Shaping Tomorrow’s Construction Industry: What Awaits the European Sector?

In this rapidly changing world, the construction sector faces many challenges now and in the coming years. This is not necessarily a bad thing, because there are also opportunities, according to Dirk Hoogenboom, Head of New Business Development and Marketing at USP Marketing Consultancy. The research agency has been conducting market research in Europe for many years, focusing specifically on the construction and installation sector. We presented him with five current trends in the construction sector. “Globally, the outlook should be bright, because demand is there and we want to become more sustainable. The question is: how quickly can the construction industry change?”

Construction trend 1. From AI buzz to proven value

“The construction sector is still in its infancy when it comes to AI. It’s still more of a gimmick, an AI buzz that’s going around,” Dirk Hoogenboom begins. He believes that AI is part of digitalisation, in which construction is slowly making progress. “USP research shows that only 13% of European architects use AI in current projects. The Netherlands is slightly ahead. Within Europe, the Netherlands is the most digitised country in the construction sector.”

Nevertheless, he expects it to bring many benefits to the sector in the long term. “Construction is very traditional, and AI is definitely going to have an impact, but it will take years before we see any results. That impact will mainly be in data management, facilitation and easier design.” He continues: “There was also a buzz around BIM. You can see that BIM is now firmly established. But it’s not as if the entire construction industry is fully digitised, far from it.” Hoogenboom cites the United States as an example. “If you look broadly at Asia, the US and Europe, you see that construction in the US is also very conservative. In fact, you see somewhat similar trends: the larger architects are more digitised, while the smaller ones and the contractors are not.”

Looking ahead, Hoogenboom sees one development standing head and shoulders above the rest. “There are a number of major threats looming over the construction industry, the most important of which is the labour shortage. All tools that can make construction more efficient are becoming more important. AI plays a role in this, but its value has not yet been proven. Nowadays, AI is also offered in BIM software. So there is definitely an opportunity for AI, but it only covers a small part of the construction process. If you look at the actual construction process of a building, applications are less visible and there are fewer solutions that could work with AI.”

Construction trend 2. Prefabricated and industrialised construction

“Prefabrication is supposed to be the solution to the problems in construction,” says Hoogenboom. “But when we ask European architects what percentage of their projects involve some form of prefabrication, it turns out to be only 40% for architects and 35% for contractors.” He adds that there is also a big difference between new construction and renovation. “Construction is not as simple as manufacturing a car. In new construction, you can apply robotisation, AI and BIM. But the biggest challenge in Europe is that the vast majority of buildings already exist and need to be renovated.”

In the wake of new construction, the further development of prefab has also stalled over the past two years. Nitrogen plays a role in the Netherlands, but more broadly in Europe, it is mainly due to high interest rates. “Project developers have put the brakes on. In addition, new construction has become incredibly expensive. People are weighing up the options: new construction is nice but costly, so I’m going to look at the existing housing market. Prices there have also risen enormously.” 

Still, Hoogenboom sees some bright spots for the renovation market, as more and more examples of prefab are emerging there as well. “A good example is the rooftop extension in the Netherlands, where an entire extra floor is placed on top of the building. So there are applications, although they still make up a limited share.”

Construction trend 3. The complexity of construction

Of course, there is the issue of complexity in construction, because sustainability always involves more complicated technologies. “As an experienced engineer, you can install two gas boilers in a day. But a heat pump can sometimes take up to three days,” Hoogenboom explains. “And it’s not just the pump; the house often needs to be modified. Installation is much more complex with digitalisation in the home, such as smart technology and solar panels.”

The people who understand their profession best are those with experience. In the engineering profession, this includes a relatively large number of baby boomers. When they retire, the younger generation will have to take over. This is a challenge because the influx of new, well-trained personnel has been a problem for the sector for years. Nevertheless, Hoogenboom expects that, as long as demand persists, the construction sector will continue to operate. How that demand can be met is another matter. “Prefab is ideal for complex construction, which you can design with BIM. That is the solution to that complexity. But we mustn’t exaggerate: whichever European country you look at, the houses are fairly traditional without too much technological complexity. Nevertheless, the expectation is that the complexity of new construction and certainly renovation will only increase over the next five years.”

That is why construction needs to change at a faster pace. For example, manufacturers are supplying more plug-and-play products that are relatively simple to install. However, Hoogenboom believes that the biggest challenge lies in installation technology. “Digitisation can help with this, but it requires a lot of retraining and further training. That is also a challenge, because the problem remains: where do you find new people to retrain?”

Construction trend 4. Housing and infrastructure under pressure

Many countries in Europe have been failing to build the number of homes needed for years. Social housing in particular is a major problem, Hoogenboom explains. “There is enormous demand, but it is difficult to meet due to legislation and regulations. We have also been unlucky with interest rates, which have put a brake on investment. Land is extremely expensive and construction itself is becoming increasingly costly. Materials such as boilers and paint have also risen sharply in price.”

One country that has made great strides in new construction is Spain. “That country mainly builds high-rise buildings,” says Hoogenboom. “Spain is also the place to be right now for the construction industry, which is growing enormously there. If you look at the growth figures, you can see that many countries will experience small growth: Belgium, the Netherlands, France. Germany is even negative. But look at Spain: 4% growth in 2025 and again in 2026.” 

He continues: “Globally, the outlook should be bright, because the demand is there, we want to become more sustainable, existing homes need to be changed, and we have more and more digitalisation at our disposal. The question is: how quickly can the construction industry change? It is normally a very conservative industry, where changes happen slowly. You see this with BIM, for example: the tool has been around for many years, but is mainly used by architects, larger contractors, and installers. Given the challenges we are currently facing, the question is whether construction developments can proceed more quickly. Under pressure, everything becomes fluid. We need to see whether this also applies to construction. To what extent can such a traditional segment see the need to develop?”

If you want quick action, Hoogenboom says it’s very simple: “I can call for more digitisation, prefabrication and AI, but those are five-year projects. What you can start with now is scrapping or at least harmonising legislation and regulations. Changes in national regulations can happen faster than those in European rules, provided there is the political will to do so. Make financing easier, simplify the granting of permits, and provide subsidies. In theory, it should also be possible to make more building land available more quickly. Here too, if the political will is there, changes can be made more quickly. These are the tools we can use now and which will have a rapid effect.”

Construction trend 5. Resilience in uncertain times

There is a lot going on globally at the moment. Such as a war in Europe, an unpredictable American president and ever-rising material costs. But Hoogenboom is optimistic. “The current situation for the construction industry actually looks quite positive. Demand is there. New construction is picking up, and renovation remains strong. These are politically uncertain times, but construction is continuing.” He believes that Europe must quickly learn to stand on its own two feet. “Europe must position itself better to be able to absorb more geopolitical shocks and become less dependent on foreign countries for raw materials. I don’t really believe that these are truly uncertain times; I just think that we are now heading towards a bottleneck in production due to staff shortages. That is what will transform the construction industry the most in the next ten years.”