Decline in production volume of installation industry is only temporary

After years of strong growth, the volume of production in the installation sector is down 0.7 percent this year. The decline in residential new construction and a dip in non-residential construction are the main causes of the decline. Starting next year, a slight recovery seems to set in. Total growth of 1.7 percent is expected in 2025, and 2.4 percent in 2026.

The figures come from the report Economic Outlook 2025 and Beyond, which research firm Bouwkennis prepared for Techniek Nederland. Installation volume in residential construction is expected to grow 4.8% in 2025 and 3.7% in 2026. The increase in the number of new homes generates investments in infrastructure, cabling and energy networks, among other things. In addition, much infrastructure in the Netherlands is in need of maintenance or renovation. As a result, installation volume in infrastructure will show growth of 1.1% next year and 1.7% in 2026. The installation volume in non-residential construction increases by 0.1% in 2025 and continues to grow by 1.7% the following year.

Share of installations growing

The installation ratio, the share of technical installations in the total construction sum, is growing. This is a development that has been going on for decades, but has accelerated in recent years due to new technology and sustainability. The innovations have been partly enforced through regulations. The installation ratio in 2024 is still highest in non-residential new construction (44.5%). In residential construction, the installation ratio is highest in the major maintenance and renovation market (23.5%).

Electrical engineering has greatest potential

Electrical engineering plays a central role in the energy transition. Sustainability and digitalization are leading to far-reaching electrification. This benefits electrical engineering companies in particular. The outlook for companies in climate engineering is also positive. Developments such as natural gas-free construction of homes, the requirements for Nearly Energy Neutral Buildings (BENG) and the need for cooling during the hotter summers are creating greater demand for sustainable climate systems. For plumbing installation companies, the outlook is stable. These companies benefit less than electrical and air conditioning companies from renovation work. On the other hand, the share of luxury plumbing will increase.

'Engineering sector has crucial role'

According to chairman Doekle Terpstra of Techniek Nederland, the report underlines the crucial role that the engineering sector has in, among other things, the energy transition. "The prospects for the sector remain unabatedly positive. It is therefore more important than ever to make engineering education more attractive and to stimulate intake. It is also important to use digitalization, prefabrication and industrialization to increase productivity in the industry. That way we can get more done with the same number of people."