Construction industry: recovery continues
Sales in the Swiss main construction sector increased by seven percent year-on-year in the first nine months of 2016. This is revealed by the latest quarterly statistics published by the Swiss Association of Master Builders (SBC).
After the 2015 construction year was still characterized by sales losses, the first nine months of the current year are marked by recovery. Compared to the previous year, sales in the main construction sector increased by 7.4 percent to CHF 14.7 billion. Both building construction (+6.6%) and civil engineering (+8.2%) increased.
In the short term, the positive development is expected to continue, according to SBC: Order backlogs and expected sales for the current fourth quarter are higher than in the previous year.
In the medium term, the association is somewhat more skeptical about the future. Net immigration - a key factor in construction demand - had declined noticeably in the current year. At least the low bond yields would ensure that rental apartments are attractive as investment properties, which is reflected in high investments in new rental apartments.
"However, for some years now, the market has not been absorbing all the newly built apartments, causing the vacancy rate to rise. This reduces the potential for new apartments in the medium to long term; at the same time, the risk of a slump in residential construction activity increases," writes the SBC in a statement. At the same time, the association stresses that the vacancy rate is still at a normal level. In the centers, it even remains very low, while it is higher in the suburbs of the centers and in rural areas.
Overall, SBC expects construction volumes in the current year to be higher than in 2015, but not to reach the level of the record year 2014. (ah)
