Industry Trend Analysis - Average Market Performance Informed By Low Risks, Low Rewards - SEPT 2017

BMI View: Germany ' s average performance on our Risk Reward Index is weighed down by a below-average rewards profile, as weak construction sector growth and a mature infrastructure base erode the long-term attractiveness of the country's construction industry. Conversely, the country's stable governance, clear regulatory regime, and strong legal framework all feed an attractive risk profile that serves to keep Germany above average relative to its North American and Western European peers.

Risk/Reward Snapshot
Germany and NAWE Region Infrastructure Risk/Reward Index
Source: BMI Infrastructure Risk/Reward Index. Scores out of 100, Higher Score = More Attractive Market

Global And Regional Ranks

  • Regional rank (out of 17): 7

  • Global rank (out of 105): 19

Key Features and Latest Updates

  • Germany benefits from one of the most attractive legal frameworks with regard to contract enforcement in the region, a fact which ameliorates the risk associated with investing in the country's infrastructure sector.

  • With a weak construction sector growth outlook and a suboptimal demographic profile, Germany scores relatively poorly on the Rewards component of our index. Having said that, the recent influx of refugees since 2015 is likely to drive demand for additional infrastructure investment, which informs our view that these scores may rise in the future.

  • The fundamentals of Germany's economy remain sound and serve to support the country's otherwise middling Rewards scores, with a solid economic foundation increasing the likelihood of continued infrastructure funding and generating demand for additional infrastructure.

  • In line with its open and transparent regulatory structure, Germany is home to a vast array of international companies like Netherlands-based Royal Bam Group, Austria-based Strabag, and Spain-based Iberdrola, which compete with domestic heavy weights such as Hochtief and Zueblin. Our Key Projects Database reveals that over half of market share in Germany's construction industry is held by foreign players. We believe that international companies will continue to gain market share in Germany, largely on the back of an ambitious government investment agenda that will seek to attract private capital into infrastructure, particularly in the road sector.

RRI Matrix Breakdown
Germany & NAWE Region Infrastructure Risk/Reward Index By Component
Source: BMI Infrastructure Risk/Reward Index. Scores out of 100, Higher Score = More Attractive Market