Global

Construction

A global forecast
for the construction
industry to 2025

GLOBAL
CONSTRUCTION
PERSPECTIVES

Global
Construction

A global forecast
for the construction
industry to 2025

Published by:
Global Construction Perspectives and Oxford Economics
Broadwall House, 21 Broadwall, London SE1 9PL
United Kingdom
Tel: +44 (0)203 0868820
E: info@globalconstruction2025.com
www.globalconstruction2025.com
Published on 1st July 2013
Copyright:
All rights, including copyright, in the report are owned
by Global Construction Perspectives Limited and
Oxford Economics Limited.
Disclaimer:
All information provided in this report is for information purposes
only. Although every reasonable effort is made to ensure the
accuracy of the report, it is not intended to be relied upon for
decision making purposes.
British Library Cataloguing in Publication Data.
A catalogue record for this book is available from
the British Library.
ISBN: 978-0-9564-2078-7
Design by
www.un.titled.co.uk

Global Construction Perspectives

and Oxford Economics
Broadwall House, 21 Broadwall
London SE1 9PL
United Kingdom
Tel: +44 (0)203 0868820
E: info@globalconstruction2025.com
www.globalconstruction2025.com

Acknowledgements

Foreword

This global forecast and report has been prepared and written by an
expert team:

Construction is one of the largest industrial sectors and will account for over
13.5% of world output by 2025.

Global Construction Perspectives

Mike Betts
Graham Robinson

I am delighted that Lafarge is a Global Sponsor of this new Global Construction 2025 global forecast and
report, the third in a series of major studies by the renowned Global Construction Perspectives and Oxford
Economics. This report and the forecasts that have been developed are rich in content and details. It provides
key insights into the factors driving construction development:

Oxford Economics
Charles Burton
Jeremy Leonard
Amit Sharda
We also thank our Sponsors Aconex, Aedas,
Arabtec Holding, Arcadis, Armstrong, Autodesk,
Royal BAM Group, Cemex, China State Construction
and Engineering Corporation, CIOB, Heidrick &
Struggles, Holcim, Lafarge, Mace, Murray & Roberts,
Oracle, OCI, PwC, Rider Levett Bucknall, Speedy
Hire, Textura, United Rentals, Viewpoint Construction
Software and Willis Re for their generous support.
We thank the industry experts who have provided
contributions within this report. Their contributions are
acknowledged.
The team is grateful and acknowledges the support of
organisations and people who have supplied material,
contributed to production and provided photographs.
These are credited throughout the report.

Construction globally is expected to rise by $6.3 trillion or over 70% to $15 trillion by 2025 compared to
$8.7 trillion in 2012.
Over 60% of the global construction activity will be undertaken in emerging markets by 2025 (up from 35%
in 2005) as significant investment is required to support economic growth and social transformation with
new homes, offices, factories, school, hospitals and infrastructure.
Seven nations will account for 72% of the expected growth: China, the US, India, Indonesia, Russia,
Canada and Mexico.
China alone accounts for 36% of all growth in construction to 2025 and the Chinese construction market is
expected to be twice the size of that in the US by 2025.
India is expected to be close to $1 trillion construction market by 2025.
North America will see the highest growth in developed country regions and is forecast to be almost
40% larger by 2025 than in 2007, while Western Europe is expected to be almost 5% smaller in 2025 than
it was in 2007.
Emerging Asia is still the fastest growing region, despite a slowdown in growth in China.
Sub-Saharan Africa is expected to be the second highest growth region for construction globally, driven by
rising populations, rapid urbanisation and much needed development of infrastructure. Almost 20 million
new homes need to be built in Nigeria alone by 2025.
Affordable housing in emerging markets is a major market opportunity for construction globally with some
270 million new homes needed in China and India alone by 2025.
Lafarge believes urbanisation is a key challenge of this century. By 2050 the planets population will be over
9 billion. This demographic trend will primarily affect cities, with some two billion additional city-dwellers
expected by 2050. This trend requires significant new challenges to be met, everywhere around the globe.
Being a leader in the building materials industry, our ambition is to contribute to building better cities through
innovation that targets more housing, more durable, more connected, more compact and more beautiful
cities. We are moving to a provider of construction solutions and I am convinced that we are just at the
beginning, with plenty of potential ahead of us.
We all want to live in a better world. Thats why we innovate. Because living in better cities is an issue which
affects every single one of us.
Bruno Lafont
Chairman and Chief Executive Officer
Lafarge
www.lafarge.com

Page 6
Global Sponsors

Aconex provides the worlds most widely used SaaS platform for managing
information, processes and people throughout the life cycle of construction and
engineering projects across multiple industries. The Aconex suite of solutions
secure, neutral and centralized enables owners, contractors and project
managers to reduce the cost and risk inherent in capital projects of all sizes and
improve efficiency, productivity and accountability for all project participants.
Aconex has served projects valued at more than US$700 billion, with over
300,000 users. Clients include nine of the worlds top ten EPC/EPCM firms, 23
of the 25 largest global design firms, and nearly all Fortune 500 construction and
engineering firms.

