The Ifo Institute expects a massive slump in the German economy as a result of the Corona crisis. The construction industry is also feeling the current decline. This is shown by a study specifically for the construction industry. Nevertheless, the authors also see positive aspects.

Building permits “are not share prices, so the construction industry will get away with a dark blue eye compared to other sectors,” writes Heinze Marktforschung in a current study on the construction industry. Nevertheless, the current effects, especially in the construction process, are “more painful than in the financial crisis,” according to the authors.

The market researchers designed their own scenario for their investigation. The basis was the collapse in gross domestic product (GDP) during the financial crisis in 2008 and 2009 of 5.6 percent.

However, the experts emphasize that the current development and the situation during the global economic crisis of 2008 differ significantly. In contrast to the financial crisis, there are currently considerable losses in private consumption. This is precisely why government spending will increase massively. The federal and state governments alone are currently planning aid programs with a volume of 750 billion euros.

Housing construction could recover towards the end of the year

According to the Heinze study, homebuilding permits will get away with a dent. Multi-family house construction would “normally” have increased by a good ten percentage points in 2020. This expectation was fueled by the increasing number of building permits at the turn of the year.

But according to the current status, building permits will collapse significantly in the middle of the year. However, there is also a ray of hope: the number of building applications is likely to rise again in the second half of the year. “All in all, there will be a stabilization,” the authors say optimistically. The upswing in multi-family home construction remains intact thanks to the high demand.

The study names two main factors for this:

  • The funding framework has been clarified and will be accepted by the actors.
  • There is a lack of lucrative investment opportunities.

Non-residential construction has been in crisis for some time

According to the study, the situation is different in the non-residential segment. Non-residential construction is facing a cyclical downturn in 2020 and 2021. This development started in 2019 and is expected to expire in 2022.

The open question is how the Corona crisis intensifies this development. The residential-like company buildings are likely to be affected the most. Agricultural construction, on the other hand, got away with less losses.