Property
Due to a peak in the number of closures and limited growth in the number of starters, there are hardly any net construction companies in our country. In private residential construction and home renovation, the number of construction companies is even declining.
The Belgian construction sector is in dire straits. In 2023, 13,296 Belgian construction companies have stopped – including bankruptcies. This is 18 percent more discontinuations than in 2022 and the highest number in five years, according to a new analysis by construction federation Embuild based on figures from trade information supplier Trends Business Information. On the other hand, the number of starters has only grown to a limited extent, after a sharp decline in 2022.
These two elements together mean that the growth in the number of construction companies in our country has almost come to a standstill. A net 1,409 companies were added (+0.9 percent), to a total of 165,949. That is half as much as the growth in 2022, and almost five times less than in 2021 when the number of starters in construction peaked.
Correction on corona
The reason for the malaise is the increased mortgage interest rate (tripling in two years), which has caused the real estate market to cool significantly and caused the demand for new home or renovation loans to plummet. Construction companies active in the residential housing and renovation market in particular are suffering from the crisis, according to Embuild’s figures. There, the number of starters is even declining (by 0.5 percent), while that figure is still increasing in the other construction segments, namely construction and renovation of buildings (+11 percent) and infrastructure (+29 percent). And on top of that, the number of cessations in the construction and renovation of homes also increased by 29 percent (including 15 percent more bankruptcies).
The decline in new-build homes (-7.1 percent) and sharply reduced growth in renovation (from 4.6 to 1 percent) are hurting construction companies. But there are also other factors at play to explain the increase in the number of closures and bankruptcies, Embuild notes. Because the corona period had significantly increased the demand for construction and renovation, which also resulted in more new starters arriving in those years. “A correction is almost inevitable when demand falls,” the construction federation said.
Stabilize building material prices
The situation for new construction and home renovation will remain difficult for a while, thinks Niko Demeester, managing director of Embuild. But he also sees signs of hope. “The number of construction companies is still increasing slightly and the prospects for housing construction and renovation are less negative this year. We also recently noticed during Batibouw that private individuals want to build and renovate again.”
Now that the prices of building materials are stabilizing after the sharp increases during corona, and the real estate market is cooling down, it is “a good time to do that,” Demeester concludes. He hopes for additional tax incentives and premiums from the government.