Page 7
Global Sponsors

Aedas consistently produces innovative architectural design solutions from our 39

offices around the globe. Our active participation within international communities
allows us the ability to offer an innate knowledge and understanding of local
cultures and the skills to lead creative design initiatives where we can apply our
international expertise to a wide range of challenges.
Our global network provides consultancy services in architecture, interior design,
masterplanning, landscape, urban design and building consultancy in Asia, the
Middle East, Europe and the Americas.

China State Construction & Engineering Corporation is the worlds largest

construction and real estate company. The companys core businesses are
building, real estate development, infrastructure, designing and overseas
operations. It is well known for undertaking super high-rise, grand scale, cuttingedge and novel projects and has built up a great number of prominent projects
both in the Peoples Republic of China and throughout the world.

With over 48,000 members, the Chartered Institute of Building (CIOB) is the
international voice of the building professional. We focus on those entering and
already in a management career in construction by delivering qualifications and
certifications that meet the needs of a changing industry. We work with members,
employers, academia and governments across the globe to drive forward the
science and practice of management in construction.

www.cscec.com

www.ciob.org.uk

Heidrick & Struggles is the premier professional services firm focused on serving
the leadership needs of top organisations globally. For 60 years, we have focused
on quality service and built strong leadership teams through our relationships
with clients and individuals worldwide. Our Global Engineering, Construction and
Infrastructure Practice has a detailed understanding of the leadership challenges
todays markets create and has grown into the top leadership advisory team in the
sector. Today, Heidrick & Struggles consultants operate from principal business
centers in North America, Latin America, Europe and Asia Pacific.

Holcim is one of the worlds leading suppliers of cement and aggregates (crushed
stone, gravel and sand) as well as further activities such as ready-mix concrete
and asphalt including services. The Group holds majority and minority interests in
around 70 countries on all continents.

www.aedas.com
www.aconex.com

Since 1975, Arabtec Holding PJSC (Arabtec) has completed a number of iconic
projects within the residential and commercial space. Projects include hotels,
airports, higher education developments, residential buildings and distribution
facilities, amongst others. Arabtec is also renowned for its expertise in industrial
and infrastructure works including oil and gas, pipeline construction, power
generation, marine works and general manufacturing facilities.
Arabtec was listed on the Dubai Financial Market in 2005, and at the time, was
the first private construction firm to go public. Today, Arabtec Holding consists of
many subsidiaries, with specialisation in all construction sectors. The Company
currently operates in the UAE, Saudi Arabia, Qatar, Kuwait, Bahrain, Egypt, India,
Jordan, Palestine, Russia and Syria. Arabtec continues to expand into additional
markets; Arabtec recognises that this growth presents a new set of challenges
but is cognisant of the endless opportunities this growth also allows.

ARCADIS is the leading pure play global engineering and consultancy firm,
providing consultancy, design, engineering and management services in
infrastructure, water, environment and buildings. We enhance mobility,
sustainability and quality of life by creating balance in the built and natural
environments. ARCADIS develops, designs, implements, maintains and operates
projects for companies and governments. With 22,000 employees and more
than 2.5 billion in revenues, the company has an extensive international network
supported by strong local market positions. ARCADIS companies include EC
Harris, RTKL and Langdon Seah.

www.holcim.com

www.heidrick.com
www.arcadis.com

www.arabtecholding.com

Armstrong World Industries, Inc. is a global leader in the design and manufacture
of floors and ceilings. In 2012, Armstrongs consolidated net sales from continuing
operations totaled approximately $2.6 billion. Armstrong operates 34 plants in
eight countries and has approximately 8,700 employees worldwide, servicing the
Americas, Asia, and Europe.
Our global team supports design and construction for architects, contractors,
and building owners with the broadest portfolio of ceiling, wall, and floor products.
Additionally, Armstrong delivers custom metal, wood, and boutique ceiling
and wall designs for market segments including office, education, healthcare,
transportation, retail, hospitality, and residential.

