Conditions in the world’s construction markets are at their strongest level in two and a half years, a survey of more than 2,300 firms has revealed.

(Empire State Building: image from Dllu via Wikipedia)

The Royal Institute of Charted Surveyors (RICS) has released the December quarter edition of its Global Construction Monitor Report.

Overall, the report indicates that construction markets have strengthened following a dip in the September quarter.

On a worldwide basis, RICS reports that its Construction Sentiment Index increased by 8 points from +9 in the September quarter to +17 in the December quarter.

This represents the highest reading since the early part of 2022.

The Index is constructed by taking an unweighted average of current and twelve-month expectations regarding residential workloads, non-residential workloads, infrastructure workloads and profit margins.

Leading the way is The Americas, where the index surged from +18 to +35.

In the United States specifically, the index rose from +19 to +40.

Whilst it is possible that the election of Donald Trump has been a factor in the improvement, the survey results point to more immediate expectations of a rise in infrastructure workloads.

In addition, building firms are expecting stronger forward order books on the back of monetary policy easing by the US Federal Reserve – something which is further indicated by an uptick in new business enquiries that was reported by survey participants.

Meanwhile, sentiment also improved albeit from a much lower base in the Asia Pacific.

This occurred on the back of strong and improving readings in India, Sri Lanka, Singapore, Malaysia and Australia as well as an easing in pessimism in China – where there are tentative signs that the real-estate market may be stabilising.

Elsewhere:

  • Conditions remain buoyant the Middle East and Africa as Saudi Arabia and the UAE remain standout global performers whilst the index for South Africa surged from +17 to +29 – the highest result since the RICS survey was formed in 2019.
  • In Europe, the picture remains flatter even though the overall index (+6) remains in slightly positive territory. Whilst Spain appears to be a standout performer (+64), negative readings are evident in France and Germany.

The latest report comes amid expectations for stronger activity in world construction markets in 2025.

In a research briefing issued in January, Oxford Economics said that it expects overall construction activity levels to rebound over the year as stronger conditions outside of China offset the ongoing downturn in Chinese real estate.

According to Oxford, key themes throughout 2025 will include:

  • Significant growth in activity levels across emerging Asian countries (outside of China) as favourable population and demographic trends drive activity in Indonesia, the Philippines and Vietnam whilst government investment in transport and utility projects underpins robust activity levels in Singapore and the Philippines.
  • A recovery building activity levels as advanced economies steadily lower rates over 2025 and a combination of lower financing costs and ongoing housing shortages in many advanced economies drives renewed construction work.
  • A continued shift in focus regarding civil infrastructure work from public transport projects to utilities as electricity networks move toward decarbonisation and the ramp up in data centre construction activity continues to boost electricity demand.

Outside of activity levels, the RICS survey asked construction firms about factors which are inhibiting further growth along with expectations for costs moving forward.

In terms of constraints, respondents indicated that significant factors include financial constraints, material costs, skills shortages, insufficient demand and planning /regulation considerations.

In terms of costs, respondents overall expect construction cost escalation of around 5 percent over the next twelve months.

 

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