Swiss Construction Expecting Difficult Times Ahead

Swiss Construction Expecting Difficult Times Ahead

Wed, May 29th 2024

Swiss construction turnover increased by 0.7% in Q1 2023, but the outlook, especially for residential construction, remains poor.

KEYSTONE/Michael Buholzer

Swiss construction companies generated more turnover in the first quarter of 2023 than the same period last year, but the outlook remains poor, particularly for residential construction.

In the first quarter of 2024, turnover rose by 0.7% to CHF 4.69 billion, according to the Swiss Association of Master Builders (SBV). Building construction turnover fell by 1.6%, while civil engineering turnover increased by 3.6%.

This trend is expected to continue, as building construction companies received significantly fewer orders between January and March. Incoming orders fell by 9% to CHF 2.71 billion, while civil engineering orders rose by 4.8%. Overall, incoming orders for the sector fell by 2.2% to CHF 5.72 billion.

Declining Sales Expected

The construction index forecasts a 2.3% decline in total construction activity in the second quarter compared to the same period last year. For 2024, sales are expected to be around 1.6% lower than in 2023, totalling CHF 23.0 billion.

Residential Construction Issues

Residential construction remains a problem area. About 50,000 new apartments were built in 2020, but this number has fallen annually since. The SBC forecasts only 40,000 new apartments for 2024, which is insufficient to meet demand. The vacancy rate could drop to 1.0% from 1.15% last year. The SBC calls for faster building permit procedures and fewer requirements.

The recent interest rate cut by the Swiss National Bank offers some hope, but its effects will be delayed. The SBC hopes it will positively impact construction activity next year.


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