The triad of slow bureaucracy, green regulation red tape, and rising costs of energy and materials has created a situation that compels many German construction firms to cancel planned projects. In August, 20.7% of firms reported canceled projects, up from 18.9% in July, according to the Munich-based Ifo Institute for Economic Research. “Cancellations in residential construction are piling up to a new high,” said Klaus Wohlrabe, head of Ifo’s surveys. “We have not seen anything comparable since the survey began in 1991. The uncertainty in the market is huge.”
As a result of the rapid rise in construction costs and much higher interest rates, many projects that would have been profitable in early 2022 are currently no longer viable, he said. “The scaling back of subsidies due to stricter energy-saving requirements is also putting a strain on builders’ calculations,” Wohlrabe said. But even much-propagandized “green economy projects” can’t get off the ground—like the Southlink overland power line from the wind parks in the North Sea down to Germany’s southernmost regions. This power line, whose construction began in a ceremony yesterday, is designed to be 700 km long—of which only 17.6 km has been approved so far! Originally scheduled to be ready by the end of 2022, the target is now 2028-2030, and likely even later.
