Architect survey shows mixed fortunes

10 February 2014

Italy, France, Spain and Poland are predicted to continue to see declining building volumes in the latest survey of architects, and building volumes will be lower in the Netherlands this year, despite recent rises.

However, the UK, Germany and Belgium are expected to see a small amount of growth or at least similar figures to 2013, according to the European Architectural Barometer. This data is compiled from market research conducted quarterly among 1,600 architects in these eight countries by Arch-Vision.

For Italy, France, Spain and Poland, in combination with a negative development of building permits in 2013, the construction sector in these countries is expected to decline in 2014.

For Dutch architects, 2014 will bring lower building volumes than 2013, the survey found, despite the fact that the country’s fourth quarter of 2013 was the best since the second quarter of 2011.

For the first time since then, the number of Dutch architects experiencing improvements (38%) was higher than the number of architects with declining order books (30%).

Arch-Vision said the improvements it observed among Dutch architects since the third quarter of 2013 had also been confirmed by the National Bureau of Statistics (CBS), which in January 2014 published data about the increase of building volumes in new orders received by architects in the third quarter of 2013.

Currently, according to Arch-Vision, 25% of Dutch architects expect an empty order book within the coming 12 months, which was less pessimistic than in the second quarter of 2013 when it was 31%.

Despite the positive architectural sentiment, building permits showed a slight decrease in numbers for 2013 compared to 2012, so Arch-Vision predicted a small decline in 2014 of -1%, but a slight recovery in 2015 at +1%. It said this positive development was based on a temporary VAT reduction on renovation activities – from early 2013 to the end of 2014 – and positive developments on the housing market.

Positive sentiment

From the third quarter of 2010 onwards, there had been a steady positive development among German architects, said Arch-Vision. In the fourth quarter of 2013, both German sentiment on the order book and turnover development were positive again, but with small changes compared to results from the previous quarter.

The number of architects with an increasing order book remained quite stable at 36%. In the fourth quarter, only 4% of architectural practices expected to see an empty order book in the coming 12 months, which Arch-Vision added did not show significant change on quarterly basis. It said this was in line with the development in building permits for both residential as well as non-residential buildings. Arch-Vision expected growth in 2014 of 1% and 2015 3%.

The few signs of improvement noticed among the French architects in the third quarter 2013 were unstable and only temporary compared to the previous quarter, said Arch-Vision.

In the fourth quarter of 2013, there were more French architects experiencing a decreasing order book, at 47% versus 44% in the third quarter, while 38% had seen their order book decline by more than 5%.

The new falls in order book and turnover development were said to show that the French situation continued to deteriorate, while Arch-Vision said this was also confirmed by the building permits. The building permits for residential showed a negative trend, which became even worse in the course of the quarter.

Arch-Vision said this fall in building permits had a big impact on the French building sector since newbuild residential had a share of about 28%. Although the building permits for non-residential showed a positive development, it was felt that it could not make up for the loss in the residential area. Arch-Vision predicted that the French construction market would decrease in 2014 by -3%, but that it would recover in 2015 at +1%.

Decline doubled

Spanish architects reported more or less the same state of their order books as three months ago – one out of five firms reported an increase in their order book, while the ones who saw their order book decline almost doubled to 37%.

However, Arch-Vision felt that with every quarter of 2013, Spanish architects were becoming more positive, feeling the bottom had been reached and improvements should follow. In the first quarter of 2013, 49% of them expected empty order books in the next 12 months, while the latest research found that that this was true for only 31%.

Arch-Vision said that, unfortunately, the more positive attitude was not in line with developments in building permits – the residential sector especially was showing a significant decline in permits.

“The last development in the building permits made us adjust our prediction for Spain which looked more positive in the third quarter of 2013,” said Arch-Vision. It said that given the latest results, it concluded that the development in 2014 at -12% would be similar to 2013, which was -11%. An improvement is not foreseen until 2016.

After a very bad second and third quarter of 2013, a majority of Italian architects reported that they had again experienced a drop in order book and turnover for the final quarter.

For the third quarter in a row, approximately 78% of Italian architects noticed a decline in their order book compared to the previous quarter. There were hardly any architects reporting an increase in their order book in the fourth quarter, said Arch-Vision. Although the architects are hoping for a better 2014 – in the fourth quarter last year, the share expecting an empty order book in the next 12 months was 30%, while the first quarter share was 50% – improvement in the construction market in Italy seems far off.

The outlook for the next 12 months is not very promising, said Arch-Vision, which predicted shrinkage of the market by 8% in 2014 and by 4% in 2015. This comes on top of the heavy decline in 2013 of -14%.

Only 7% of Belgian architects expected an empty order book in 2014. Although this was higher than the previous quarter, Arch-Vision felt it was still a relatively low figure.

Furthermore, since the second quarter of 2013, the number of architectural practices seeing their order book grow is higher than the number of those who experienced declining order books – 43% in the fourth quarter compared to 19%.

The building permit figures, especially for residential buildings, were quite stable, while a drop in non-residential could be seen. Arch-Vision said the positive sentiment among Belgian architects was most likely to have been influenced by work on renovation projects. This has led to a prediction of the Belgian construction sector by Arch-Vision to be one of modest growth – 1% 2014 and 1% 2015.

As in previous quarters, there were more Polish architects in the fourth quarter of 2013 experiencing declining order books (41%) than those who saw growth (28%).

Arch-Vision said it was a positive sign that the number of architects that expected an empty order book within the next 12 months had dropped from 31% to 20%.

“Poland is a country which heavily relies on newbuild when it comes to the construction sector (73%),” it said, “so it could be alarming that the figures of the architectural sentiment are still negative. This is also the case for the residential building permits – they show a declining trend for a second year in a row.”

Arch-Vision said that all together, it expected that the Polish construction sector would end 2014 with building volumes which were 2% lower than 2013, followed by -1% in 2015.

Highest number

It said the UK had experienced the highest number of architects ever who saw their order book growing.

In the fourth quarter of 2013, architectural companies in the UK showed a strong development in order book and turnover sentiment, said Arch-Vision.

In the fourth quarter of 2013, two thirds of British architects saw their order book growing, against only 10% who reported a decline. Arch-Vision said that since the start of the European architectural barometer survey, this had been the highest number of companies with increasing order books ever registered.

The number of architects expecting an empty order book in the next 12 months was lower than in the previous quarter – 21% versus 27%.

Despite the very positive signals coming from British architects, Arch-Vision said the building permits for non-residential had decreased significantly in 2013 over 2012. Building permits for residential had gone in the opposite direction, it said, although it added that since the non-residential sector in the UK was bigger, this would have more influence on the total building sector.

Arch-Vision, therefore, predicted a stabilisation of the market in 2014, and a small increase of 1% in 2015.

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