Market environment

Market environment impacted by increased interest rates and construction costs as well as Covid-19 pull-forward effects in previous years

The building construction sector saw a decline in most regions in 2023 due to increased interest rates and construction costs.

In November 2023, the construction market research network Euroconstruct forecasted a decrease in building construction for Europe in 2023 of -3.1%, lower than the previous estimation made in mid-2023 (-2.0%). At -5.2%, new construction showed a sharper decline than renovations (-1.3%) in the November forecast. The decline was primarily due to residential construction (-4.9%), with non-residential construction remaining stable compared to the previous year. Countries that are important to Geberit in terms of sales developed slightly to significantly negatively in 2023: Switzerland -1.6%, Germany -2.8%, Austria -3.7%, Norway -3.9%, Italy -4.5%, Denmark -8.5%, Finland -11.3% and Sweden -14.8%. Only the Iberian Peninsula recorded positive growth (Spain +1.8%, Portugal +0.9%), while the Netherlands saw a stable development (+0.3%).

Of the total European construction volume of EUR 2,070 billion in 2023, around 80% was generated by building construction. The ratio of residential to non-residential building construction remained the same at around 60% to 40%. New construction as a share of total building construction continued to lag behind the renovation business in 2023.

According to estimates by the Bureau of Economic Analysis, real gross domestic product (GDP) increased by +2.5% in the USA (previous year +1.9%), while inflation declined to +3.4% (previous year +6.5%) according to the Bureau of Labor Statistics. According to figures from the United States Census Bureau, investments in building construction increased slightly year-on-year by +0.9%. Within building construction, investments in residential construction decreased by -5.6%, while investments in non-residential construction increased by +21.2%. The healthcare/hospitals and schools/universities segments, which are important for Geberit, developed with +14.9% and +13.4% more positively compared to the previous year (+8.8% and +1.1%, respectively).

In the Far East/Pacific region, economic growth amounted to +4.2% in the reporting year, above the global economic development of +2.6%. With a share of around 58%, the largest proportion of global economic growth again originated from the Far East/Pacific region. At +5.0%, China recorded stronger growth compared to the previous year (+3.0%), although this figure is lower than the average of recent years. The real estate crisis in China had a negative impact on residential construction in 2023.

In the Middle East/Africa region, economic growth in 2023 was +2.5% (previous year +5.4%).

(The aforementioned figures covering the world economy and the performance of the Far East/Pacific and Middle East/Africa regions were published in the October 2023 edition of the IMF World Economic Outlook)