strong growth of 5.1% in 2026.

STRABAG is the number one on the market in the Czech Republic. With an output volume of € 998.65 million in 2023, around 5% of the Group’s total output (2022: 6%) was generated in the country. The market share in the entire construction market is 3.1% and in road construction amounts to 13.3%.

The Hungarian economy stagnated in 2023 with GDP growth of 0.0%. The main factors behind this development were the high inflation, rising consumer prices, high interest rates and the government’s investment freeze. Euroconstruct expects an increase in wages as well as consumption and, as a result, a return to growth in the coming years. The employment rate, already high, looks set to increase even slightly further. The government is also showing increasing budgetary discipline. The GDP is therefore forecast to grow by 3.5% in both 2024 and 2025 and by 3.6% in 2026.

The output of the Hungarian construction industry decreased by 8.0% in 2023. After several years of strong stimulus from the government, its investment freeze affected almost the entire sector. The situation could change if the resources from the EU funds, which are currently still being blocked, were to be released. The government has announced a ten-year development plan to be presented mid-2024. Euroconstruct is forecasting a decline of 3.8% for the Hungarian construction industry in 2024, with a trend reversal expected starting in 2025 (+4.9%) and growth of 5.4% forecast for 2026.

The sharp downturn in Hungarian residential construction (2023: -17.2%) is particularly dramatic, with the decline in new residential construction being the main contributing factor. The high construction costs, sharply rising interest rates and low sales prices gave developers little incentive to invest. Government subsidies and a recommended annual interest rate cap of 8.5% provide some relief. The market for renovations also declined in 2023, though it could recover as early as 2024, whereas new construction is not expected to pick up again until 2025. Accordingly, Euroconstruct is forecasting a decline of 3.6% for Hungarian residential construction in 2024, with the segment expected to grow by 4.0% again from 2025 and by as much as 5.5% in 2026.

Non-residential construction in Hungary fell by 4.8% in the reporting year. The government’s investment freeze had a significant impact here as well. The goal of creating a comprehensive ecosystem for e-mobility in Hungary could, however, positively stimulate the market for industrial and logistics buildings. Euroconstruct anticipates a further decline of 4.8% in this segment in 2024, with an increase of 2.7% and 2.8% expected for 2025 and 2026 respectively.

The Hungarian civil engineering segment, including road construction and other transport infrastructure projects, declined by 3.8% in 2023. In contrast, intensified reindustrialisation had a positive effect, with a plus in energy and water supply projects. In the short term, however, the trend in civil engineering will continue to be curbed by the suspension of state investments and the postponement of planned renovation work on the road network during modification of the road concessions. The freezing of EU funds is continuing to have a negative impact as well. The Euroconstruct forecast therefore predicts a further decline of 2.4% in this segment in 2024, before a strong recovery sets in again in 2025 and 2026, with growth of 9.2% and 9.1% respectively.

The STRABAG Group generated € 807.74 million, or 4% of its output, in Hungary in 2023 (2022: 4%). This puts STRABAG in fourth place in the Hungarian construction market. Its share of the total market reached 4.2%, that in road construction 12.5%.

The Romanian economy grew by 2.0% in 2023, less strongly than in the two previous years. The outlook remains positive, albeit subdued. The increase in consumer prices (8.8%) is expected to slow significantly from 2024 onwards, although lending rates will remain high for longer. EECFA is forecasting GDP growth of 3.4% and 4.2% for 2024 and 2025 respectively.

In contrast to the development of the economy as a whole, output in the Romanian construction industry fell by 1.9% in the reporting year. High energy prices and construction costs, partly due to higher personnel expenses, affected all segments. The budget available from Romania’s National Recovery and Resilience Plan (NRRP) decreased, which had a significant impact on the healthcare and energy sectors. The decline in the energy sector, however, is more than offset by the European Union’s REPowerEU plan. In the 2024 election year, with elections at local, national and EU level, the focus will be more on local and socially impactful projects – at the expense of longer-term projects. According to EECFA calculations, construction output in Romania will fall by a further 6.4% in 2024 before recovering slightly (+1.9%) in 2025.

The Romanian residential construction sector suffered a significant slump in 2023 (-8.6%), as high inflation and expensive lending rates as well as increased construction costs dampened both supply and demand. Building permits and the amount of usable space fell by almost a fifth, particularly in the Bucharest region (-36%) and the west of the country. EECFA expects a further downward correction for residential construction in 2024 (-7.6%). In 2025, a return to slight growth of 1.8% is expected for the segment thanks to falling inflation and lower lending rates.

The development of the non-residential construction segment in Romania was very mixed in 2023, with a slight decline of 0.8% overall. Sharp declines were recorded due to lower demand and changing trends in the market for office buildings. By contrast, healthcare buildings and educational facilities increased by 12.1% in 2023 due to co-financing from the previous EU programming period. The recovery of private consumption was reflected in an upturn in retail and wholesale properties. Industrial buildings and warehouses also remained on a growth path. EECFA is forecasting a decline of 4.0% for the segment in 2024, followed by a return to growth of 2.9% in 2025.

Civil engineering, with growth of 7.3%, proved to be the strongest segment of the Romanian construction industry in 2023. On the one hand, projects from the 2014–2020 EU programming period were still being completed; on the other hand, investments from the NRRP were already underway. The focus was on transportation infrastructures as well as on structures in the energy and pipeline sectors. The switch to the new EU programme along with greater budget discipline will lead to a decline in construction output, however. EECFA is forecasting a decline of 6.5% for the Romanian civil engineering segment in 2024, followed by a slight recovery of 1.2% in 2025.

