Economic growth in Belgium is showing signs of slowing considerably in mid-2022. This also applies to the Belgian construction sector. For example, Bouwunie's construction barometer is signaling red numbers. Builders' confidence fell sharply in the first half of 2022. Construction companies are clearly less optimistic about the economic situation than a year earlier. The main reasons for this are supply problems and extreme price increases for energy and construction materials.

There is high uncertainty in the market. Households are suffering from high inflation and rising interest rates. This can lead to postponement or cancellation of construction plans. This also applies to the investment plans of businesses, although there are still quite a few orders on the books. Four out of five construction companies still have as much work in mid-2022 as they did the year before although they are seeing a decline in the number of new orders.

Price increases and rising costs are affecting the profitability of construction companies. This was already the case at the end of 2021, but the trend continues. According to Bouwunie, 4 out of 10 construction companies report a further decline. Compared to the extreme price increases, it is notable that the average tender prices are rising much less rapidly.

Increasingly, construction companies are refusing to take on complex, long-term projects because it is difficult to hedge the risks of rising costs. In the past, it was quite normal to fix the price of building materials for a quarter or even six months, but now this is no longer possible. Recently, the rise in the price of materials has been so fast that daily prices are now being applied.

And then there are the delivery problems. In large projects, agreements on price and delivery are hard to meet. Postponement and cancellation of construction projects are therefore the order of the day. A survey by the Construction Confederation, in which 325 contractors and installers took part, showed in mid-2022 that 61% of construction companies are seeing a decline in the number of new contacts. In 13% of cases, customers are cancelling their construction or renovation project because of the rising construction costs.

The Construction Confederation and the VBA (Association of Belgian Contractors for Large Constructions) are urging the construction sector, together with clients, to look for creative solutions to reach an adapted formula in order to be able to execute current and future contracts in a responsible way.

Belgium is struggling with an unprecedented shortage on the labour market. More than half of construction companies looking for additional workers in early 2022 still failed to fill their vacancies after three months. Businesses complain about the lack of candidates and the lack of knowledge and competences.

According to the European Commission, labour migration will have to provide solutions. According to European Commission Vice-President Margaritis Schinas, significant labour migration from Morocco, Algeria and Tunisia will not only solve the labour shortage, but will also automatically curb the illegal migration flow from these North African countries.

The number of building permits for new residential buildings rose by 12.6 percent in 2021 across Belgium compared to the previous year. This is according to data from Statbel, the Belgian national statistics office. New construction increased in 2021, but it is not clear how many homes are involved. A residential building can contain several homes (for example apartments).

The figures for early 2022 show a different picture. The number of licensed new residential buildings decreased by 1.1% in the first 3 months (compared to the same period a year earlier). In the Flemish Region, there was an increase of 2%. In the Walloon Region, the number of new licensed residential buildings was 11% lower, and in the Brussels-Capital Region, there was an increase of 22.4%.

Since 2007, the level of licensed residential renovations has generally been higher than licensed residential new construction, according to Statbel. It is true that there was a turning point in 2018, but that was only temporary. In 2019, the number of licensed residential renovations was again above the level of licensed residential new construction. This was also the case in 2021.

With an average age of 52, Belgian homes are among the oldest in Europe. According to the FPS Economy, no less than 38% predates the Second World War and a quarter even predates the First World War. The renovation need is therefore great. The current new-build production of homes annually concerns less than 1% of the total existing housing stock.

The National Bank of Belgium has been warning about high house prices for some time now. The Belgian housing market is closed to the younger generation. Fewer and fewer first-time buyers can afford to buy a home. This effect is aggravated by rising mortgage interest rates. The abolition of the Housing Bonus does not help either.
There are various trends visible in the residential area. The ageing population is increasing the need for apartments. Moreover, an increasing number of people who now live in rural areas would like to move to urban environments. In addition, the number of one- and two-person households is increasing. This requires an adjustment of the type of housing that is available. The need for smaller homes is increasing. More than six in ten Belgians (64%) outside city centres say they would settle for a smaller home if they could live closer to city centre amenities.

Construction is relatively conservative. Changes are being made step-by-step, but tried and tested techniques and methods are often adhered to. Yet we see technological innovations emerging. In recent years, the digitization and automation of the construction sector has increased significantly.

  • Monitoring and risk management
    Supply chain problems and the extreme price increases of recent times make it clear how important it is that construction companies have full visibility of the logistics process and the actual costs incurred during the construction process. The integration of digital technology in key processes helps with this. Digitization enables higher quality analytics and increases visibility into real-time data. This allows management to make more informed decisions.
  • Modular and prefab construction and 3D printing
    New construction methods are gaining ground with the aim of reducing construction costs (both equipment and personnel), working and planning more efficiently and also building more sustainably.
  • Robotisation
    Construction robots ensure that painting, masonry, welding and many other repetitive tasks are automated with great precision, so that fewer mistakes are made. Robotics offers a range of opportunities to improve efficiency, productivity and production flexibility in the construction industry.
  • Drones
    Drones can be used for transport, aerial surveillance, visualization of height differences (contour lines), 3D scanning, making maps, etc.
  • Artificial Intelligence (AI) and the Internet of Things

Sustainable building is on the rise. The core is that the effects on the environment are taken into account in the design, construction and use of the building (and ultimately the demolition). Much attention is paid to energy consumption and the CO2 that is released (such as heating and climate control).

In order to eventually build fully circular, an important intermediate step is required: reducing the use of primary raw materials. Building materials such as concrete and steel require a lot of energy to produce. This is much less true for bio-based materials; moreover, they actually retain CO². Bio-based materials such as preserved wood and various composites (pressed wood sawdust or plant fibres) are already increasingly being used in construction.

Other aspects of sustainable building and living:

  • (Re)use of old or recycled materials
    Partly due to the high prices of building materials and the pursuit of sustainability, clients and builders are increasingly opting for the (re)use or application of recycled materials.
  • Green roofs (roofs with vegetation)
    The vegetation on the roofs helps to prevent flooding due to the delayed drainage of water. It also provides cooling for the home, and green roofs provide 'shelter' for butterflies, insects, bees and birds in the summer.
  • Insulation with hemp

 

Sources: Bouwunie, Statbel, Construction Confederation

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