Significant increase in voluntary business closures in Belgian construction sector

• Expected 39% increase in auctions in 2024 due to voluntary business closures in the construction sector
• High wage indexation and equipment prices impact profitability

 

The number of auctions in the Belgian construction sector is on the rise again. While it declined in 2023 compared to the previous year, 2024 is showing a significant increase. Recent figures from Troostwijk Auctions reveal that many construction entrepreneurs are opting for voluntary business closures. Higher interest rates on loans, coupled with high indexation of wages and with limiting measures for demolition and reconstruction, are the main drivers of this trend.

Throughout 2023, 95 Belgian construction companies auctioned their business assets due to voluntary business closures. In 2024, halfway through the year, the count already stands at 79. “If this trend continues, we will reach figures close to those in 2022”, says Diethard Huygen, Account Manager at Troostwijk Auctions. The number of companies auctioning their assets due to voluntary business closures is expected to rise to a total of 132 this year, representing a 39% increase compared to 2023.

Construction entrepreneurs adjust equipment fleet per project

The sharply increased mortgage interest rate last year is a major cause. “As a result, it is difficult for many entrepreneurs to invest in new machines. We see that they are now purchasing machines specifically for a project and selling them after completion through so-called contribution auctions, where multiple parties offer lots in one auction. Through the sale, entrepreneurs regain liquid assets to purchase other construction materials needed for new projects”, explains Huygen. In 2024, 21 construction companies have already participated in these contribution auctions at Troostwijk.

High number of bankruptcies in addition to voluntary closures

Belgian statistics agency Statbel reports that the construction industry has recorded 1,094 bankruptcies within five months, a negative record. This figure has never been reached so quickly. Jean-Pierre Waeytens, CEO of the industry association Bouwunie, explains: “The bankruptcy numbers have been high for some time. The high, albeit stabilizing, prices of construction equipment, the exceptionally strong indexation of wages in 2023, and the severely limiting measures for demolition and reconstruction are significant reasons for the high numbers.”

“Especially the low profitability and high costs continue to worry construction entrepreneurs”, Waeytens continues, though he sees a glimmer of hope. “Order books are better filled for the first time in a long while. However, we can only assess at the end of the year whether the positive trend will continue.”

Notable generational differences

Troostwijk Auctions also observes generational differences among entrepreneurs regarding equipment use, not just in construction but across other sectors as well. “While younger generations increasingly opt for leasing and renting, older generations preferred purchasing machines”, says Bjorn Moris, Managing Director at Troostwijk Auctions Belgium. “When many of these assets are on the balance sheet, a company becomes less attractive for acquisition. This is another reason why we often see entrepreneurs choosing to downsize. This is particularly noticeable in the construction sector, where the space for medium-sized businesses is shrinking between the large players and small, specialized SMEs.”

From Belgium to Romania

The choice for online auctions is related to the larger market reach the platform offers. “Both buyers and sellers can tap into a fast, digital network across Europe,” says Huygen. 43% of buyers of construction machinery from Belgian entrepreneurs come from abroad. “The Netherlands is the largest foreign market, followed by Romania. Surprisingly, Romanian construction entrepreneurs purchase more Belgian machines than their counterparts from Germany or France.”

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