Global Construction Outlook

Key takeaways:

• Oxford Economics estimate the global construction market was valued at US$10.7 trillion in 2020; US$5.7 trillion of this output was in emerging markets.
• The global construction market is expected to grow by US$4.5 trillion between 2020 and 2030 to reach US$15.2 trillion with US$8.9 trillion in emerging markets in 2030.
• Regional construction growth is expected to be highest in Sub-Saharan Africa followed by emerging Asia.
• Four countries – China, India, US, and Indonesia – to account for 58.3% of global growth in construction.
• Residential construction is predicted to drive short-term recovery while infrastructure spending propels medium-term outlook.
• Urbanisation expected to turbo charge growth in emerging markets. Overall growth of the world’s population could add another 2.5 billion people to urban areas by 2050 with almost 90% of this happening within Asia and Africa.
• Infrastructure development globally is heavily dependent on public spending. This means investment relies on the ability of governments to finance spending although long-term stable and index-linked returns from infrastructure are generally well matched to the needs of large superannuation funds.

Construction will be an economic driver over the medium term with growth averaging 4.4% between 2020 and 2025 –  higher than the estimated growth in both the manufacturing and service sectors. Over the period 2020 to 2030 growth in construction output is projected to average approximately 3.5% per annum.

Global headline sector growth

Growth regionally is expected to be highest in Sub-Saharan Africa with average annual growth of 5.7% to 2030 as rising populations and rapid urbanisation provide powerful growth drivers — particularly in East Africa and West Africa.

Growth however will be concentrated in a small number of countries. Just four countries — China, India, US and Indonesia — account for 58.3% of global growth in construction between 2020 and 2030. The top ten markets account for almost 70% of the US$4.5 trillion growth over the next decade.

Contribution to global construction growth 2020-2030

In 2021, residential construction activity is forecast to be the fastest growing sector globally at 7.1%. The residential sector accounted for 44% of total global construction in 2020 making it is the largest sub-sector and a key driver of global growth.

Construction of infrastructure will grow at 6.8% in 2021 and is predicted to be the fastest growing sub-sector to 2030 with expected average annual growth of almost 4%. This will be fuelled by emerging economies looking to develop energy, transport networks, sewage and waste systems, and other large-scale projects.

Growth in infrastructure construction 2020-2030

The level of government debt influences its capacity to spend on infrastructure construction; debt as a percentage of GDP is an indicator of long-term ability to finance developments.

Ability to finance public investment, 2020