With an output of € 519.26 million in 2023, the STRABAG Group holds a 1.6% share in the entire Romanian construction market. In road construction, the share of the market stands 4.6%.

The Slovakian economy grew by 1.5% in the reporting year. Key economic indicators, such as private and public consumption as well as imports and exports declined, however. The inflation rate in 2023 stood at just over 10%. The shortage of labour was particularly evident in industry and construction. The automotive industry, on the other hand, was able to compensate for the decline in private consumption. EU programmes and funds, which provided stimulus in the fields of transport, the environment, digitalisation, science and research, had a positive effect. Euroconstruct expects Slovakia’s GDP to grow by 2.7% in 2024, 3.4% in 2025 and 2.1% in 2026.

The Slovakian construction industry generated slight growth of 0.1% in 2023. High material and labour costs and rising lending rates led to a gradual decline in construction investments. As expected, the number of projects in transportation infrastructures fell significantly before the elections in autumn. Following the elections, the number of projects put out to tender is expected to increase once again. Euroconstruct is forecasting a reduction in public investment from the state budget. The development of construction output in the coming years will therefore depend on how effectively the funds from the EU’s recovery plan and the new EU programming period are used. Euroconstruct predicts growth of 2.9% for the Slovakian construction industry in 2024, followed by a plus of 0.7% and 3.9% respectively in the following years.

Slovakia’s residential construction output fell by 2.6% in 2023. High lending interest and high construction prices dampened demand from developers and smaller investors alike. Funds from the European recovery plan are to be used in the future primarily to promote renovations aimed at increasing energy efficiency. The demand for flats in Bratislava and other larger cities is also continuing. After a further slight decline in 2024 (-0.3%), Euroconstruct expects residential construction to grow again in 2025 and 2026 with a plus of 3.3% and 5.6% respectively.

Output in non-residential construction fell significantly in 2023 (-5.5%). The market for office buildings was especially hard hit, while growth was reported for educational facilities and healthcare buildings. The automotive industry remains the largest private investor in the country. Euroconstruct expects the greatest input for the segment to come from the European recovery plan, particularly in the healthcare sector. Non-residential construction is expected to pick up significantly in 2024 with an increase of 6.3%, while growth of 3.8% and 2.7% is expected for the following two years.

Slovakia’s civil engineering sector, with a plus of 14.5%, proved to be by far the strongest segment in the reporting year, mainly due to the end of the EU programming period. The frontrunner was transportation infrastructures – with motorways, expressways and city bypasses as well as maintenance and renovation work. The expansion of the bicycle network was also driven forward. The rail, water and wastewater, and renewable energy sectors will receive additional funding from the European recovery plan. Euroconstruct expects a further increase of 4.7% for the segment in 2024, followed by a decline of 7.9% in 2025 and a further increase of 2.1% in 2026.

With a market share of 4.7% and an output volume of € 410.26 million in 2023, STRABAG is the leader in Slovakia. In road construction, STRABAG’s share is 18.9%. In 2023, Slovakia contributed 2% to the Group’s total output volume (2022: 2%).

The Croatian economy grew by 2.6% in the reporting year. A key factor contributing to this development was Croatia’s entry into the Schengen area and the eurozone at the beginning of the year. The high-tech sector continued to perform strongly, and tourism also delivered very good results once again. Croatia also became more successful in acquiring and quickly utilising EU funds, especially for the National Recovery and Resilience Plan (NRRP), as well as funds from international financial institutions. Inflation stood at 8.1% in 2023. EECFA expects further GDP growth of 2.5% and 2.8% for 2024 and 2025 respectively.

With strong growth of 9.1%, the Croatian construction industry performed much better than the economy as a whole in 2023. This was true for all segments. Construction growth is expected to weaken significantly again in the coming years, however, among other things due to rising real estate prices and more difficult financing conditions. EECFA forecasts an increase in construction output of 1.6% for the segment in both 2024 and 2025.

The Croatian residential construction sector grew more strongly than expected in 2023, with a plus of 6.5%. Domestic demand was up as many young families are looking for new and larger living space. Foreign demand also increased, despite the recession in Austria and Germany. A downward correction in residential construction output is expected in the following years, mainly due to rising real estate prices and the high level of inflation. For 2024 and 2025, EECFA is forecasting declines of 5.6% and 4.1% respectively.

Non-residential construction recorded a strong increase of 8.0% in the reporting year. The market for office buildings grew particularly strongly (+13.7%). Renovations with the aim of building energy-efficient and environmentally friendly offices are being driven by the NRRP. The healthcare and educational buildings sector (+11.5%) is also booming thanks to EU and other international funds being channelled into this segment. The market for industrial buildings, warehouses and hotels also developed very promisingly. EECFA forecasts growth of 3.1% for non-residential construction in Croatia in 2024, followed by a slight decline of 0.5% in 2025.

With growth of 13.3% in the reporting year, civil engineering proved to be the strongest segment of the Croatian construction industry. This growth was driven in particular by complex large-scale construction projects at industrial locations and in transportation infrastructures. Croatia was able to convince the EU to extend two core network corridors of the European transport network TEN-T to the country. The expansion of the railway network, which is in need of renovation, is also planned for the next decade. Investments in the electricity grid and the expansion of renewable energies are expected to provide new stimulus as well. EECFA’s forecasts are correspondingly positive, with Croatia’s civil engineering segment expected to grow by 9.1% in 2024 and by 8.8% in 2025.

With an output of € 241.63 million in 2023, the STRABAG Group holds a 3.6% share in the entire Croatian construction market. In Croatian road construction, the share of the market stands 7.8%.