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BERLIN (Reuters) – Construction spending in Germany is expected to fall for the first time since the financial crisis in 2024, according to a study by a prominent research institute, a blow for the real estate industry in the grip of its worst crisis in decades. This is an even worse sign. .
Construction volume will decline by 3.5% to 546 billion euros ($597.38 billion) in 2024, before increasing by 0.5% in 2025, the DIW Institute for Economic Research said in a research report released on Wednesday and seen by Reuters. He said he expected a slight recovery.
The German and other European real estate sectors have been booming for years due to low interest rates and strong demand.
But sharply rising interest rates and costs put an end to business, and the developer went into bankruptcy as bank financing dried up and deals were frozen.
The last time German construction spending fell was in 2009.
“The downturn in the construction industry has lasted longer than expected,” said study author Laura Pagenhardt.
A survey released by the Ifo Economic Research Institute on Wednesday showed sentiment towards housebuilding is at an all-time low, further highlighting the dire state of the industry.
“There are still no signs that the situation is easing,” said Ifo head of research Klaus Wohlraabe, after the economy hit its lowest level in December since the survey began in 1991.
“These extremely weak expectations show that businesses are currently lacking hope. The outlook for 2024 is bleak,” he added.
(1 dollar = 0.9140 euro)
(Reporting by Rene Wagner; Writing by Tom Sims and Miranda Murray; Editing by Rachel More and Michael Perry)
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