Construction in the Netherlands – Key Trends and Opportunities to 2017

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3 Construction Industry Dynamics

3.1 Macro Factor Analysis

The 2009 recession in the Netherlands was largely a result of the collapse of foreign demand for Dutch products. This led to a decline in exports and manufacturing, and the situation worsened as domestic demand also started to dwindle. The economy started to recover in 2010 and 2011, driven mainly by exports, which have now reached its pre-crisis level. Domestic consumers, however, are still cautious in spending. There has been a substantial decline in household consumption in the Netherlands. In October 2012, household spending on goods and services declined by XX.XX% annually, the largest decline in the past three years.

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Construction in the Netherlands – Key Trends and Opportunities to 2017

The Dutch construction market recorded a CAGR of -4.16% during the review period (2008–2012). All construction categories registered negative growth over this period. This is largely a result of the economic slowdown following the financial crisis and austerity measures implemented by the Dutch government.

Residential construction was the largest construction category in the Dutch construction industry, with a 45.1% share of the industry’s total value in 2012. Despite this, prospects for growth in the residential construction market remain bleak, as depressed economic conditions are making it difficult for Dutch households to repay housing debt. Prospective buyers, especially those looking to get onto the property ladder, as well as households looking to refinance their debt, are finding it difficult to secure mortgages. There looks to be little improvement of this situation in the short term, as the government implements measures to protect the banking system from the risk of large mortgage defaults.

Commercial construction recorded a CAGR of -5.17% during the review period, the largest decline of all construction markets in the Netherlands. The country’s retail sector has recorded subdued levels of investment since 2008. Consumer spending is cautious, owing to large debt, low wage growth and a depressed economic outlook. While prime retail centers such as Amsterdam and Rotterdam continue to exhibit high occupancy rates and stable rents, secondary retail locations are coming under increased pressure. Secondary centers such as Schiedam, Gouda, Tilburg and Almelo are facing increasing vacancy rates. The retail sector, in particular the non-food retail segment, is expected to stay depressed in the short term, as government spending cuts and an increase in VAT puts further pressure on the domestic market.

The Netherlands has well-developed infrastructure, consisting of several modern seaports, inland waterways, airports, highways and railroads, and is a dominant European logistics location. The infrastructure construction market, however, recorded a CAGR of -2.23% during the review period. Large budget cuts, as a part of the government’s austerity measures, affected the growth of the market. Furthermore, budget cuts to road infrastructure construction were announced in November 2012. The infrastructure construction category is expected to record a moderate CAGR of 0.87% over the forecast period.

Industrial construction is expected to be the fastest-growing construction category, with a projected CAGR of 0.26% during the forecast period. Low domestic demand and virtually no growth forecast for the eurozone in 2013 will market growth.