Construction, like many other industries, is driven by demand.An influx of urbanization, due to greater employment opportunities and a better standard of living, has set a new wave of productivity in the construction industry.
A growing city needs more development and expansion to provide residential, commercial, and industrial spaces. Moreover, what’s immediately apparent in a booming city is the emergence of the mighty crane. From self-erecting cranes to tower cranes, more cranes in the sky signal economic growth.
Indeed, the construction industry is projected to continue to be big business.
The Chartered Institute of Building (CIOB), in conjunction with Global Construction Perspectives and Oxford Economics, recently released their 2030 Global Outlook Report for the global construction industry.
The report headlines the growth of the global economy covering, of course, the global construction market. By 2030, CIOB forecasts specific markets will experience far more activity than others. But which regional markets will claim the lion’s share of the growth?
Here is a snapshot of the largest and most active international markets for construction from the report.
Despite considerable challenges such as trade tensions, China’s economy promises growth. This is especially true within the construction segment. Growth in consumer spending, migration from rural to urban areas, and continued industrialization are all contributing to an increase in construction expenditures in China.
The economic growth of China in 2019, forecasted at six percent, is buoyed by outbound tourism, growth in consumer demand and infrastructure construction. While residential projects are projected to slump, construction expenditures will continue to occur throughout commercial and infrastructure projects.
By 2030, China, alongside the US and India, will account for 57 percent of all global construction growth.
2. United States
From 2012 to 2015, the United States had a construction renaissance. Total construction expenditure was a spirited effort, advancing 11 to 14 percent each year.In more recent years, this expenditure has slowed but continues to mature.
The 2019 construction outlook for the US is estimated at US$808 billion, a three percent increase. This deceleration in the rate of growth is due to several challenges such as rising interest rates and higher material costs.
These challenges are balanced by strong economic fundamentals like declining unemployment, the easing of bank lending standards, and higher state financing for public works and infrastructure projects.
Despite the modest growth, the US construction market is set to outpace other regional markets such as Canada and the UK by 2030.
A rapidly expanding population is driving significant construction growth in India.
This will require unimaginable infrastructure development. Between now and 2030, India must build 170 million properties to accommodate its vast population. That’s a staggering 31,000 homes yet to be built per day.
At this continued pace, by 2030, India is expected to become the fastest growing construction market, spending US$13.1 trillion on construction. This will mean India will overtake Japan as the third largest global construction market.
In Southeast Asia’s emerging markets, Indonesia stands out as one of the fastest growing construction markets. In 2015, Indonesia was ranked in eleventh place. By 2030, Indonesia will overtake Japan to claim the fourth largest global construction market.
Several years of robust expansion, emphasized by social infrastructure builds, new transport links, and recent cuts in interest rates have propelled Indonesia’s construction growth.
The construction landscape in Indonesia is dominated by state-owned enterprises, followed closely by private sector participation and rapid real estate growth. Indonesia’s construction growth rate by 2030 is projected at six percent per annum or higher.
Japan is expected to drop two spots, falling to become the fifth placer in the global construction rankings. This is due to significant challenges ahead, especially a shrinking population resulting in a sharp decline in housing output. These challenges will affect Japan’s long-term growth.
Japan’s shrinking population is so severe, that until 2025 the country’s housing production will experience close to zero growth. After 2025, Japan’s housing market is forecasted to fall sharply.
The future of Japan’s construction market will rely heavily on infrastructure projectssuch as the expansion of renewables. The demand for renewable energy can be attributed to the 2011 Fukushima nuclear accident, which saw the nation effectively retire its nuclear industry.
The global construction market has a bright outlook. Certain actors such as India and Indonesia have positioned themselves for considerable growth. In the same way, countries such as Japan must address significant challenges ahead to avoid stagnation in their construction activity.
Hermann Buchberger is the Founder and CEO of Active Crane Hire (ACH). He’s taken the company from start-up to Industry Leader offering the largest fleet of construction cranes in Australia. ACH launched a new type of crane previously unheard of in the Australian market: electric tower cranes. The company’s infrastructure and associated services now comprise a fleet of trucks and trailers, a crane-rigging team, mobile crane technicians, a fleet of service vehicles, and an extensive range of crane spare parts.