The German construction industry, known for a comparatively low degree of digitalisation, faces a potentially comprehensive transformation through the application of Artificial Intelligence. According to analyses by the international credit insurer Atradius, AI could fundamentally modify individual processes and significantly increase the sector's efficiency in the coming years. David Engelhardt, Manager Risk Services at Atradius, emphasises that AI's performance in specific areas already surpasses human capabilities, even if the technology does not yet independently construct buildings.
Particularly in a currently strained market environment, the use of AI proves to be an important competitive factor. Atradius identifies the greatest potential in data- and document-intensive construction processes such as planning, costing, tendering and control. Mr Engelhardt stresses that the leverage for AI applications in the construction industry is likely to be greater than in many other sectors. AI already enables the swift creation of diverse design variants and visualisations, as well as the assessment of hundreds of concepts based on predefined criteria such as building regulations, building volume or energy efficiency.
Significant efficiency gains are also expected in the administrative domain of the construction industry through AI. Many processes are based on the processing of texts, data and documents, including bills of quantities, bids, supplementary orders, invoice reviews and construction files. Here, AI-supported applications can, for example, assist with calculations, automate invoice verification, or comprehensively document construction sites using photo and sensor data. Drones, cameras and other sensors also generate data volumes that AI can analyse for progress monitoring, quality assurance and occupational safety.
Beyond short-term efficiency improvements, AI could also structurally reshape the construction industry. The deployment of construction robots for simple tasks to counteract the shortage of skilled workers, or the coordination of processes between the office and the construction site by AI agents – from bid preparation to scheduling and coordination with subcontractors – are conceivable. Digital twins could also identify risk factors such as weather influences, delivery delays or cost overruns early on. Mr Engelhardt highlights that the actual bottlenecks lie less in the technology and more in the areas of data, competence and regulation. Current efficiency gains are already achievable, while the structural upheaval is likely to gain momentum in the next five years.
This technological perspective encounters an industry that has stabilised after difficult years but continues to face pressure. Stress factors include inflation, a shortage of skilled workers, high material costs and credit risks. Positive signals are emerging in residential construction: in June 2026, the number of building permits increased by 13.8 percent to 21,600 dwellings compared to the same month last year. In the first half of the year, a total of 126,300 dwellings were approved. However, Mr Engelhardt points out that this starts from a very low construction volume in previous years and the federal government's projected completion figures have not yet been reached.
Supportive impulses for the sector come from civil engineering, particularly through projects in railway infrastructure, energy and heating networks, underground pipeline construction, data centres, and bridge and other infrastructure measures. Only road construction shows weaker development, as the infrastructure special fund has not yet triggered broad effects in order books. The insolvency situation remains tense: between January and May 2026, 735 insolvencies were registered in the construction industry (previous year: 744). According to Atradius, significantly higher damage sums are observed in individual insolvencies, indicating an increasing impact on larger companies. The 6.2 percent increase in non-payment reports compared to the same period last year underscores continued strained payment behaviour.
For 2026, Atradius forecasts a 1.6 percent decline in German construction output, which is, however, smaller than the declines of 3.7 percent in 2024 and 3.4 percent in 2025. Weak economic growth, high energy prices, complex approval procedures, bureaucratic hurdles, increased building material prices and the persistent shortage of skilled workers continue to be cited as burdensome factors. From 2027, Atradius expects a noticeable recovery. The financial leeway created by the federal government's special fund is likely to gradually take effect. Atradius anticipates that German construction output will recover by five percent annually in 2027 and 2028, with robust growth rates in all sub-sectors.
