DIP partner Aengevelt Immobilien deduces from the building permit figures for 2025 that the focus of real estate development will shift in the medium term, as building permits are one of the leading indicators for completions in the next two to four years. Growing numbers are recorded for housing, infrastructure, education, health and also retail real estate, while declines can be seen in office and commercial real estate.
Building permits are an early indicator of building completion, which generally only takes effect after two to four years of production until they are ready for occupancy. According to the experience of recent years, around 95% of the building permits issued are also realized. In recent years, a considerable backlog of permits has accumulated in numerous large cities, which could usually have an impact on the market beyond the latest permit figures if the upswing continues. The figures just published by the Federal Statistical Office make it possible to estimate the project developments of the next two to four years quite reliably, regardless of other parameters.
Reduction of usable space in the event of disproportionate price increases for construction services.
If one compares the building permits issued in 2025 with the previous year, it can be seen that although there was a slight increase of 3.3% in the total number of buildings to 149,748 properties, the usable area was reduced by 2.3% because the average property size decreased. However, the estimated costs of all buildings will increase by 9.4%, which shows that the phase of disproportionate price increases for construction services has not yet come to an end.
Residential units are increasing, but remain below demand.
The number of residential units increased by 11.2% to 232,995 dwellings, while the living space even increased by 13.2%. However, Aengevelt Immobilien points out that with a realisation rate of 95%, only around 210,000 completions are expected to be triggered by building permits from 2025, which is still significantly below demand. As recently as 2021, just under 381,000 residential units had been approved, so that the recent increase can only be interpreted as a slight recovery after passing through the trough reached in 2024.
Growth in infrastructure buildings thanks to special funds.
The infrastructure package of the federal government, which is financed by a special fund, is already noticeable in the building permits. There was an increase of 4% for selected infrastructure buildings, 6.3% for leisure, recreation and sports buildings, 7.5% for healthcare buildings, 13.9% for education, science and research buildings, and 63.8% for transport and communications buildings. The number of permits for halls of residence increased by 12.7%. In the case of buildings for public safety and order, an increase of 21.7% can be seen. However, there was a 20.7% decline in area for social work buildings and 27.0% for culture, reflecting reallocations in public budgets.
Declines in non-residential buildings.
Nevertheless, there was a decline in the number of permits for non-residential buildings by 3.3% compared to the previous year to 36,206 properties. The usable area is even reduced by 3.8%.
Differentiated development according to building classes:
The number of building permits for office and administrative buildings has shrunk by 4.5%, and in relation to the area even by 13.6% to around 2.6 million m2. Nevertheless, an increase of 4.2% can be seen in construction costs, which impressively confirms the trend towards higher qualities (“flight to quality”). The 6.2% decline in non-agricultural business buildings and 12.7% in factory and workshop buildings in terms of area gives rise to fears that deindustrialisation will continue in view of the persistently weak economy. There was only a slight decline of 0.7% in the number of permits for commercial buildings, which was also compensated for by the fact that the usable area increased by a whopping 21.0% to 1.6 million m2. The estimated construction costs increased by 13.8%. This speaks in favour of the construction of low-cost large-scale properties such as supermarkets (especially discounters) or specialist stores, but less so of shopping centres. The boom in logistics real estate is slowing down significantly, with the number of permits for warehouse buildings falling by 10.3% and the permitted usable area by as much as 12.4%. The number of permits for hotels and restaurants fell by 13.0%, and the investment sums by 7.1%.
Conclusion:
Dr. Wulff Aengevelt, Managing Partner of DIP partner Aengevelt Immobilien:
“In principle, the construction industry can be pleased with the increase in the approved order volume. An analysis of the development of building permit figures, however, sends differentiated signals to the real estate industry: the new construction dynamics are shifting from offices, hotels and the long-vaunted logistics to residential construction and in particular to selected types of infrastructure properties, especially social infrastructure. A ray of hope is that retail real estate is also on the rise again in terms of area and value.”