Autodesk helps people imagine, design and create a better world. Everyone--from
design professionals, engineers and architects to digital artists,students and
hobbyists--uses Autodesk software to unlock their creativity and solve important
challenges.Autodesk is a leader in professional and personal3D design,
engineering and entertainment software. Customers across the manufacturing,
architecture, building, construction, digital art and entertainment industries use
Autodesk software, mobile apps, cloud services and communities to design,
visualize, simulate and communicate their ideas.Since 1982 Autodesk continues
to develop a broad portfolio of state-of-the-art software for global markets.
www.autodesk.com

BAM has top market positions in the Netherlands, Belgium, the United Kingdom,
Ireland and Germany. BAM has active International activities in the Arabian Gulf,
Australia, Indonesia, South Africa, Ghana, Tanzania and Libya.
One of BAMs prominent features is its widespread regional network of offices,
meaning that the company is always close to its customers. BAM has achieved
very high standards in respect of its Corporate responsibility and sustainability
credentials, in many cases taking a leading position in its operating countries.

CEMEX is a global building materials company that provides high-quality products

and reliable service to customers and communities in more than 50 countries
throughout the world. CEMEX has a rich history of improving the well-being of
those it serves through its efforts to pursue innovative industry solutions and
efficiency advancements, and to promote a sustainable future.
www.cemex.com

Murray & Roberts is a leading South African engineering, contracting and

construction services company. It has created employment, developed skills,
applied technology and delivered infrastructure since 1902.
The company offers civil, mechanical, electrical, mining and process engineering;
general building, construction and infrastructure development services in the
global underground mining market and selected emerging markets in the natural
resources and infrastructure sectors.
The company operates in Southern Africa, Middle East, Southeast Asia,
Australasia and North and South America. The company is based in
Johannesburg South Africa, where it has a public listing on the JSE Limited.
www.murrob.com

www.bam.co.uk

Mace is an international consultancy and construction company, offering

integrated services across the full property and infrastructure life cycle.
Our experts in programme and project management, cost consultancy,
construction delivery and facilities management thrive within our collaborative
and entrepreneurial culture, constantly striving to find better solutions to complex
infrastructure and property challenges.
www.macegroup.com

www.lafarge.com

www.armstrong.com

Royal BAM Group nv is a successful European construction group. BAM is active

in the sectors construction, property, civil engineering, public private partnerships,
mechanical and electrical contracting, consultancy and engineering, and facilities
management.

A world leader in building materials, Lafarge employs 65,000 people in 64

countries, and posted sales of 15.8 billion in 2012. As a top-ranking player in its
Cement, Aggregates and Concrete businesses, it contributes to the construction
of cities around the world, through its innovative solutions providing them with
more housing and making them more compact, more durable, more beautiful,
and better connected. With the worlds leading building materials research facility,
Lafarge places innovation at the heart of its priorities in order to contribute to more
sustainable construction and to better serve architectural creativity. Since 2010,
the Lafarge Group has been part of the Dow Jones Sustainability World Index, the
first global sustainability benchmark in recognition of its sustainable development
actions. More information is available on Lafarges website:

With more than 390,000 customersincluding 100 of the Fortune 100and

with deployments across a wide variety of industries in more than 145 countries
around the globe, Oracle offers an optimized and fully integrated stack of business
hardware and software systems.
Oracle engineers hardware and software to work together in the cloud and in
your data centerfrom servers and storage, to database and middleware, through
applications. Combining Oracle Primavera Project Management software with
other business critical applications delivers complete industry solutions.
www.oracle.com

Contents Global Construction

Page 8
Global Sponsors

OCI N.V.s (formerly Orascom Construction Industries) Construction Group is

a leading international engineering & construction company focused on large,
complex and demanding projects primarily in the power, petrochemical, transport
infrastructure and water treatment sectors. OCI N.V. is one of the largest globally
ranked corporations with projects and investments across the United States,
Europe, North Africa, the Middle East and Central Asia, offering a comprehensive
range of engineering & construction services primarily on infrastructure, industrial
and high-end commercial projects for public and private clients.

PwC helps organisations and individuals create the value theyre looking for.
Were a network of firms in 158 countries with more than 180,000 people who
are committed to delivering quality industry focussed assurance, tax and advisory
services.

www.pwc.com

www.orascomci.com

2
Rider Levett Bucknall is an independent, global property consultant, providing
advice focused on the cost, quality and sustainability of the built environment. It
has over 3,000 staff operating from more than 100 global offices.
The firms philosophy is to combine global best practice with local know-how,
utilising the latest cost data and innovations to deliver full property solutions for
clients across a number of sectors. Services provided include Cost Management,
Project Management and Advisory.
www.rlb.com

Speedy Services is the UKs leading provider of equipment and support services
to the Construction, Infrastructure and Industrial markets.

Speedy Services operates across the UK, Europe, the Middle East and North
Africa, and is totally committed to supporting clients, wherever their projects take
them.

United Rentals, Inc. is the largest equipment rental company in the world, with
an integrated network of 830 rental locations in 49 states and 10 Canadian
provinces. The companys approximately 11,400 employees serve construction
and industrial customers, utilities, municipalities, homeowners and others. The
company offers for rent approximately 3,300 classes of equipment with a total
original cost of $7.24 billion.

