Brief analysis

Energy-efficient building refurbishment as the key to CO2 reduction in the building sector.

To achieve the net-zero target for CO2 emissions in the building sector, the façade, roof, windows and heating components (i.e. insulation of the building envelope and utilisation energy generation) are key. As things stand, 15.7 million buildings in Germany alone need to be comprehensively refurbished in order to fulfil the required energy efficiency standard set by the EU Commission and the German government. Now that manufacturers of all components have massively expanded their capacities in recent years, we believe that the bottleneck will be in construction/installation.

For this reason, in addition to the necessary costs (here we have factored out all expected material and wage price increases, so this is an extremely conservative calculation), we have recorded and analysed the capacities in the construction phase.

The results of our analysis show that it will not be possible to achieve the targets by 2045 in any of the trades. We have also made a conservative calculation for capacities and assumed that the refurbishment rates of the past can be maintained and that all capacities will be used purely for refurbishment - which is rather unlikely given the continuing shortage of housing; however, a look at demographic trends and the age cohorts in the building trade shows that we must assume a further shortage of personnel over the next 20 years.
 
This means that a significant increase in labour costs can be expected, which can be passed on to customers at least 1:1 by installers due to the critical fulfilment requirement. Furthermore, this means that processes and technologies (e.g. modular construction methods) that increase the output per FTE achieve a growing profitability effect; however, these measures can only be implemented by larger trade groups.
 
In fact, this means that consolidation in the building trade will increase significantly and the profitability levels between large and small players will be further spread. Furthermore, it can be assumed that, contrary to current experience, well-managed craft groups will be a highly attractive asset class in the future.
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Christoph Blepp
Christoph BleppManaging Partner
Christoph Blepp is one of the leading strategy consultants in the construction and construction supply industry as well as in the infrastructure sector with extensive expertise in the areas of strategy development, value creation and corporate management. His focus is on achieving sustainable effects for companies and combining strategic initiatives with measurable results.
 
Through his analytical approach and deep understanding of industry-specific challenges, Christoph is able to develop customised solutions that drive both operational efficiency and strategic growth. His focus on holistic strategies, combined with his hands-on experience in managing complex business operations, makes him a sought-after partner for clients seeking sustainable success.
 
‘The transformation of the entire building construction, infrastructure and energy sector is leading to strong pressure for change and enables completely new approaches to strategy. Helping companies to create sustainable and superior business models is what drives me.’’