ABN Amro expects the construction sector to stabilize in 2025 after a decrease this year

After a challenging year in 2023, the construction sector is also expected to shrink this year, according to a sector report from ABN Amro. The expectation is that the construction activities will increase during the course of 2025.

The sector is shrinking due to a combination of high interest rates, an overcrowded power grid, a rise in construction costs, and complex procedures. "In the years to come, the margins are going to be under pressure due to high labor and material costs, while this will be offset by insufficient productivity growth," construction economists conclude.

A primary reason for this development is stagnation in new construction projects of homes and company buildings. "Extra limiting factors are a lack of available building locations and problems with getting or expanding the electricity and water connections," the report stated.

ABN Amro expects the construction sector to shrink by 2,5 percent this year after decreasing by 2 percent last year. The industry is expected to stabilize in 2025.

Housing construction has been struggling the most this year, with a six percent decrease. In 2025, the decrease in the construction of new homes is expected to be four percent.