Textura operates globally in support of our clients with offices in the United States,
Canada and Australia. More than 400,000 organizations have used Textura on
over 13,000 commercial construction projects worldwide. With award winning
technology, world-class customer support and consistent growth, Textura is
leading the construction industrys technology transformation.

www.unitedrentals.com

For over 35 years, Viewpoint Construction Software has been meeting the
information and collaboration needs of construction industry professionals.
Viewpoint provides construction-specific enterprise resource planning, 4Projects
BIM and project collaboration, mobile field-to-office and enterprise content
management solutions that can be acquired separately or as a total solution to
enhance a contractors business model. Viewpoint works with customers and
industry partners to produce cloud, SaaS, mobile and on-premise products that
address the unique needs of construction firms throughout the U.S., Australia,
Canada, Europe, New Zealand, Middle East, South Africa and the U.K.

Willis Re is a leading global risk advisor and reinsurance broker. With offices in 40
locations around the world, we work as one team, under one flag. This means
our clients, no matter where they are, have access to our full suite of global
capabilities.

www.viewpointcs.com

Willis Re is here 24 hours a day to provide clarity in a complicated world.

19

Global Outlook

20

Global Economic Outlook

22

Global Construction Outlook

29

Western Europe
34
United Kingdom, Germany, France, Italy,
Spain, Netherlands, Belgium, Sweden
and Greece.

6
7

86

112

Middle East and North Africa

192
UAE, Saudi Arabia, Kuwait, Qatar, Egypt,
Morocco, Libya and Algeria.
Sub Saharan Africa
South Africa and Nigeria.

234

South and Central America

Brazil, Colombia, Mexico, Chile
and Argentina.

250

Box: CEMEX: Industrial Approach to 278

Global Affordable Housing Challenge
Juan Luis Alfiero, Director for CEMEX
Global Housing Initiatives

Box: Public Private Partnerships

134
Pending
Jon Hart, Partner, Pinsent Masons LLP
member of the Pinsent Masons Global
PPP Group Hong Kong, Singapore,
Beijing, Shanghai, Dubai, Doha, Munich,
Paris and London

Eastern Europe, Russia, Turkey and 280

Ukraine
Turkey, Russia, Ukraine, Poland,
Czech Republic, Romania, Hungary
and Bulgaria.
Box: Global Talent 2025: The Age of 324
the Innovator
Charles Commander (New York),
Jamie Page (London) and Stafford
Bagot (Singapore) Co-leads of Heidrick
& Struggles Global Engineering,
Construction and Infrastructure Practice
2013

Our analytics and brokerage teams work side by side in order to provide truly
holistic solutions to our clients who face an increasingly complex business
environment in terms of capital management, risk transfer, regulation, catastrophe
modelling and enterprise risk management.

www.willis.com

136

Box: Africa - Unleashing the

248
Potential
Amal Tantawi, Group VP - Strategy,
Development and M&A, Africa Middle
East, Eric Schneider, Group VP - Strategy,
Development and M&A, Financial
Forecasts, Christel Monot, Senior
Analyst - Strategy, Development and
M&A, Financial Forecasts

North America
88
United States of America and Canada.

Developed Asia Pacific

Australia, Japan and Hong Kong.

Emerging Asia Pacific

China, Singapore, India, Malaysia,
Vietnam, Thailand, Indonesia,
Philippines and South Korea.

Box: From Smart

190
Buildings to Smart Cities
Paul Doherty, AIA 2013
President/CEO of the Digit Group Inc

Box: The Impact of the US Shale Gas 110

Boom on Construction Activity
Jeremy Leonard, Head of Industry
Services and Amit Sharda, Economist,
Oxford Economics

www.texturacorp.com

Introduction

Box: US Construction Market: State 100

by State
Amit Sharda, Economist, Oxford
Economics and Graham D. Robinson,
Executive Director, Global Construction
Perspectives

www.speedyservices.com

Textura is the leading provider of on-demand business collaboration software to

the commercial construction industry. Our solutions serve all construction industry
professionals across the project lifecycle from takeoff, estimating, design and
pre-qualification to bid management, submittals, LEED management and
payment. Our solutions increase efficiency, enable better risk management, and
provide improved visibility and control of construction activities for our clients.

10

Box: The Future of Infrastructure

Financing
Jonathan Hook, Partner, PwC

Working closely together in partnership allows the identification of innovative,

sustainable and integrated long term solutions, which drive added value and
return on investment.
This collaborative approach focuses on addressing a clients unique challenges;
allowing them to optimise assets, reduce risk and enable delivery of projects.

