Newbuilds are no longer the dominant project type for architects in Europe. Renovation and transformation now make up an equally large share of architectural commissions – and that impacts both business and design. In this article, we explore industry figures and dive into how different project types influence profitability in European architecture practices.
Architecture is About More Than Margins
Before we dive into the data and trends, let’s remember one thing: architecture is about much more than margins. It’s about form, function, responsibility and identity. But the finances set the framework for everything else.
That’s why it’s valuable to understand how different types of projects – from residential to renovation and public commissions – can affect your ability to run a profitable practice.
The European Architecture Market: Small firms, Big responsibility
The European architecture sector is expected to reach €26 billion in turnover by 2024 – a 24% increase since 2020 (source: ACE Sector Study 2024). The number of architects is now 580,000, but the industry is highly fragmented: 71% of firms are sole practitioners, and 25% have just 2–5 employees.
Italy, Germany and Spain have the highest number of architects, but the profession varies widely between countries – from building traditions to legislation and the architect’s role in the process.
Italy alone has around 152,000 architects and Germany 118,000, followed by Spain (~48,000), the UK (~43,000), and France (~30,000). These five countries account for nearly 70% of all architects in Europe.
Residential Dominates – But Is It the Most Profitable?
Private residential projects are by far the most common project type among European architects. A full 89% work on residential projects, which account for 56% of the average firm’s income (source: ACE Sector Study 2022).
While housing projects provide a steady volume of work, they’re not always the most profitable. They’re often small, with tight budgets and tough competition. But they’re well suited to smaller practices with lean operations and close client contact.
Larger firms tend to diversify – combining residential work with commercial, public or specialised commissions. This combination is often what makes their business model sustainable.
The remaining 44% of revenue in an average firm comes from sectors such as public buildings, commercial work and renovation.
Renovation and Transformation Are On the Rise
There’s a growing trend towards renovation and transformation of existing buildings, driven in part by climate concerns.
According to ACE’s 2024 study, 49% of current projects involve renovation, while 40% are newbuilds and 11% are preservation. The shift is clear: working with existing buildings is becoming the new normal.
EU policies such as the Green Deal and the New European Bauhaus are accelerating investment in existing building stock. This opens new opportunities – both professionally and financially.
Transformation projects are often more complex and consultancy-intensive, which can increase billable hours. But they also require solid project control and experience to avoid pitfalls.
Did you know that many architecture firms use Milient Project Flow to stay on top of margins and time spent on these types of projects? The software gives you insight and control – so you can handle even the most complex projects with confidence. Try an interactive demo.
Public Projects – Stable but Complex
Public and institutional buildings are often seen as prestigious and stable. While that may be true, the competition is fierce and the procurement processes can be long and demanding – often with price as a low priority.
For firms with the capacity, experience and quality documentation, public projects can still be a smart long-term move. They offer predictability and build reputation – often balancing out more volatile project types.
Profitability Under Pressure: Small Margins, High Costs
Even as the market grows, profitability is not necessarily increasing. In the UK, the RIBA Benchmarking Report 2023 shows falling profit margins despite higher turnover. The average operating margin is around 7%, with salaries as the largest cost – typically more than half the budget.
It’s a similar story in the Nordics. In Norway, about 30% of member firms in the national association went into deficit in 2022. In 2024, only 18% reported increased turnover in the previous six months (source: Arkitektbedriftene).
In Sweden, one of the region’s most mature markets, profitability is also under pressure. A 2024 survey from Sveriges Arkitekter found that 39% of firms had seen falling profitability compared to the year before. Another 43% expected further decline – a clear contrast to the optimism seen in 2022.
The picture is clear: practices are working hard, but fewer are seeing satisfactory returns.
Are Smaller Firms More Profitable?
Several studies suggest that small firms often achieve higher profit margins. Lower fixed costs and more flexibility play a role. A solo practitioner working from home can keep a tight grip on hours and spending – and earn a healthy profit.
Larger firms face more admin, higher payroll and overheads. They may have higher revenue, but thinner margins. However, they’re also more likely to land larger, more complex projects – which can support growth and resilience.
Sustainability – A Business Opportunity?
"The greenest building is the one you don’t demolish," the saying goes. It makes sense – politically and professionally. More clients are demanding verified sustainability skills, and architects with experience in reuse, circular design and energy analysis are in demand.
But it comes at a cost. Sustainable projects are often more complex and it’s not always clear how to price that extra effort. Still, for firms with future ambitions, sustainability is more than a value – it’s a strategic investment.
Key Takeaways
There’s no single answer to which projects are most profitable – but some patterns are emerging:
- Residential projects provide steady volume but require efficiency to be profitable.
- Renovation and transformation are growing – and can be lucrative if managed well.
- Public projects offer stability but demand patience and capacity.
- Small firms can outperform large ones – with tight control.
- Sustainability is both a value and a business opportunity.
The financial picture varies by country and sector. But by looking at revenue mix, risk and margin pressure, we can start to see which types of projects create the right conditions for profitability.
Financial sustainability enables design quality, long-term thinking and a healthy work culture. By choosing projects with both heart and mind – and supporting your decisions with industry data and firm-level insight – architecture practices can stay resilient in challenging times.
