Germany’s 2025 Election: What we know and what we anticipate for the construction industry
4 March 2025
By Marc Kirschbaum, managing director, Currie & Brown Germany
The recent German election has ushered in a new coalition that appears to promise a more stable, long-term approach to economic management. We anticipate that the new government’s multi-year strategies will help provide the certainty our clients need to navigate economic volatility by ensuring consistent investment and regulatory support. In the near term, moving beyond short-term legislative cycles, the result should help create an environment where developers and investors can plan confidently on projects that extend well into the future.
Stability and the Value of Long-Term Planning
In the past few years, the impact of sudden policy shifts and budget cuts have disrupted major projects, specifically those that need detailed design, approval processes, and ample funding. With lending institutions and local councils expected to operate under steady federal and EU-wide guidance, we can expect a more predictable environment and project teams can plan with greater certainty.
Energy Security and the Push for Affordability
Although the coalition aims to ensure affordable energy, Chancellor Merz may scale back sustainable initiatives. This could impact clients relying on policy incentives, especially in the data centre and pharmaceuticals sectors. If federal sustainability support wanes, EU-level regulations, such as the EU Taxonomy, will continue to shape eco-friendly building materials, insulation standards, and passive energy solutions. Cost pressures from reduced national funding, combined with strict EU rules and skilled labour shortages, could strain budgets, inflate costs, and potentially delay or derail projects.
If multiple projects come online simultaneously, we could see demand for advanced technology skills outstrip supply, driving up costs. Detailed planning will be essential to help mitigate this risk. Organisations will need to consider the impact of different risk factors on funding and costs to ensure that project goals can be achieved in any scenario.
Investing in Future Industries
Current indications suggest that the new administration aims to expand Germany’s industrial base by supporting innovative fields such as pharmaceuticals, advanced information technology and other high-growth sectors.
It is expected that demand for contractors may exceed supply, with organisations experienced in regulated environments scrambling to build these high-growth facilities. Firms skilled in similarly demanding fields, such as hospitals or large industrial sites, may be able to transfer their expertise; however, it is unlikely that workforce flexibility alone will meet the widespread demand for specialised skills and infrastructure.
Addressing Housing Affordability
Rising rents and limited supply have led the government to accelerate housing construction and offer financial incentives. Developments with sustainable features may qualify for grants or tax breaks, while streamlined planning could reduce approval times. However, a surge in residential projects could clash with parallel expansions in industrial and educational sectors, intensifying competition for skilled labour and materials. We are confident that meticulous planning to factor in potential concurrent developments will help mitigate cost inflation and scheduling constraints.
Reinforcing Germany’s Defences, Expanding National Links
We anticipate that Germany’s pledge to meet its NATO obligations and safeguard national security will direct significant investment into defence infrastructure. Alongside efforts to modernise roads, railways, and digital networks, this will generate fresh opportunities for the construction industry. We expect that overlapping large-scale initiatives will sharpen competition for skilled labour and materials, driving up costs and stretching capacity. Carefully planning and managing resources will be crucial, given rising costs, capacity constraints, and tighter timelines.
A Decade of Opportunity
The construction outlook remains robust, grounded by long-term stability, energy targets, and cross-sector expansions. Yet overlapping demands for skilled labour and resources could drive up costs, strain schedules, and require meticulous planning. Positioning for long-term success involves rigorous project planning, embracing sustainability, leveraging technology, diversifying suppliers, strengthening contracts, and maintaining flexible budgets.
As noted in our recent 2025 Global Cost Report - Adapting to uncertainty in 2025, by meticulously planning projects, embracing sustainability, diversifying supply networks, and maintaining flexible budgets, organisations can adapt to market volatility and sociopolitical shifts.
If you would like to discuss the potential implications of new policies on your construction project, please get in touch at [email protected].