The world’s construction market is set for a decade long boom which will deliver more than a trillion dollars’ worth of opportunities despite COVID, the latest report suggests.
Releasing its latest report, Oxford Economics says it expects the dollar value of Gross Value Added (GVA – output value less inputs) in worldwide construction to grow by $US1.5 trillion to go from $US4.3 trillion in 2019 (constant 2015 prices) to $US5.8 trillion by 2030.
According to the report, between 2019 and 2030:
- China will remain the single largest construction market, reaching almost $US1.4 trillion in value over the next decade (Gross Value Added)
- India’s construction output will double and reach almost $US400 billion
- Almost ten percent of global growth will occur in ASEAN regions, with Indonesia set to become the fifth largest market.
- Sub-Saharan Africa will be the fastest growing region, with Nigeria moving up from being the 27th largest market in the world in 2019 to the eighth largest market in 2030.
- The developing world will gain market share at the expense of the developed world, increasing its share of the global construction market from 48 percent in 2019 to 59 percent in 2030.
- Within the developed world, Angloshpere countries will outpace Europe and Japan. All up, construction output in the US, UK, Canada, Australia and New Zealand will grow by 21 percent.
In its report, Oxford acknowledges that the industry has been impacted by COVID-19.
Worldwide, it says construction activity declined by around ten percent over the first half of the year as the industry felt the effect of lockdowns and restrictions.
This was particularly the case in places such as France, Italy and Spain, where COVID has shaved 26.0 percent, 21.8 percent and 20.6 percent in activity respectively between the fourth quarter of last year and the June quarter just passed.
Going forward, Oxford expects a rebound which will see activity return to pre-COVID levels in China, the United States and India by the first quarter of next year.
Construction will recover more quickly compared to other sectors, Oxford says, as the nature of the work makes social distancing more practical and the building sector is more reliant on investment as opposed to consumer spending.
Countries such as France, Spain, Italy, Brazil and the United Kingdom, however, will not recover to pre-COVID activity levels until 2022.
In Australia, BIS expects the construction sector to contract by 10.4 percent in 2020 followed by 7.1 percent growth in 2021.
Longer term, Oxford says opportunities will emerge in several areas.
Leading the way will be civil construction, which accounts for 30 percent of global construction activity.
Growth in this area will be driven by massive levels of investment as emerging markets continue to build out transport networks, water and sewerage systems and other large-scale projects which are needed for economic development.
Behind that, demand for housing will be driven by ongoing movement from rural to urban areas – especially in developing countries.
On Australia specifically, Oxford says the country will buck the trend among other developed countries in market share loss.
Whereas other developed nations will cede market share to emerging markets over the next ten years, Australia will maintain its current market share (1.9 percent) over the next ten years amid robust population growth and a strong pipeline of infrastructure projects.