Executive Summary

10

Methodology and Interpretation

326

Page 10
Global Construction 2025
Executive Summary

Page 11
Global Construction 2025
Executive Summary

Global Construction 2025

Executive Summary
Global Construction 2025 is the third in a series of major
global studies of the construction industry published
by Global Construction Perspectives and Oxford
Economics.
Global Construction 2025 is sponsored by prominent global business
leaders in the construction and engineering industry from North America,
Latin America, Europe, MENA, sub-Saharan Africa and Asia Pacific, with the
purpose of understanding the global construction and engineering market
and the forces shaping future demand to 2025.
In this Executive Summary we give an overview of the health of the global
economy and explain how key drivers, including growth in economic output,
rising populations and rapid urbanisation in emerging markets are expected to
impact growth in key regional construction markets.
This Executive Summary is aimed at business leaders, policy makers and
others with a special interest in helping to shape the future of the global
construction and engineering industry. Others including financial institutions
and aspiring leaders of the future will find much of interest in the Global
Construction 2025 forecast and report which includes considerable data,
information, analysis and insight into global trends as well as individual
forecasts for all major construction markets globally.
More detailed forecasts and analysis of key construction markets is presented
in the main Global Construction 2025 report (328 pages, 683 charts and
tables) as well as in over 50 separate databases that provide annual data over
a 20 year period from 2005 to 2025 for all markets.

China, US and India Drive Global

Construction Growth to 2025
We forecast that the volume of construction output will grow by 70% from
$8.7 trillion in 2012, to $15 trillion by 2025, representing growth of $6.3 trillion.
We estimate almost 60% of all global growth in construction will be in just
three countries: China, India and the United States.
China overtook the US as the worlds largest construction market in 2010, and
now accounts for 18% of total global construction in 2012.
By 2025, we forecast China will represent over a quarter of all construction
output globally.
Our forecasts show that growth in construction in China will slow over the
period to 2025 and more considerably after 2020. Nonetheless, even in 202025, growth will average over 6% pa, keeping China among the five fastestgrowing construction markets.
The slowdown in growth in China is due to both lower population growth,
a legacy of the one child policy in place since 1979, and a slowdown in
economic growth as the economy rebalances away from investment and
export-led growth toward household consumption. But this shift will have
an offsetting impact, as increasingly affluent consumers will demand larger
homes and drive the retail and wholesale distribution networks essential for a
consumption-oriented society. We expect the number of Chinese households
with at least $30,000 income to increase tenfold to at least 30 million by 2020.
We expect India to be a faster-growing construction market than China over
the period from 2012 to 2025.
Not only are similar dynamics at work with regard to explosive growth in the
number of middle class households, but population in India will grow much
more strongly.

KPF: Ping An Finance Center, Shenzhen, Guangdong Province, China. A 115 storey supertall
skyscraper, standing a total of 660 meters high and will be the second-tallest building in the
world and the tallest in China

Aedas: West Kowloon Terminus, Hong Kong. High speed rail terminus will connect Hong Kong to major cities in Mainland China. It will probably be the largest below ground terminus station in
the world

We forecast India will overtake Japan as the third-largest construction market

by 2022. This is later than we previously forecast due to short-term economic
weakness in India as well as a temporary boost in construction output as a
result of natural disasters in Japan during 2011.
We estimate that 270 million new homes will be needed in China and India
alone by 2025 to meet the needs of population growth and urbanisation
trends. The majority is likely to be affordable housing. In this report, Cemex
describes how it is targeting the affordable housing market, particularly in
Latin America.
Despite being cyclically weak with construction output depressed by 30% in
the seven years to 2012, the US is still the second largest construction market.
The US share of the global construction market is one and a half times that of
Japan, the third largest construction market.
The recovery in the US construction market which started last year is forecast
to continue with housing remaining the fastest growing sector. We forecast
the volume of construction output in the US to grow by over 75% between
2012 and 2025.
We estimate the US needs almost 20 million new homes by 2025, an average
of 1.5 million new homes that need to be built each year.
Globally, construction, taking our measure of gross output, accounted for
12.2% of world GDP in 2012, but by 2025 we forecast this will rise to over
13.5%, as growth in construction continues to rise more strongly than GDP.
We expect construction output in emerging markets will be 16.7% of GDP
by 2025, compared with 10.3% for developed countries, reflecting the higher
investment requirements in industrialising economies.

Developed Economies are Mixed North

America Growing Strongly but a Lost
Decade in Europe
Weak economic fundamentals and stagnant (and in some cases declining)
populations leave few growth opportunities in Western Europe.
We forecast that the construction market in Western Europe will be almost 5%
smaller by 2025 than its 2007 peak.
Conversely, we forecast that the construction market in North America will be
almost 40% larger by 2025.

