Dutch construction sector braces for sharp contraction

Construction work under way in Nijmegen (Sjors737/
The Dutch construction industry is expected to shrink by 2.5% next year, the biggest contraction in a decade, according to a report by ING bank.

It warned of a combination of factors including higher interest rates, falling house prices, a shortage of land, and restrictions on building to combat excess nitrogen pollution.

The sector was buoyed for the past 18 months by a demand for energy-saving measures, but the bank said that boom is over owing to the drop in energy prices.

There has already been a “significant drop” in demand among project developers and producers of concrete and bricks.

“In the coming quarters, this will be felt throughout the entire construction chain,” ING said.

It adds that the production of cement and bricks has fallen by 20% in a year. “Construction companies are ordering fewer building materials that are mainly used in new construction projects because they are already dealing with fewer orders,” the report says.

The nitrogen issue is proving intractable. Last November, the Netherlands’ highest administrative court overturned a temporary reprieve for construction projects. Larger construction projects are particularly vulnerable.

Meanwhile, NL Times notes that the Economic Institute for Construction reported last month that home-building was declining faster than expected. It predicted there would be 6.5% less construction this year than last. It expects a fall of 8% in 2024.

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