The Dutch construction Market
In 2007 the Dutch economy remains firmly on the growth-path that started in 2004. This year it expects a growth of 2.75% (2006: 2.9%) This growth is driven mainly by exports and government spending. During 2007 the short-term interest rate has been raised by the ECB, to prevent overheating. Long-term interest rates have also responded to the stronger economic activity. Last year the long term interest rate was 3.8%, this year it is expected to increase to 4.25%. Also, a slight increase in the level of inflation is expected for this year and the next.
Construction Market output is growing at an even stronger rate than the overall economy and is fuelled mainly by growth in the residential sector, followed by infrastructure development. The non-residential construction industry has become in the last 2 years ever more fragmented with many small, family owned companies.
In connection to this, the real estate labour market in the Netherlands remains tight, unemployment figures are low (4.2%) and the number of vacant positions extremely high Problems in the labour market are worsening due to the extensive increase of the new projects and lack of the highly skilled staff. This lack of skilled staff is an increasing problem for such construction companies. Total staff take-up in the C&P in Netherlands was approximately 30.000 in 2007 and we expect take-up for 2008 to be in line with last year’s figure.
What happened in 2008?
We expect the conditions on the construction & property market to remain good this year and the next. As the economy is driven by high-tech activities, industry and commercial services, it is less vulnerable to the current perils on the credit market. In turn, this will also bring long-term investors back into the market. We expect investment yields to remain at their current levels, at least until the end of next year.
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