Introduction

The German economy has been up and down in the last year, with quarterly Gross Domestic Product (GDP) results switching back and forth between slight growth and contraction. Construction prices, however, continue to rise in Q1 2023 and to a much lesser extent in Q2 2023 even though the construction industry is beginning to see a drop in the number of contracts that have been tendered. Due to the lowering of client demand as well as the dwindling number of contracts, coupled with contractor sentiment sliding, 2023 has gotten off to a slower start and the prospect of a national recession and further construction contraction looms.

Falling demand should allow tender price inflation to return to a more expected 2-4 percent year-on-year growth from the high levels seen in 2022, but other threats, such as the loss of skilled labour, continue to affect and raise the tender prices.

No one behaviour or factor can neutralise the complex, overlapping threats posed by uncertain market conditions. Still, this first edition of the Germany market intelligence report identifies where the risks lie, and how projects and programmes can prepare for this uncertainty, be quick to react to the ever-changing conditions as well as use the current market expectation to their advantage.