Market environment

In the absence of alternative investment possibilities with similarly secure and high yields, real estate has remained in high demand in 2012. It is unlikely that the situation will change in the coming years on account of the high investment pressure which private and institutional investors are exposed to.

In terms of the overall market, it may very well be assumed that prices for real estate and building land will continue to rise, albeit at a slightly slower pace than in previous years. One of the reasons for the slowdown is that commercial space in several regions is experiencing an oversupply.

It is expected that the introduction of stricter guidelines relating to the financing of residential property will result in prices levelling off.

It is neither sensible nor possible to estimate the future market development owing to regional differences and characteristics of the various real estate segments. In the future, probably even more so than at present, the success or failure of real estate transactions will depend on detailed knowledge of the local and regional markets.

General contracting

The emerging slowdown in construction activity will in the short and medium term lead to a further accentuation of competition. Without a doubt, this development will result in capacity adjustments. The process will affect the offered prices of the various trade categories. However, this does not mean that general and total contractors can count on higher margins and decreasing pressure on prices as investors will set off the lower cost of production against the increasingly demanding project development and approval procedures.

In addition to the economic development and increasing complexity of regulations, general and total contractors are being confronted with numerous additional challenges, such as the issue of quality assurance with consistently increasing pressure on time and costs – both in terms of project management and, especially, the cooperation with subcontractors. This issue is increasingly gaining significance, both in the industry and amongst the public.

Unfortunately, for several years apprenticeships in the construction trades have not been very popular among young persons. As a result, the present shortage of well-trained and motivated employees will persist or continue to grow. This is all the more disturbing as experienced project and construction managers are suited best to assure quality directly on the construction site.