Austria's construction industry: Billion dollar projects despite housing shortage!

Austria's construction industry: Billion dollar projects despite housing shortage!

The Austrian construction industry is currently in a changing light. While large public projects are flourishing, new housing construction is suffering enormously. The **Börse Express** report that the new construction of the Luegbrücke on the A13 will bring the companies PORR and STRABAG a contract worth 217 million euros. A total of 300 million euros is expected for the project, whose construction work is scheduled to begin at the end of March and is targeted for completion in 2030.

But while large sums of money are being planned here, things look anything but rosy in the housing sector. The forecast for 2025 shows that only 25,200 residential units will be completed across Austria. That is 42 percent less than in 2023. Vienna in particular has seen a decline of 35 percent in housing construction. High construction costs, rising interest rates and strict credit guidelines are putting a severe strain on privately financed residential construction.

Signs of a housing crisis

The future of housing is becoming bleaker as experts warn of a possible housing shortage. The reasons are varied: sharp increases in land prices, high construction prices and increased capital market interest rates in recent years have brought the construction industry to a standstill. The President of the Association of Austrian Project Developers, Andreas Köttl, points out that the number of building permits has fallen dramatically in recent years. Instead of the 85,000 permits that were issued in 2019, there will only be around 47,000 for 2023, which means a decline of around 44 percent.

A look at the community of Vienna-Donaustadt shows that despite these challenges, innovative projects are emerging. A new community building with 70 apartments and a kindergarten is being developed here, which uses groundwater for heating and cooling. Completion is scheduled for 2027. The need for subsidized housing is high, which is why over 20,000 new subsidized apartments are planned in Vienna, which is a ray of hope in the current situation.

The future of the construction industry

The decline in new construction output is alarming. A further decline of around ten percent is expected in 2024, with a dramatic reduction in completion numbers that could fall by up to 80 percent. The backlogs in planning and implementation are already having an impact on the future housing shortage in three to five years, as industry specialists emphasize.

The construction industry in Austria continues to be influenced by high interest rates and construction costs. However, positive developments are emerging as raw material prices are stabilizing and improvements in real estate returns are being observed. The legal framework and ongoing government measures should also contribute to financial relief in the construction and real estate sector. Despite all the challenges, there is growing optimism among market players for 2025 and 2026, especially when it comes to public investments that will benefit non-residential construction.

In summary, it can be said that a profound change is taking place in the Austrian construction industry. While major projects are booming, things are looking bleak in residential construction and it remains to be seen how the situation will develop in the coming years.