Regional Analysis 2018 Europe

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Europe Market Review - section updated Sept 2018

Output in the European construction industry is estimated to have increased by 3.5% in 2017, with output reaching its highest levels since 2006. Growth in construction output in the EU is set to slow in the years leading up to 2020, with growth rates of 2.6% and 2.1% forecast for 2018 and 2019 respectively. Overall, the European economic outlook remains positive, as GDP continues to increase in almost all EU member states and real GDP growth exceeds expectations with a 2.1% increase. However, GDP growth is set to slow in the coming years, with forecast growth rates of 1.9% in 2018 and 1.7% in 2019. 


Residential

Residential construction has contributed to the growth in European construction output more so than any other sector. Demand for residential construction in the EU remains strong, but growth in the sector is set to slow in the coming years. This growth can be attributed to state subsidies and cheap forms of credit. Overall, output remains at sustainable levels, with countries such as Hungary, Ireland and Sweden seeing the most construction activity.

The European construction industry is expected to continue to grow steadily over the coming year, averaging at approximately 2%.

Non-residential

Non-residential construction is recovering at a slower pace than both the Residential and Civil Engineering sectors. Growth is predicted to be between 1.5% and 1.8% for 2018 and 2019. Office construction will perform well above these averages, in line with demand for commercial space. Industrial construction in large economies, such as Germany and the United Kingdom, is expected to decline, and this is unlikely to be offset by improvements in the markets of the Netherlands, Belgium and Denmark.

Civil Engineering

Civil construction has continued to recover throughout 2017, and is forecast to grow by 4% per annum for 2018 and 2019, while the construction industry as a whole is estimated to grow at 2.6% and 2.1% respectively in these years.  According to the Global Infrastructure Outlook report, Europe has an investment requirement of US$14.8 trillion up to 2040, so activity in the sector is set to remain strong in the coming years.

Overall the outlook remains positive, and the European construction industry will continue to grow in the years leading up to 2020 and beyond.

Contributors: Michael Bonner, Willie Aherne, Terence Woulfe-Flanagan, Niall Doran