Stabilisation in Western Europe is one of the main drivers of the renewed

global growth in construction output that we are expecting, after an 8%
decline during 2012 and 2013.
Any cyclical upturn in Western Europe, after the double-dip downturn in
construction activity during 2008-10 and 2012-13, will be very weak. With
household purchasing power declining amid declining real wages and recordhigh unemployment, there will be little source of residential construction
demand. Cash-strapped governments have little scope for significant
infrastructure investment, and uncertainty over finding a long-term solution
to the deep-rooted financial and fiscal woes in the Eurozone are severely
constraining business investment in new capacity. As a result, we foresee very
subdued growth in construction, not reaching 2% in any year between now
and 2025.
We expect Germany to remain the largest construction market in Western
Europe throughout the forecast period, ahead of France, but population is
expected to shrink by almost two million people by 2025, leading to less
demand for new housing. A smaller working age population by 2025 could
reduce demand for offices, factories and other buildings, whilst social
infrastructure such as hospitals and clinics could increase as the population
ages. Nonetheless, despite an expected short-term cyclical recovery, the
growth outlook for Germany is among the weakest in Western Europe.
The expected recovery in Spain will still leave construction volumes in
2025 almost 25% lower than their 2007 pre-recession peak, reflecting the
magnitude of Spains housing bubble. At its peak, the construction market
in Spain was 12% larger than in the UK, despite having a population that is
25% smaller. Even though the number of new homes built each year in Spain
is likely to more than double from current levels to an average of around
170,000, this would still be less than half the average 450,000 housing
completions a year since 2000.
Despite near-term weakness, the UK stands out from the rest of Western
Europe as a growth market.
We forecast that construction volumes in the UK will grow at more than
double the average rate in Western Europe to 2025 and the size of the UK
construction market will rival Germanys by 2025.
There is a pressing need to modernise ageing infrastructure and to build more
new homes to prevent a widening housing deficit in the UK. Until recently,
house building has remained stubbornly low since the onset of the global
financial crisis. The governments housing stimulus measures are providing
most of the growth in UK construction at present, but we also expect to see
more investment in UK infrastructure and real estate from China and other
Middle East sovereign wealth funds. In addition, stronger trade links to a

KPF: Hudson Yards in New York City, consisting of 16 skyscrapers containing more than 12.7 million square feet of new office, residential and retail space

Page 13
Global Construction 2025
Executive Summary

Key Natural Resource Markets in

Developed Countries Mixed Australia
and Canada Experiencing Different
Cycles
The mining and natural resources driven boom in Australia resulted in an
average annual growth rate in infrastructure volumes of almost 16% pa
between 2005 and 2012, as investment in new mining capacity and the
infrastructure necessary for export boomed. However, as this new extraction
capacity moves to the production phase, we expect minimal growth this year
and next year, with small declines then following until 2025. This is likely to
slow the rate of growth in total construction volumes from an average of 4.4%
pa in 2005-12 to an average of 1.3% pa in 2012-25.

Nine Elms on the South Bank, will be one of Londons greatest transformations, becoming an
ultra-modern complex offering 16,000 homes and 25,000 jobs, schools, parks, culture and the
arts, set over 196 hectares including the iconic Battersea Power Station

In contrast, Canadas growth in oil sands and shale gas related construction
has been much less dramatic, as political pressures relating to the
environmental impact of both the extraction itself and the construction of
new pipelines have prevented the type of boom seen in Australia. But by the
same token, strong global demand for fossil fuels over the forecast horizon
means the scope for additional construction activity in the sector is strong. In
addition, there is an increasing desire to refine in Canada to capture additional
value from the extraction value chain.
Added to this is Canadas decades-long neglect of its highways, sewers and
other municipal infrastructure, which will increase demand for construction
whether governments like it or not. Numerous bridge collapses and nearmisses have stoked public opinion for action and Canadas federal and
provincial governments have responded with long-term investment programs
in infrastructure, helping to drive growth. As a result, average growth in
Canadian infrastructure construction is expected to be 3.1% pa through 2025,
more than double that in Australia.

US embassy in Nine Elms, Battersea. The 11 storey cube-shaped building, one of the highest
performing energy use and sustainability in the world

growing US economy and more positive population and demographic drivers

point to a stronger medium-term performance for the UK construction market
relative to the rest of Western Europe.
North America will account for a significant proportion of the increase in
developed-world construction volumes in 2012-25. The US has several strong
positive drivers for construction growth not shared elsewhere in the developed
world. Growth in population is high by developed-world standards and the US
manufacturing sector is as competitive as it has been in decades. Anecdotal
evidence points to a strong trend towards re-shoring of manufacturing
operations as well as strong growth prospects for firms already producing
domestically will help drive non-residential construction growth.
The outlook for Canada is robust, not only due to its tight trade links with
the US, but due to an even more open immigration policy that will drive even
faster population growth than the US.
In addition, shale gas and oil has led to increased construction output in
both the US and Canada as a result of investment in infrastructure and other
facilities related to its extraction, which is having further positive knock-on
effects on competitiveness via significantly lower energy prices.

