Europe Biannual Construction Market Report 1Q/2Q 2025
Austria
Top opportunities
Energy: Green energy and renewable projects are becoming more prominent, particularly in sustainable technologies.
Government and municipal projects: Ongoing government-backed projects in infrastructure and public services are generating opportunities.
Healthcare: There is a continued demand for the expansion and upgrading of healthcare facilities. Infrastructure: There is a strong focus on expanding transportation networks and upgrading public utilities.
Residential: Housing development projects, both public and private, are on the rise.
Top trends
Digital tools and AI: Growing adoption of digital technologies like BIM and AI for improved construction efficiency.
Green financing: Rising interest in financing sustainable and renewable energy projects.
Modern construction methods: Increased use of modular and offsite construction for more efficient builds.
Sustainable construction/Net Zero: Focus on energy-efficient, net zero buildings in line with environmental goals.
Local economic indicators
In 2024, Austria is projected to have experienced its second consecutive year of recession, with year-over-year (YoY) gross domestic product (GDP) contracting by 0.6%, following a 1% decline in 2023. This downturn, as noted by the European Commission, is attributed to declining real wages, stagnant private consumption and a slump in both investment and exports. The impact of high interest rates and energy costs has been particularly pronounced in the construction sector, where residential construction activity fell by 18% over the year. When looking at GDP growth compared to the previous period, QoQ, Eurostat reports that Austria saw a fall of 0.1% between 2Q and 3Q 2024.
Looking ahead, the European Commission predicts a brighter outlook for 2025, with GDP growth projected to rebound to 1%, followed by further acceleration to 1.4% in 2026. This improvement is expected to be driven by rising consumer confidence, supported by low and stable inflation, as well as a recovery in exports. Additionally, construction activity is forecasted to benefit from monetary easing and the introduction of a housing construction stimulus package.
Eurostat also reports that in 2024, the construction industry’s gross value added, which measures its contribution to Czechia’s overall GDP, remained stable at approximately 6% of the total GDP.
Inflationary pressures eased significantly in 2024, with the Eurostat’s Harmonised Index of Consumer Prices (HICP) falling to 2.9%, down from 7.7% in 2023. This decline was largely due to lower wholesale energy prices and deflation in industrial goods and food. The European Commission predicts further decreases in HICP to 2.1% in 2025 and 1.7% in 2026, reflecting continued disinflationary trends and suggesting a more predictable environment for potential investors.
Unemployment figures remained stable at 5.3% throughout 2024, with no change expected for 2025 and a drop to 5% forecast for 2026 as labour market conditions improve. Real wages are anticipated to rise over the next two years, supported by easing inflation and improving economic conditions.
Construction materials
Eurostat's November data on local industrial producer prices suggests relative stability across most sectors in Austria's construction materials market. However, a notable recovery has been observed in electricity, gas, steam and air conditioning, with the price having decreased by 13.4% YoY. When indexing for June 2022, when oil prices peaked due to the Russia-Ukraine conflict, we can see relative stability with a price recovery of 12.3% in the manufacture of basic metals and a price increase of 11.2% in the manufacture of other non-metallic mineral products standing out. Regular updates to project allowances are deemed essential to ensure alignment with evolving market conditions. See the following table for month-over-month (MoM), YoY and indexed pricing inflation:
Market outlook
In October, Austria's construction confidence indicator, CCI, experienced a sharp decline, dropping from -9 to -24.4, and continued its downward trajectory to reach -29.8 in December 2024. This significant fall was driven by negative trends in both employment expectations and the evolution of order books, which deteriorated from -5.2 and -12.9 in September to -33.7 and -25.9 in December, respectively. While these figures reflect the various challenges Austria is currently facing, it is important to recognise that the decrease in the CCI in countries with colder climates during the winter months is also part of a cyclical trend influenced by adverse weather conditions, which slow order books and reduce work expectations.
Austria's construction sector faced several significant challenges throughout 2024, with insufficient demand standing out as a major issue, averaging 26.1 over the year and rising to 28.3 in December. Price expectations for the next three months also emerged as a growing concern, climbing from an average of 2.5 during 3Q and 4Q to 11.3 in December. Labour shortages, though still prominent, showed some improvement, with December figures of 17.4 compared to the 3Q and 4Q average of 20.3.
Local office input
The Austrian construction industry is set to recover starting in 2025, with an anticipated average annual growth rate of 2.4% from 2025 to 2028. This growth will be primarily driven by significant investments in transport and renewable energy infrastructure, alongside the government’s ambitious plans for achieving climate neutrality by 2040 and generating 100% of the country’s electricity from renewable sources by 2030. Key projects, such as the expansion of the rail network and investments in the semiconductor sector under the European Chips Act, are expected to attract €3 billion in public investment between 2024 and 2031. Along with government backed energy subsidies, this should provide a considerable boost to the construction sector.
In the residential sector, new housing construction will continue to decline until 2026, though renovation activities, driven by mandatory improvements in energy efficiency and increased investments in affordable social housing, will help mitigate the downturn.
In commercial construction, a rebound in tourism and increased investments in office buildings and hotels are expected to drive steady growth through 2028, despite the office sector experiencing a substantial decline in 2024. Meanwhile, non-residential construction will benefit from a backlog of orders as well as growth in healthcare, education, and research projects, driven by rising investment.
Although challenges remain, the Austrian construction market is expected to regain stability as government support, strategic investments, and sector-specific growth initiatives take effect, positioning the industry for sustained recovery in the coming years.
As always, Gleeds advises regular project budget updates that consider recent market pricing and local risk factors that may impact project programmes and costs. Undertaking risk analysis studies enables better evaluation and preparation of appropriate contingencies for your project conditions and risk exposure.
