What are the prospects for 2021?
According to an analysis of the sector conducted by the Construction Confederation, the economic activity of the construction sector in Belgium declined by about 5% last year overall. For 2021, a recovery is in the cards but one whose scope will depend on the rhythm of a number of major Belgian construction projects, such as the new canal lock at Terneuzen, the Oosterweel link under the Scheldt river in Antwerp, the RER Regional Express Network and the tram system of Liège. The Construction Confederation is also counting on an increase in public investments.
Leaving aside these major projects, the companies active in the construction sector clearly remain under pressure, with a level of activity that is below what we were seeing prior to the crisis. Another factor is the increase in prices for raw materials, which is causing difficulties for the companies.
Here are the most important trends for the construction sector in 2021:
1. Recovery for new housing
2. Stabilisation for non-residential buildings
3. Excellent prospects for renovation
Rather favourable conditions
In light of these evolutions and forecasts, the conditions for building or renovating a residence are particularly favourable:
- The disposable income of households increased last year.
- Interest rates for mortgage loans have never been so low.
- The generalised reduction of VAT to 6% for demolitions-reconstructions which was introduced at the start of this year will continue to apply through 2022.
Watch out for the rise in raw material prices
Thinner order books
An increase in the risks of unpaid invoices and bankruptcies
The successive lockdown periods have weighed heavily on the companies. Euler Hermes believes that one company in five in Belgium is at risk of experiencing a cash-flow crisis in 2021. Not having been able to entirely offset the losses suffered during the months of lockdown, 31% of construction companies are encountering liquidity problems and will have more and more difficulties paying their short-term invoices, dragging the suppliers and the entire supply chain down with them.
While a large number of bankruptcies were avoided in 2020 thanks to the support measures introduced by the government authorities, Euler Hermes expects a rise in bankruptcies in the second half of 2021.
Protect your company against payment defaults
Protecting your company has never been as important as it is today. In this crisis period, you are never safe from payment defaults or the bankruptcy of one of your customers, and quite often these risks generate a snowball effect.
We monitor the financial health of your customers
We take care of the collection of your unpaid invoices
And we compensate you when your customers don’t pay
Do you want to know more about our trade credit insurance solutions?
Feel free to contact our team for a tailor-made solution. Our experts will be delighted to help you.