Key factors driving progress
Strong demand for new housing – especially in large urban centers – continues to buoy the sector, which is expecting five per cent revenue growth in 2017. Renovation spending by households in 2015 totaled €10.7bn (a 13 per cent increase since 2008). Energy-related expenditures in existing residential buildings likewise grew dramatically in that period, rising 28 per cent to €36.4bn. The German Energy Agency (dena) reports that heating consumption declined by around 9.7 per cent between 2008 and 2015.
Insulation measures have faced criticism that they can lead to higher rents and require the use of environmentally questionable materials, claims that are dismissed by Alexandra Langenheld, energy efficiency project manager at Berlin-based Agora Energiewende. “The true driver of cost increases is not the introduction of new efficiency standards but the demand for housing in combination with a short supply in urban areas.”
There is still much to be done in order to achieve the 2050 target. “The renovation rate in residential buildings must be raised to two per cent,” Langenheld says. The sector will only be successfully “decarbonized”, she maintains, if there is “energetic renovation of existing buildings towards the minimal standards that exist for new ones.”
The challenge ahead presents opportunities for foreign investment: “meeting climate change mitigation targets will require considerable investments in both building insulation and heating systems,” she says. Although construction and heating are both highly consolidated industries in Germany, rapid growth and the vast sums being invested in efficient construction and renovation and efficient heating systems mean the sectors are attractive for new market entrants with innovative products and services.