Construction in the Netherlands has gained serious momentum, growing 8% in a year, but this is not sufficient to decrease the housing deficit. A solution for this ever-increasing housing shortage in the Netherlands may be found with Estonian modular and wooden houses, which can also help the Netherlands deliver on their set climate objectives.
The year 2021 has adequately proven that the pandemic has had a lesser impact on the construction sector than initially feared in the Netherlands; however, while large companies are in a more complicated situation, specialist construction companies are prospering. Therefore, the downturn of 2020 can be chalked up to a singular sad incident in a number of otherwise successful years in which the construction sector grew between 5% and 9% on average every year.
Graph: Bert Reila. Source: CBS (The Netherlands’ statistical institute)
Even though this year in the Netherlands began slightly dubiously for the construction sector, the sector managed spectacular growth by the summer and demonstrated a substantially better recovery from the pandemic compared with other economic sectors. Construction companies’ turnover in the second quarter grew by 9% on average compared with last year; the construction of small and medium sized buildings has grown the most and companies focusing on building urban facilities have shown successful growth as well.
Increased turnover does not automatically indicate good profitability, as the sharp price increase of construction materials will decrease profits. Nevertheless, only 6% of construction companies reported a loss last year, 9% managed to break even and a total of 82% turned a profit. Ever-growing consumer confidence also supports the positive outlook. The crisis plans created last year to support this sector were thankfully shelved to await even worse times. Active construction has kept the construction sector afloat during the threat of a larger bankruptcy wave; frankly speaking, such a small number of construction company bankruptcies has not been seen since 2013.
The construction of houses is always increasing in the Netherlands due to increasing demand – 71,000 new houses are built every year. Even though this number is much higher than the 45,000 reported during the last great financial crisis, the state is concerned about the fact that, despite overwhelming need, this number has steadily remained at ca 71,000 for several years. However, the number of construction permits issued has seen an increase, which indicates that a larger number of houses will be built in upcoming years.
The housing shortage has even decreased during the pandemic – the current estimated shortage of houses in the Netherlands is 279,000, but it was 331,000 last year. The Netherlands is planning to build over 960,000 new houses between 2021 and 2029. This will only happen if the state can find at least 23 billion euros to supplement the construction of these houses by 2030, otherwise around 345,000 new houses may remain unbuilt.
A new, interesting trend can be seen in public buildings and commercial properties – even though there are more houses built than ever before, their size is becoming smaller. For example, the average size of new commercial properties has dropped from 1600 m2 to 1500 m2 and the size of halls and sheds has decreased by 20%. Construction prices are also decreasing; compared with last year, the average construction cost with one issued construction permit has decreased by 23% to 590,000 euros. In the meantime, the construction costs of office spaces and school buildings have risen by 34% and 41%, respectively. 294,000 m2 of new office space will be built this year, 50% more than the previous year.
The labour shortage is starting to obstruct growth. The construction sector creates tens of thousands of new jobs every year; however, the number of unfilled positions has risen to 21,000, the highest number since 2008.
In conclusion, the construction sector in the Netherlands has gained serious momentum this year. Production capacity is growing, manufacturer confidence levels continue at a high-level, new construction permits are issued more frequently. The production rate of housing construction must greatly increase, specifically in the affordable housing sector. However, infrastructure construction will face an uncertain future because several large projects are still pending.
Entrepreneurs in the Netherlands will need to look at faster solutions in order to satisfy the demand in the housing market and Estonian element houses and modular houses which have become a success could be the solution, especially for building social housing and affordable housing. The Netherlands sustainable development strategy foresees a reduction in nitrogen, carbon dioxide and other emissions in all large sectors – using wood instead of concrete may help obtain these objectives, which could also help Estonian wooden house manufacturers break into the Dutch market.
Members of the Estonian Woodhouse Association and the Estonian Wooden Houses Cluster founded a consortium called the Offsite Construction Group in order to solve Europe’s climate objectives and housing shortages. The group consolidates the manufacturers of various products and competencies. OCG partner Raiko Gustavson says that the Dutch market is an extremely fantastic opportunity for Estonia’s wooden houses manufacturers because the number of opportunities there is an indication of considerable growth potential. “We have performed a comprehensive analysis of the Dutch market as a part of the OCG consortium project and we are aware that we need to be extremely precise in regard to our products and services in that market – the first thing that must be made clear is whether they expect a price corresponding to high-volume products or whether we can offer products and services that offer greater added value,” explains Gustavson, adding that long-lasting trading traditions and mercantile economic policies in the Netherlands imply that they require every project to be profitable for them.
Estonia’s wooden house manufacturers took a joint trip to the Netherlands in the beginning of last year, which gave an energetic push towards a more intense business relationship. Harmet has sold their range of designed beach houses to the Netherlands, Timbeco Woodhouse’s wooden houses are planned to be used to build a modern wooden house concept and Kodumaja has set up their own subsidiary in the Netherlands.
For more information on business opportunities in the Netherlands and various economic sectors, feel free to contact our export adviser.
|Thijs de Neeve
Export advisor in the Netherlands (Benelux)
Enterprise EstoniaE-mail: Thijs.DeNeeve@eas.ee
The publication of this article is financed by the European Regional Development Fund (ERDF).