Construction is changing fast, not just in how we build, but also in why and with what. As we do year after year, we unpack the biggest trends shaping construction in Europe. Our insights come from deep conversations with industry leaders across the continent and real project data, giving you a front-row seat to what’s next. Whether you’re a developer, contractor, material supplier, or investor, understanding these trends can help you stay ahead.
If you’re asking yourself any of the following, you’re in the right place:
- Are rising costs, labor shortages, or increasing sustainability expectations affecting your projects?
- Could a stronger long-term focus on renovation be a better strategy than maintaining emphasis on new construction?
- Which low-carbon construction materials are worth investing in today?
- Are you prepared to respond strategically to evolving regulations?
Understanding the forces shaping construction
The European construction industry is facing major challenges. Since 2022, the war in Ukraine has significantly disrupted the energy market, driving costs sharply upward. Lower interest rates have not been enough to revive demand. New construction remains limited, material sales are slow, and building permit issuance continues to fall short of expectations. But beyond this cyclical slowdown, deeper structural shifts are reshaping the market:
- Renovation over new build: High construction costs and limited land mean many investors now favour upgrading existing buildings.
- Urban recalibration: With office demand falling, conversions into residential or hospitality projects are becoming more common.
- Material innovation: Bio-based insulation, mass timber, hempcrete, and low-carbon cement are gaining serious traction.
- Labor scarcity: Skilled labor is in short supply across Europe, pushing adoption of prefabrication, lightweight methods, and opens the door to robotization in construction.
- Fire safety evolution: As timber and other bio-based materials become more widespread, system-level fire testing of complete building elements is slowly but steadily becoming standard practice.
- Sustainability as baseline: Life-cycle assessment (LCA) and circular economy strategies are now central to project planning.
This is the landscape we’re navigating. And these shifts are not just changes, but opportunities for smart strategic action.
Top 3 trends shaping the near future
Before we jump into the trends, it’s important to understand how we approached this overview. Our analysis isn’t just theoretical. It’s based on more than 450 expert interviews with leaders across the European construction value chain conducted between 2024 and 2025, and in-house expertise from specialists with up to 20 years of experience. We examined markets across Europe, covering construction materials, methods, machinery, innovation, and sustainability, and incorporated the latest regulatory changes, including fire safety norms and European sustainability frameworks. By combining diverse perspectives, practical experience, and data-driven insights, we developed a forward-looking view of the European construction market and the trends that will shape competitiveness. Here’s a taste of three of the most critical trends.
Trend 1: Renovation boom
Why it matters: Renovations are becoming the default strategy in many European markets. High interest rates, scarce and expensive land, and rising construction costs are pushing investors and owners to upgrade existing assets rather than build new ones. Renovation projects often benefit from faster or simplified permitting, lower upfront costs, and incentives for energy-efficient improvements.
Key drivers:
- Rising property prices and limited availability make upgrading existing assets more attractive than purchasing new ones.
- Financing, especially for capital-intensive new builds, remains limited due to persistently high interest rates.
- Government grants and energy-efficiency programs support renovations.
Skilled labor shortages make retrofit and renovate-first strategies more practical and, in many cases, more realistic. Renovation remains a cost-conscious and practical choice, especially while skilled labor stays expensive and financing for new builds is limited.
Trend 2: Urban construction shift
Why it matters: In dense cities, growth often comes from upward extensions or infill projects, using underused plots or adding floors. Lightweight structures and easing regulations make this more feasible.
Key drivers:
- Scarce land and planning rules push projects upward or into vacant plots.
- Timber and steel frames address structural limitations.
- Regulatory changes, including at the local level, enable easier rezoning and help overcome fire-protection limitations.
- Major cities like Berlin, London, and Paris have significant extension potential.
Expanding existing buildings can finance modernization, improve energy efficiency, and create additional housing or commercial units without major interruptions.
Trend 3: Low-carbon materials
Why it matters: Sustainability is driving real material innovation. Low-CO₂ options, including timber, green concrete and steel, and bio-based insulation, are increasingly mainstream. They support circular-economy goals through their recyclability and renewability.
Key drivers:
- LCAs and EPDs are now commonly required by regulations.
- Developers, contractors, and investors are aligning with net-zero and low-carbon strategies.
- Government policies (France, Germany) incentivize natural, low-emission materials.
- Innovation in recycled steel, advanced timber, and new concrete blends is accelerating adoption.
Green materials require new methods and planning, but they position projects competitively in a market increasingly focused on sustainability.
Wrapping Up
Europe’s construction sector is finally moving beyond the comfort zone of traditional methods and materials. Rising costs, labor shortages, and sustainability requirements create challenges, but also significant opportunities for early movers. The next five years will finally bring long-awaited growth and a shift toward a greener, more circular, and more retrofit-focused industry.
In this article, we’ve highlighted the top three trends; our full report, however, goes further, covering all 15 trends in detail. It explains what’s driving each trend and assesses its impact in both the short and long term. We encourage you to explore the complete set of trends to see how they could shape your business. Download the report or get in touch with us. We’ll be happy to guide you through it.