2024-08-29

 

• Expected 39% more auctions in 2024 due to voluntary business closures in the construction sector

• High wage indexation and prices for construction equipment squeeze profitability

 

 

The number of auctions in the Belgian construction sector is rising again. Whereas the number declined in 2023 compared to the year before, 2024 shows a sharp increase. This is evident from recent figures by Troostwijk Auctions, which show that many construction entrepreneurs are opting for voluntary business closures. Higher interest rates on loans, combined with high wage indexation and measures for demolition and rebuilding, are underlying causes.

 

Throughout 2023, 95 Belgian construction companies auctioned their business inventories due to voluntary business closures. In 2024, after just half a year, the counter already stands at 79 entrepreneurs. “If this trend continues, we will again approach the figures from 2022,” says Diethard Huygen, Account Manager at Troostwijk Auctions. It is expected that the number of companies auctioning due to voluntary business closures will rise to a total of 132 this year, a 39 percent increase compared to 2023.

 

Construction Entrepreneurs Adjusting Equipment Per Project

The sharply increased mortgage interest rate last year is a major culprit. “As a result, it is difficult for many entrepreneurs to invest in new machines. We notice that entrepreneurs increasingly purchase machines specifically for a project and afterward sell them again through so-called consignment auctions where multiple parties offer lots in a single auction. Through these sales, entrepreneurs regain liquidity for purchasing other construction materials needed for new projects,” says Huygen. In 2024, 21 construction companies have already participated in these consignment auctions with Troostwijk.

 

Besides Voluntary Business Closures, Also Many Bankruptcies

The Belgian statistical office Statbel reports that the construction industry, with 1,094 bankruptcies after five months, is setting a negative record. Never before has this number been reached so quickly. Jean-Pierre Waeytens, head of trade association Bouwunie, explains: “The bankruptcy figures have been high for some time. The high, although stabilizing, prices of construction equipment, the exceptionally strong wage indexation in 2023, and the heavily restricted measures for demolition and rebuilding are major reasons for these high numbers.”

 

“Especially the low profitability and high costs continue to worry construction entrepreneurs,” Waeytens continues, although he sees a glimmer of hope. “For the first time in a long while, the order books are better and filled for longer. But only at the end of this year can we determine whether the positive trend continues.”

 

Generational Differences Stand Out

Troostwijk Auctions also notices generational differences among entrepreneurs regarding machine usage, not only in construction but also in other sectors. “Where younger generations increasingly choose leasing and renting, older generations preferred buying machines,” says Bjorn Moris, Managing Director at Troostwijk Auctions Belgium. “When many of these business assets are on the balance sheet, a company becomes less attractive for acquisition. This is another reason why we increasingly see entrepreneurs choosing to slim down. Especially in the construction sector, where the space for medium-sized companies is shrinking between the large players and small, specialized SMEs.”

 

From Belgium to Among Others Romania

The choice for online auctioning is related to the broader sales market that the platform offers. “Both the buyer and the seller can tap into a large digital network throughout Europe,” says Huygens. 43 percent of buyers of construction machines from Belgian entrepreneurs come from abroad. “The Netherlands is the largest foreign market, followed by Romania. Surprisingly, Romanian construction entrepreneurs buy more Belgian machines than their colleagues from Germany or France.”