Building & Infrastructure
The construction industry is a key economic factor. Every euro invested in construction strengthens the industry and Germany’s economic position.
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Overview of the Building & Infrastructure sector
The construction and infrastructure sector is one of the largest and most economically significant industries in the DACH region. In Germany alone, it generated a gross value added of approximately EUR 234 billion in 2023, accounting for 6.2% of GDP; including real estate activities, the share rises to nearly 20%.
With more than 800,000 companies employing around 3.5 million people, the sector represents a key employer and investment driver. It is strongly characterized by mid-sized structures — over 95% of companies are small or medium-sized, predominantly owner-managed enterprises. This structure ensures customer proximity and flexibility but limits economies of scale. The market remains project-driven, capital-intensive, and cyclical.
Key Insights
The construction and infrastructure sector in the DACH region is undergoing a phase of profound structural modernization. This development is driven primarily by the growing demand for efficiency, sustainability, and technological integration.
Digital planning and management systems (BIM), modular construction methods, and automated processes are gaining importance as they reduce time, costs, and resource consumption while increasing transparency throughout the entire project lifecycle. At the same time, investment focus is shifting increasingly toward infrastructure: large-scale programs for the expansion of energy, transport, and broadband networks are generating stable demand impulses, making the sector less dependent on short-term economic cycles.
Sustainability is emerging as a key competitive factor — construction and real estate companies that integrate ESG criteria into planning, materials, and operations are securing long-term access to capital and public contracts. For mid-sized firms, this transformation creates opportunities to establish a sustainable market position through technological expertise, quality, and specialization.
At the same time, the industry faces a demanding transformation process. The interest rate and cost environment remains challenging: higher financing costs and increased material prices require more precise calculation and consistent cost management.
The shortage of skilled labor is becoming a structural bottleneck, particularly in technical and craft professions, limiting the growth potential of many mid-sized companies. In addition, growing regulatory and reporting obligations — especially regarding energy efficiency and sustainability — are adding administrative complexity. Many firms also face the task of modernizing internal processes and IT systems to fully leverage digital potential.
The sector thus operates within a field of tension characterized by strong demand, rising pressure for quality and efficiency, and increasing organizational complexity — a challenge that simultaneously serves as a catalyst for professionalization and technological advancement.
The valuation of construction and infrastructure companies follows an operationally driven logic, where stability and transparency are weighted more heavily than growth. Key factors include EBITDA margins, order backlog, and cash flow quality — all of which determine a company’s resilience to cost and interest rate fluctuations.
A solid capital structure with a balanced equity ratio and efficient working capital management has an immediate value-enhancing effect. Increasingly, differentiating factors include technological competence and ESG compliance: companies with digitally integrated processes, sustainable construction methods, or specialized niche expertise achieve significantly higher multiples.
Conversely, project-dependent revenues, weak governance, and limited scalability tend to result in valuation discounts. For investors, mid-sized companies with a clear strategy, robust organizational structures, and proven execution capability are coming into focus — not because of their size, but because of the quality of their value creation.
M&A Perspective
Despite these challenges, the construction and infrastructure sector remains systemically relevant to the long-term competitiveness of the economy. The need for modernization in transport routes, energy and water networks, the growing demand for housing in urban areas, and the energy transition of the building stock ensure structurally high levels of investment for decades to come.
For mid-sized companies, this translates into stable yet demanding market conditions: success increasingly depends on efficiency, technical expertise, and professional management — factors that will determine future market positioning and value creation.
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