Japan Boosted by Rebuilding and

Abenomics, but Longer-Term Trend is
Weak
In the short-term demand in Japan continues to be boosted by the rebuilding
after the March 2011 earthquake and tsunami in north eastern Japan. This
has been reinforced by the ambitious policy actions to combat deflation and
shake off two decades of economic stagnation. One of the elements of the
so-called Abenomics is a fiscal stimulus in the order of 2% of GDP, which
may well succeed in improving prospects over the next couple of years, but
the impact of accelerating population decline will offset this over the rest of the
forecast horizon, with construction output slowing to well under 1% pa. As a
result, the size of the construction sector in 2025 will be about what it was in
2005, causing Japans global share to fall from 8% to 5% of the total.

KPF: The Scalpel, joining a cluster of skyscrapers in and around Londons main financial
district. It will be 190 metres tall and contain 560,000 sq ft of offices

RLB: Msheireb, Doha, Qatar. The 31 hectare development will be the worlds first sustainable downtown regeneration project and the
largest collection of LEED certified buildings and whilst preserving the historical heart of Doha

Page 14
Global Construction 2025
Executive Summary

RLB: Xiqu Centre, Hong Kong. The Xiqu Centre will be the first of 17 core arts and cultural venues, occupying a prime site of 13,000 square meters

New Generation of Asian Tigers Propel

Growth in Emerging Asia
The dynamism of economies in Emerging Asia over the past two decades is
breath-taking. The Asian Tigers of the 1990s of which South Korea and
Taiwan are the key examples have now all but become developed and
industrialised economies. The massive development of the infrastructure and
production capacity that underpins an industrial economy and the housing
that increasingly wealthy citizens desire has largely been accomplished, so
it is not surprising to observe that South Korea, with growth averaging 3.5%
pa in 2012-25, is the slowest-growing of the Emerging Asian construction
markets we have examined.
While China is far from becoming a developed economy, it is facing significant
growing pains. Unit labour costs have trebled over the past ten years as
workers clamour for higher wages and productivity struggles to keep pace.
This has allowed other countries in the region to draw businesses in textiles
and manufacturing assembly, causing China to become the victim rather
than the beneficiary of offshoring. Moving up the value chain is proving to
be more challenging than perhaps expected for Chinese producers, as the
importance of innovation (and the protection of intellectual property that it
entails), product quality and speed to market become more critical. These
challenges do not reduce Chinas importance as a large and fast-growing
construction market, but they do open up opportunities in a new generation of
faster growing Asian Tigers that will help propel regional growth.
Perhaps the most dynamic new Asian Tiger construction market is Indonesia,
the worlds fourth most populous nation. We expect the construction market
to grow by an average of over 6% pa in 2012-25, raising its global ranking from
10th largest in 2012 to fifth largest in 2025.
Indonesia will become the worlds third largest housing market globally by
number of new homes that it needs to build each year, slightly more than the
average number for the US. Indonesias key Economic Corridors are centred
on growth of key industrial sectors and building the necessary infrastructure to
support economic growth.

Other new Asian Tiger construction markets include Vietnam and the
Philippines, also expected to exceed 5% pa growth in 2012-25. Both Vietnam
and the Philippines will benefit from broader inter-regional trade flows with
China and neighbouring economies as well as the need for investment in
essential infrastructure and production capacity as their level of economic
development increases.

Global Construction 2020 has given

Royal BAM Group a clear perspective
on emerging global markets,
supported by reliable forecasts
Martin Rogers,
Executive Board Director, Royal BAM Group

Global Construction 2020 is the

definitive overview of one of the
most important sectors of the global
economy. We have found it invaluable
in preparing our global strategy
Patrick Allin,
Chairman and Chief Executive Officer, Textura Corporation

Page 16
Global Construction 2025
Executive Summary

Page 17
Global Construction 2025
Executive Summary

Russia and Turkey Lead Growth in

Eastern Europe

Qatar is Fastest Growing Construction

Market Globally

The population in Eastern Europe is forecast to decline by an average of

0.2% pa, but increased demand for construction is expected from stronger
economic growth. We expect GDP to expand at an average pace of 3.8%
pa from 2012-25, 0.3 percentage points higher than the global average. As
a result, construction output in Eastern Europe is forecast to increase by an
average of 4.6% pa between 2012 and 2025, marginally higher than the global
average. However, there are some key divergences with, for example, growth
likely to be strongest in Russia and Turkey, in both cases exceeding 5% pa
average over 2012-25.

