Building Prosperity: Circular construction opportunities could offer €363 billion

Adopting circular economy principles, such as improving product design and material sourcing, could offer €363 billion in revenue opportunities across the value chain, according to a new report from the Ellen MacArthur Foundation.

The ‘Building Prosperity’ report identifies the construction sector as the largest contributor to Europe’s material footprint, accounting for over 35 per cent of total waste. Currently, 5.5 tonnes of construction materials are consumed per person each year.

This resource-intensive model exists alongside significant inefficiency, with approximately eight per cent of European office space sitting permanently vacant and over 20,000 km² of brownfield sites lying dormant across six European Union (EU) countries.

While the EU’s Circular Economy Action Plan provides a regulatory framework for a transition to a circular construction sector, the report notes that there is still a need to close the gap between policy ambition and implementation, which will require action from businesses, policymakers, and investors.

According to the European Environmental Agency (EEA), the current European economy is 11.5 per cent circular based on material recovery and waste reduction. Although efficiency improvements have been made, they have been counteracted by rising consumption rates and a lack of focus on reuse and repair models.

Economic and environmental benefits of circular construction

According to the report, material-efficient design combined with low-impact materials could save developers up to 20 per cent in project costs, while reducing the demand for virgin materials by 250 million tonnes.

For material suppliers and component manufacturers, the transformation represents a particularly lucrative prospect. The report projects "a potential revenue pool of over €250 billion — driven by a five-fold increase in the prefabricated construction market, and an increase in demand for modular building systems and lower-impact materials."

A reduction in building material demand would also be essential, with the report recommending increasing the use of bio-based materials, implementing construction design efficiencies, and shifting from single-family to multi-family housing.

Beyond direct revenue, transitioning to a nature-focused, circular economy could provide a further €158 billion in wider economic benefits, including €22 billion in savings for households and businesses through more efficient infrastructure networks.

The report also suggests that this transition has the potential to create up to 700,000 new jobs by 2030 in the EU, spanning sectors from repair and remanufacturing to regenerative agriculture.

The environmental benefits are equally significant, with potential carbon emission reductions of 131 Mt of carbon dioxide annually by 2035 - equivalent to approximately 5 per cent of the EU’s total CO2 emissions.

Implementation pathway for stakeholders

The report outlines recommendations for key stakeholders to accelerate the adoption of material-efficient design and low-impact materials across Europe’s built environment.

For EU and national policymakers, a crucial first step is leveraging upcoming revisions to policy instruments such as the Construction Products Regulation and Green Public Procurement criteria. These revisions present opportunities to strengthen circular economy requirements for the built environment beyond waste management.

The report also recommends that policymakers design economic instruments that incentivise circular construction projects, and invest public funds into research, development, and innovation for systemic solutions.

City-level policymakers and local authorities are encouraged to work with industry to strengthen secondary material value chains and ensure that publicly funded construction projects set the standard for nature-positive outcomes.

Commenting on these recommendations, Gino Van Begin, Secretary General of the ICLEI - Local Governments for Sustainability, said: “This report underscores the clear benefits of nature-positive and circular implementation in our urban areas and the roles of policymakers at all levels to work with finance, developers and businesses.”

For businesses in the build environment supply chain, the report suggests joining or establishing a coalition of practitioners to overcome industry fragmentation and deliver collecting circular economy services.

Material suppliers and construction companies are encouraged to adopt design-build-operate-maintain (DBOM) contracts that incentivise material efficiency and integrate circular principles into their business models.

Digital technology is also identified as a key enabler for material efficiency, with the construction sector currently lagging behind others in digital adoption. The report highlights the potential of Building Information Modelling (BIM), AI for predicting material reuse patterns, digital product passports, and additive manufacturing to ‘reduce waste and optimise construction processes’.

Borja Rogriguez, Deputy Mayor of Vitoria-Gasteiz, Spain, added: “The strategies in this report are robust and align with our circular priorities, including rehabilitating old housing as well as using demolition materials and bio-based materials in new developments.

“As such, we welcome this report’s clear and actionable set of recommendations to accelerate the transition towards a nature-positive, circular economy that benefits all stakeholders within our shared built environment.”