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Global Construction Market

Industry Sector



2 November 2012


Matt Bodimeade

Type of News


The global construction market has been forecast to increase by 70% between now and 2020, rising from a valuation of $7.2 trillion to $12 trillion. In spite of what is currently reported on the news about the present global economy and the global construction market, the medium- and long-term outlooks for this hard-hit industry and the overall global economy actually look bright.

Approximately half the increase - $4.8 trillion's worth - will come from China, India, and the US. Last year China overtook the US as the world's number-one construction market, and looks likely to stay in the top spot thanks to the Chinese government's stimulus spending. Chinese construction is expected to reach $2.5 trillion per year by 2020, about 21% of the global total and more than double what it is today.

The US construction market has been forecast to rebound over the next five years, with growth averaging 7.8% per year. Western Europe won't do nearly as well, with1.7% annual growth predicted.

The third largest construction market is Japan, with an estimated market size slightly half of the US market. The next markets in the top seven are Germany, Spain, France, and Italy, with a combined market size of about $1.2 trillion, representing about 15 percent of the total global market. Of these, Germany is the largest, with an estimated market size of about $300 billion, and Italy is the smallest, with a market size of about $260 billion. The remaining top markets are India and England, with market sizes of $250 billion and $240 billion respectively.

In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking. Normally, the job is managed by a project manager, and supervised by a construction manager, design engineer, construction engineer or project architect.

In general, there are four types of construction:
1. Residential Building construction
2. Industrial construction
3. Commercial Building construction
4. Heavy Civil construction

Each type of construction project requires a unique team to plan, design, construct and maintain the project.

In a country, the residential construction sector typically is by far the largest, representing almost half of the total market. On the other hand, commercial and infrastructure are about the same size each and each represent about 25 percent of the total sector. While variations exist, this is very similar in most countries, whether developed or emerging.

As one may suspect, the residential sector was hit the hardest in the last recession, particularly in the United States, Spain, and other European countries where significant growth took place in the late 2000s. Thus, global infrastructure and commercial sectors are expected to be the engine of growth in the next 10 years, as developed countries upgrade their aging infrastructures and emerging countries build theirs.

Undoubtedly, the 2007-2009 global financial crisis had a major impact on global construction output. During this period, global annual growth slowed to just less than 1%, and the largest decrease was in advanced countries, with a decline of 3% annually.

While growth is expected to be fairly evenly distributed during the next 10 years, some experts anticipate that the next five years will experience a bit stronger growth as the global economy starts to bounce back from the most recent recession. The bounce back will be uneven for developed and emerging markets. While there are different and divergent opinions on the subject, the overall consensus is that emerging markets will bounce back to historical growth rates of between 6-8%, while developed markets will grow at a more modest rate of 2-3% annually.Global Construction Market

UK Construction Companies:
The total turnover of the top 100 biggest builders in the United Kingdom fell by approximately £0.5 million to just under £64 billion in 2011. Interestingly, the profit and average margin of the largest UK construction companies increased as a whole, suggesting many firms are focussed on costs and operational efficiency rather than driving absolute sales volume. The following table lists the top 25 construction companies in the United Kingdom, ranking their performance by total turnover and net profit.

The construction industry in the United Kingdom expanded by 7.2% during the financial year 2010 although during 2011, revenues were reported to increase by only 1% over the year. It is forecast that total market revenues for construction in the United Kingdom will increase by approximately 1% in 2012.

United States Construction Companies:
The largest construction companies in the United States ranked by turnover was CH2M Hill, with ABC Supply ranked second. The United States construction market has contracted by 1.7% in 2011 off the back of even sharper than anticipated falls in transport and non-residential building investment. It is anticipated that a return to minimal growth in the US construction industry will be reported in the United States during 2012, being driven primarily by base effects and the bottoming out of the industry.

As evident by the latest financial crisis reports in Europe and the stalled US economy, the danger of a double-dip global recession is a real possibility, which will have major repercussions on the overall global construction markets. However, in spite of the dark economic clouds, the long-term outlook for the global construction industry remains positive, especially as emerging countries invest in developing their infrastructure.

For more information on the global construction market, see the latest research: Global Construction Market

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