The construction industry in the Netherlands experienced a substantial 12.3% growth in revenue during the first quarter of 2023 compared to the previous year, according to recent data released by the Central Bureau of Statistics (CBS). However, the number of permits issued for new residential buildings was more than a quarter lower than the same period last year, indicating potential challenges ahead.
The surge in construction revenue can be attributed largely to higher prices. Domestic sales prices of wood and construction materials increased by 15.6% compared to the previous year, contributing to an overall revenue increase of 8.6%.
Within the construction sector, the civil and utility construction segment witnessed an 8.6% rise in revenue, similar to the previous year. The ground, water, and road construction (GWW) sector performed significantly better, with a growth rate of 11.3%, compared to less than 5% growth in the same period last year. Specialized construction companies experienced a growth of 15.8%, surpassing the previous year by over 5%.
Small-scale construction firms with up to 10 employees saw their revenue increase by an average of 14.4% in the first quarter. Medium-sized companies with 10 to 100 employees achieved an 8.8% increase in revenue. Interestingly, medium-sized GWW companies were the only segment in the construction industry that witnessed a decline in revenue, experiencing a 2.4% decrease. Conversely, small-scale GWW firms achieved the highest revenue growth in the sector, exceeding 20%. Revenue for large construction companies with 100 or more employees rose by 13.0%.
In contrast to the positive revenue growth, the number of bankruptcies in the construction industry continued to rise. In the first quarter of 2023, 92 construction companies went bankrupt, compared to 77 in the same period the previous year. This marks four consecutive quarters of increasing bankruptcies. Most of the bankruptcies were observed among specialized construction firms, accounting for 52 cases in the first quarter of 2023.
Moreover, the number of permits issued for new residential buildings decreased by almost 28% in the first quarter of 2023, with 12.8 thousand permits granted. This represents the lowest number since the second quarter of 2016 and indicates a potential slowdown in future construction projects. It is important to note that these figures do not include housing transformations such as converting offices into residential units.
While the approved construction costs for all residential buildings decreased by nearly 29% compared to the first quarter of 2022, amounting to approximately €2.6 billion, costs for new residential construction specifically declined by over 30% to around €2.0 billion. Costs for residential renovations decreased by over 20% to €504 million.
In contrast, approved construction costs for non-residential buildings, including commercial structures, were nearly €2.0 billion in the first quarter, representing an increase of almost 16% compared to the same period the previous year. New non-residential construction accounted for nearly €1.5 billion, marking a growth of almost 23% year-on-year. The construction costs for non-residential renovations increased by nearly 1% to €529 million.
Despite the overall revenue growth in the construction sector, challenges loom due to the decline in permits for new residential construction and the persistent rise in bankruptcies. It remains to be seen how the industry will navigate these hurdles and continue to sustain its growth in the coming quarters.