Germany Infrastructure Report Q1 2008

The German construction industry has been on the path of revival since 2006. The industry is in a phase where it is witnessing consolidation on a significant scale and is also expanding its roots in the overseas construction market. According to BMI's newly released Germany Infrastructure Report Q407, the construction industry of Germany is forecast to log an average growth of 4.20% over the 2008-2012 period.

In the past few years, transport-related construction has been on the rise in Germany. One of the biggest projects planned in the country is in the transport segment - the US$8.32bn Brenner tunnel, which will link Germany with Austria and Italy. Moreover, the 17 transport projects under the German Unity programme have been the cynosure of its construction industry since 1991, with the government still pouring in additional capital to make the programme successful. Also on the anvil are privately financed road infrastructure projects that are proposed to be tendered internationally.

The rigid labour markets and excessive bureaucracy that have accompanied EU expansion act as dampeners on the German construction industry. Furthermore, expansion of the European Union (EU) has intensified competition in the region. Adding to concerns is the slowly decelerating rate of growth of housing prices that threatens to create sluggishness in the construction industry of Germany and its partners in the EU. Outside the EU, China is well on the way to displacing Germany from its top position as a major global manufacturing power.

That said, an impressive and growing international presence in construction - well-supported by a highly developed building materials market - will help the German construction industry tread the path of growth. Accordingly, BMI forecasts the construction industry to be valued at US$120.49bn in 2008, expanding to more than US$147bn by 2012.