From July to September, the main construction works generated sales of 6.2 billion francs, the Swiss Builders Association (SBV) announced on Wednesday. This means that the previous year’s high is roughly maintained.
However, undiminished good development should be placed in perspective, according to the SBV. Building materials have become more expensive to purchase, and wage costs have also increased. As a result, the profit margins of construction companies continue to decline from 2 percent to 3 percent.
In the residential construction segment, orders received in the third quarter amounted to CHF 1.7 billion. The 5.7 billion francs accumulated since the beginning of the year are historically “very good value”. SBV also expects investment in living spaces for the foreseeable future due to the low vacancy rate, population growth and rising housing rents. On the other hand, hosting is unlikely to become more expensive in the future.
On the other hand, the order books in the commercial construction sector, which includes commercial and industrial buildings, retail spaces and offices, are slightly less full. Here, they say that incoming orders, construction activities and backlogs in the third quarter decreased compared to the previous year. Uncertainties in the general economy will affect this area more rapidly.
In the short term, the good environment for the construction industry should continue. The construction index, published by SBV together with Credit Suisse, predicts a good 7 percent increase in sales in the fourth quarter compared to the same quarter last year. The index climbed to a new high of 161 points.
However, the medium-term outlook for the sector is pessimistic due to the expected cooling in the economy and uncertainties regarding price developments. In addition, the burden of interest rate hikes is expected to become more palpable as of the summer of 2023. In contrast, strong population growth is likely to have a positive impact on construction demand.
(SDA)