Boston, MA -- (ReleaseWire) -- 06/11/2014 -- BMI View: The German construction industry is showing signs that it is in the best shape it has been for over a year over the first half of 2014. As such, we are maintaining our forecast for growth in the industry at 1. 6 % year-on-year in real terms driven largely by continued investment in the renewables sector and an uptick in r esidential building activity . L ow levels of domestic investment and ageing infrastructure are set to be addressed by the government's pledges to invest billions of euros in road and rail projects - although we are yet to see movement on this . We highlight that overall investment levels remain muted and major projects will be subject to constrained budgets and strong opposition, as experienced by Stuttgart 21. Over our ten-year forecast period to 2023 , the construction industry will average real growth of 1.4%.
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Key Trends And Developments
- After the September 2013 elections, the government aims to pump EUR23bn into infrastructure over the next four years. We tentatively factored this investment pledge into our forecasts. However, the realisation of the full amount of investment is, in our view, unlikely and subject to political wrangling. As such, we only expect a moderate boost to growth.
- Low interest rates have made mortgages affordable and German real estate has been viewed as a safe haven for European investors. As such, there has been significant growth in house prices, which should spur the residential sector.
- Due to unfavourable economics, gas-fired regeneration power plants are becoming unprofitable. Also, EU legislation will hit the coal fired generation project pipeline. As such, it is the renewables sector which will drive growth in the energy and utilities sector, and the industry should experience more sustainable growth as the government has decided to limit subsidies to the first 2.5GW of capacity which are brought online each year - prolonging investment periods.
- We are monitoring the...
The Germany Infrastructure Report features Business Monitor International (BMI)'s market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Germany Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the German infrastructure and construction industry.
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