Strong activity in infrastructure is expected to continue to drive positive conditions in the world’s construction markets, a new report has found.

Based on a survey of 3,040 firms from across the world, the fourth quarter (2023) edition of the Global Construction Monitor published by the Royal Institute of Chartered Surveyors has provided a snapshot of current market conditions and near-term expectations across world construction markets.

Overall, the report found that the composite Construction Market Activity Index remained unchanged at +10 in the fourth quarter.

The index measures current market conditions and twelve-month expectations across the construction sector for residential building workloads, commercial/non-residential building workloads, civil construction workloads and profit margins.

At its current level, the index remains in positive territory overall.

Index scores range from +100 to -100. Any score above 0.0 indicates a net positive result.

Leading the way is the Middle East and Africa region (MENA), where expectations are particularly buoyant in countries such as Saudi Arabia, Mauritius, UAE, Oman and Nigeria.

Activity is particularly strong in Saudi Arabia, where the country is undertaking a Vision 2030 initiative to reduce its dependence on oil, diversify its economy and develop public service sectors.

As a result of that initiative, the country has more than 5,200 ongoing major construction projects across the areas of transport, renewable energy, housing and tourism. This includes a whopping $US500 billion smart city initiative known as Th Line.

In other regions, the index remains in positive territory in the The Americas and the Asia Pacific region despite the calamity in China’s real-estate market.

However the index is in negative territory in Europe as expectations are being dragged down on that continent as rising interest rates and higher building costs are leading to subdued volumes of approvals in new housing construction.

According to the survey, markets are particularly weak in Germany, Romania, France and Spain.

In terms of sectors, infrastructure remains the strong driver of construction demand as much of the world is experiencing a robust flow of major civil projects.

This has thus far more than offset the impact of subdued residential conditions which have taken hold across much of the developed world on account of higher interest rates.

The survey also found that, on a worldwide basis:

  • Cost pressures have eased, with twelve-month cost projections having eased since their peak in the middle of 2022 (see chart below); and
  • Financial constraints were sighted as the most significant impediment to higher levels of activity followed by cost of materials and shortages of skills and labour.

The latest survey comes as forecasters expect the overall construction market to broadly hold up in 2024.

In a research briefing issued on January 8, Oxford Economics said that it expects the overall dollar value of construction work done across calendar 2024 to edge up by 0.5 percent to reach $US9.6 trillion.

This is happening as the strong infrastructure investment referred to above continues to offset what Oxford says is will now be a weaker than expected recovery in residential and non-residential building markets.


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