Europe Biannual Construction Market Report 1Q/2Q 2025
France
Top opportunities
Data centres: High demand for digital infrastructure is driving opportunities in data centre development.
Financial institutions: Expansion in banking and financial services is creating tender opportunities.
Hospitality and stadia: Growth in tourism and events is fueling development in hospitality and stadiums.
Industrial, manufacturing, and logistics: E-commerce growth is driving demand for industrial and logistics facilities.
Residential: Urbanisation and housing demand are creating significant opportunities in residential construction.
Top trends
Adaption for ESG conformity: Companies in France are increasingly adopting Environmental, Social, and Governance (ESG) standards to meet regulatory requirements and investor expectations, reflecting a shift towards responsible business practices.
Green financing: France is witnessing a surge in green financing, with increased investment in sustainable projects such as renewable energy and eco-friendly infrastructure, in line with EU environmental goals.
Sustainable construction/Net Zero: There is a growing focus on net zero buildings and sustainable construction practices, driven by stricter environmental regulations and the push for carbon reduction.
Local economic indicators
France’s year-over-year (YoY) gross domestic product (GDP) growth, as reported by The European Commission, is forecasted to have grown by 1.1% in 2024, driven by public expenditures and robust foreign trade, particularly in transport equipment. However, private demand has remained subdued due to elevated savings rates and ongoing economic uncertainty. Growth is expected to decelerate to 0.8% in 2025, as restrictive fiscal policies aimed at reducing the budget deficit weigh on the economy, with a rebound to 1.4% forecasted for 2026 supported by lower funding costs and stronger private demand. When viewing GDP compared to the previous period, QoQ, Eurostat reports that France experienced a growth of 0.4% between 2Q and 3Q 2024.
Eurostat also reports that in 2024, the construction industry’s gross value added, which measures its contribution to France’s overall GDP, remained stable at approximately 5% of the total GDP.
Eurostat’s Harmonised Index of Consumer Prices (HICP) has continued its downward trend in 2024, with an average rate of 2.4% forecasted. Projections for 2025 and 2026 indicate further decreases in inflation to 1.9% and 1.8%, respectively, attributed to falling energy, commodity, and food prices.
Unemployment figures remained relatively stable at 7.4% in 2024, marking one of the lowest rates since 2008 and much improved since the most recent high of 8.9% in 3Q 2020. However, modest increases are expected, with unemployment projected to rise to 7.5% in 2025 and 7.6% in 2026.
Construction materials
Eurostat's report on local industrial producer price indices shows general month-over-month (MoM) stability across most sectors in France except for electricity, gas, steam and HVAC supply which saw a significant increase of 15.1%. YoY figures show a trend of price recovery with glass falling by 10.8% and electricity by 17.9% despite this most recent month’s increase. When indexing for June 2022, when oil prices peaked due to the Russia-Ukraine conflict, we can see strong price recoveries of 19.2% in flat glass and 11.3% in wood with an increase of 14.2% in concrete standing out. It is paramount to regularly update project allowances as market pricing and conditions change weekly. See the following table for MoM, YoY and indexed pricing inflation:
The French All Trades Index (BTO1) in November indicated overall stability in construction costs both on a MoM and YoY basis. When indexing for June 2022, when oil prices peaked due to the Russia-Ukraine conflict, we can see relative stability across the majority of sectors apart from framework and metal frames which saw a price reduction of 21.2%.
Market outlook
France’s construction confidence indicator, CCI, has seen a gradual but steady decline throughout 2024, falling from -6.2 in January to -15.9 in December. This decrease has been largely driven by a worsening in current overall order books, which declined from -17.6 to -28.9, alongside a smaller but complementary drop in employment expectations, which shifted from 5.2 to -3 during the same period. The summer Olympics hosted by France likely contributed to this decline, as the reduction in overall order books and employment expectations between the first and second half of the year aligns with the expected post-event slowdown in construction demand.
Insufficient demand has been gradually deteriorating over 3Q/4Q 2024, rising from July's figure of 31.6 to a December peak of 37.9, making it the primary factor restricting construction activity in France. Meanwhile, labour shortages, though still the second most impactful constraint, has shown a slight improvement, declining from its 3Q/4Q average of 32.3 to 30.2.
Local office input
The construction sector in France is expected to face a challenging year in 2025, with activity projected to decline by 5.6% in volume, following a 6.6% decrease in 2024, driven primarily by a significant 21.9% drop in new housing. The French Building Federation (FFB) also anticipates the loss of 100,000 jobs in the sector unless urgent measures are taken. While some experts foresee a potential recovery in the new real estate market, supported by stabilising prices and improved access to credit, a swift rebound remains uncertain, particularly due to the delayed 2025 Finance Bill, which adds further uncertainty and weakens hopes for a recovery in housing construction. To navigate these challenges, investment in innovative construction technologies and sustainable practices may provide a pathway for long-term sector resilience.
In response to these pressures, Gleeds advises revisiting project budgets, adjusting them to reflect current market conditions based on both local statistical data and our own internal insights. We also recommend that investors account for potential inflationary impacts and the ongoing unpredictability of materials and labour shortages.
Gleeds recommends revising previously set project budgets to present-day figures based on local statistical information and our own internal data. Additionally, we advise investors to consider inflation contingencies in their budgets as materials and labour shortages remain unpredictable.
Peninsula Hotel, Paris — Gleeds provided Quantity Surveying/Cost Management services.
