Andorra Construction Faces Labour Shortage and Land Scarcity Amid Housing Boom

Andorra's construction sector, a key driver of economic growth in the first half of 2025, faces mounting structural challenges that threaten its long-term viability despite surging housing demand.

Business leaders highlight two critical bottlenecks: a severe shortage of skilled labour and a lack of developable land. According to the latest business climate survey from the Andorran Chamber of Commerce (CCIS), 56% of construction firms report serious difficulties recruiting workers, the highest rate across all economic sectors. This persistent issue affects masons, labourers, technicians, and specialists alike, limiting the industry's ability to meet rising residential needs.

Contributing factors include an ageing workforce, limited local specialised training, and hurdles in attracting foreign talent due to administrative restrictions and living conditions in the principality. Companies emphasise that the problem is not a lack of work, but an inability to carry it out.

Compounding this is the scarcity of urbanisable land, tied closely to regulatory constraints. Temporary suspensions of building licences—imposed during reviews of municipal urban planning guidelines (POUP) and communal load studies—have created administrative gridlock. These halts prevent new projects from starting and extend timelines unsustainably, fostering market tensions where demand far outstrips supply.

Activity indicators reflect this slowdown. Gross value added (VAB) growth has weakened compared to prior years, job creation has plateaued, and revenues are moderating. The CCIS survey shows business sentiment dipping to a net positive of +25 points, down from +36.5 points in 2024. Regulatory uncertainty around POUP revisions further deters investment, as promoters hesitate amid shifting rules.

This situation underscores a stark paradox: acute housing shortages amid high citizen concern, yet barriers blocking new supply. Residential construction remains somewhat buoyed by easier credit access, population growth, rental market pressures, and the government's new first-time buyer guarantee programme. However, non-residential building and public works show little promise for near-term recovery.

Firms anticipate moderate growth ahead, supported by a solid pipeline of contracted work, but warn of stagnation without swift action on labour and permitting issues.