Macro Strategist: AI to Boost European Productivity
Macro strategist Darius Dale predicts that AI adoption will drive significant productivity and earnings growth in Europe, helping close the gap with the US. He argues this will create "meaningful tailwinds" for investment. For the built environment, this could mean European construction and real estate firms see margin expansion of 200-500 basis points and a shift in capital flows towards European property and infrastructure.
The productivity gap between the European Union and the United States has become a structural issue, widening significantly in recent years. In 2024, the EU's average hourly labor productivity was $72, 38% lower than the US average of $116. This divergence has accelerated since 2019, with US labor productivity growing by 9.7% compared to just 2.4% in the EU, a trend partly driven by the US boom in digital and AI technologies. In response, the European Commission launched the 'Apply AI' strategy in October 2025, aiming to accelerate AI adoption across strategic sectors, including construction, and enhance the EU's technological sovereignty. The strategy promotes an "AI first" policy and a "buy European" approach, particularly for the public sector. This initiative is part of a broader effort to remain competitive with global leaders like the US and China. The European construction industry's AI market is projected to grow from $1.80 billion in 2026 to $11.38 billion by 2034. However, adoption remains limited, with a 2025 RICS report finding that 45% of construction firms have no AI use at all. Key barriers include a lack of skilled personnel, challenges with systems integration, and high implementation costs. In the Netherlands, the government has presented a national vision for generative AI, emphasizing safe and fair development that serves human well-being. This includes the GPT-NL initiative, a homegrown AI model backed by a €13.5 million investment, designed to reduce reliance on foreign technology and adhere to Dutch and European values. The government is also developing a National AI Delta Plan to bolster infrastructure, encourage adoption, and ensure strategic control over the technology. Dutch startups are already applying AI to navigate complex building regulations and zoning plans, aiming to streamline the notoriously slow permit processes that can delay housing projects for years. At the municipal level, Amsterdam is actively testing generative AI in its urban planning processes to speed up workflows and create rapid scenario models, while also exploring AI for footpath accessibility and crowd management. The European Green Deal is a significant driver for AI adoption in the built environment, framing climate neutrality as an industrial and regulatory project. AI is seen as a critical enabler for optimizing energy consumption in buildings, integrating renewable energy, and promoting a circular economy through innovations like material passports, which are being developed in EU-funded projects.
