A new report forecasts that the volume of construction output will grow by 85% to $15.5 trillion worldwide by 2030. China, the US and India will be leading the way, accounting for 57% of all global growth.
Rider Levett Bucknall (RLB) has sponsored the latest benchmark Global Construction 2030 study, which is the fourth in a series from Global Construction Perspectives and Oxford Economics.
Slowing down of China’s construction market
The findings show an average global construction growth of 3.9% per annum to 2030, outpacing that of global GDP by over one percent. This is driven by developed countries recovering from economic instability, and emerging countries continuing to industrialize.
‘China’s share of the world construction market will increase only marginally as growth slows in the world’s largest construction market by 2030. In comparison, US construction will grow faster than China over the next 15 years – by an average of five percent per annum. Meanwhile, we’re due to see a surge in construction rates in India as it overtakes Japan to become the world’s third largest construction market by 2021,’ says Graham Robinson, the executive director of Global Construction Perspectives.
China construction growth is to slow considerably with a slump in housing, and the first ever decline in housing output for China will be registered this year.
Its transition to a consumer and services driven economy provides opportunity for growth in new types of construction, such as healthcare, education and social infrastructure, retail and other consumer end-markets. The abolition of China’s one-child policy also adds impetus to our long-term view.
India growing rapidly
The construction market in India will grow almost twice as fast as China to 2030, providing a new engine of global growth in emerging markets. India’s urban population is expected to grow by a staggering 165 million by 2030, swelling Delhi by 10.4 million people to become the world’s second largest city.
‘Although globally we see construction growing more rapidly than the overall economy, with developed markets forecast to rebound from their depressed levels, many will not be back to their previous peak levels even by 2030. The current weakness in most emerging countries is likely to be temporary, with higher growth rates soon returning,’ says Mike Betts of Global Construction Perspectives.
In the US, construction growth will tilt towards the southern states, reflecting the region’s greater catch-up potential and higher population growth.
‘Fed lift-off, expected as early as December, could mean a risk for construction growth in key emerging markets – Brazil, Russia, Turkey and India – that could all suffer from significant short-term reductions in construction growth, with some of these countries potentially halving growth,’ says Jeremy Leonard, Director of Industry Services, Oxford Economics.
Indonesia overtaking Japan
He added, ‘Whilst there is an interesting relationship between the top three countries, it is important not to forget that we see significant weakness in Brazil and Russia, but we see extraordinary growth in Indonesia. In Latin America, we expect Mexico to overtake Brazil, whilst Indonesia will overtake Japan by 2030.’
Brazil risks a ‘lost decade’, as the stranglehold of excessive bureaucracy and the Petrobras scandal continues to hold back the economy and investment. The strong demographics that supported Brazilian growth are reversing, leading to stagnation in demand for construction over the long term.
UK construction to lead the way
While Europe won’t recover to reach pre-crisis levels until 2025, the UK is a stand-out growth market, overtaking Germany to become the largest in Europe, and the world’s sixth largest construction market by 2030.
‘Construction is likely to be one of the most dynamic industrial sectors in the next fifteen years, and is utterly crucial to the evolution of prosperous societies around the world. The numbers within this report are huge, which translates into new jobs and creating significant wealth for certain countries across the globe,’ said Fernando A. González, Chief Executive of CEMEX.
RLB Chairman Ann Bentley added, ‘It is evident from the report that construction is rapidly becoming a global industry where the need to provide services and products on a global-scale is clear. RLB has 120 offices in key global cities, and with a diverse, talented and multi-national staff, is in a prime position to take full advantage of these trends shaping the future of construction.’
For more information visit www.globalconstruction2030.com.