Qatar is forecast to have the fastest growing construction market amongst the
46 countries examined in this report, with average double-digit growth of
10% pa between 2012 and 2025. Qatar will benefit from the countrys hosting
of the FIFA 2022 World Cup and continuing diversification within its economy.
Growth in construction volumes in Qatar is set to slow significantly after 2020.

Sub-Saharan Africa Second Fastest

Growing Construction Region to 2025
After Emerging Asia

Russia was the ninth largest construction market globally in 2012. In 2025, we
expect Russia to be the sixth largest.

The population of sub-Saharan Africa is rising fast, with total population

expected to reach almost 1.2 billion by 2025, over 40% higher than todays
population, and growing at a rate of over two and a half times the rate of
population growth in Emerging Asia.

In comparison to most other Eastern European countries, GDP growth in

Russia is not being affected by severe austerity measures. However, the
economy will be more reliant on productivity catch-up to maintain GDP
growth. And we expect the implementation of structural reforms necessary
to achieve this to be implemented gradually, supporting solid medium term
economic growth. On the upside, a more rapid and deeper modernisation
agenda could raise medium-term potential growth higher than we are
forecasting. Furthermore, the expansion in construction output over the
forecast period will be boosted by the upcoming 2014 Winter Olympics and
FIFA 2018 World Cup, which will provide the incentive to improve infrastructure
and new building work such as hotels. Moreover, better infrastructure links
and the ability to implement structural reforms should lead manufacturers
towards Russia.

African nations are also urbanising fast and the urban population of subSaharan Africa is expected to grow almost 70% by 2025 and is also expected
to become increasingly middle-class. As a result, there will be a significant
need for construction of housing, urban transportation, medical and
educational facilities.
We expect Nigeria to be the second fastest growing construction market
amongst the 46 countries we have examined, behind Qatar, with average
growth in construction of 8% pa in 2012-25.

Despite the relative strength in Russia, We forecast that construction

volumes will grow more rapidly in Turkey than any other market in the region.
Turkey will be supported by better long term economic fundamentals
compared to neighbouring countries in the region. In addition, a more stable
macroeconomic environment and strong trade links to fast growing emerging
markets, such as those in East Asia, should help to attract investment. Urban
population in particular in Turkey is expected to grow by around one-third.
Forecasts for housing are relatively robust in Turkey, mainly driven by the need
to replace and upgrade existing aged housing.

The population of Nigeria, already seventh-largest in the world, is growing

rapidly, with an average growth rate of 2.5% pa forecast for 2012-25, much
higher than the global average. At the same time, GDP is also forecast to grow
by an average of 5.4% pa over the same period, significantly above the global
average.
We estimate an average of slightly less than 1.5 million new homes a year will
need to be built in Nigeria between 2012 and 2025, making Nigeria the fifth
largest housing market in the world after the US.

Mexico, Chile and Colombia Drive

Growth in Latin America
Growth in construction output in Latin America is expected to be slower than
the global average. Although most countries within the region are already
highly urbanised, limiting the scope for further strong increases, a closer look
shows that some parts of Latin America will perform better than others.
The largest Latin American construction market, Brazil, is only expected to
see average growth in construction output of 2% pa, much lower than the
regional average. Work has been brought forward, with Brazil hosting the
FIFA 2014 World Cup and the 2016 Olympics in Rio. But long term growth
will be constrained by the inability to enact deep and necessary reforms
within the economy in order to unlock higher economic growth. Such reforms
would need to be targeted at the current poor state of infrastructure, high
and complex taxes and excessive bureaucracy. However, if these problems
are addressed then we may see stronger growth in Brazil than currently
envisaged.
The expansion of mining capacity in Chile and expansion of extractive
industries in Colombia will help to support longer term growth, while long term
growth in Mexico will be aided by its proliferation of bilateral trade agreements,
competitive exchange rate, low unit labour costs and longstanding deep trade
links with the US. Overall, we believe construction in Chile and Colombia will
grow at rates of over 4% pa or more between 2012 and 2025 but Mexicos will
be slightly higher at almost 5%.

Adrian Smith + Gordon Gill: Kingdom Tower will rise to a height of at least one kilometre and
will become the worlds tallest building when completed. It is the first phase of the Kingdom
City development, located along the Red Sea on the north side of Jeddah

Arabtec Holding: The Louvre Abu Dhabi, UAE. The museum is located on the Saadiyat Island
complex and will be approximately 24,000 square meters

Affordable Housing in Latin America

A Key Growth Opportunity
Brazil and Mexico are the worlds sixth and seventh largest housing markets
globally by number of housing completions. Nonetheless, Latin America, as a
whole, faces a large and growing housing deficit. In Mexico alone, the housing
deficit is currently estimated to be 8.9 million homes, whilst in Brazil housing
shortages stand at between six and eight million.
In addition, a total of almost 60 million people in Latin America and Caribbean
live in houses that are not classed as fit for habitation.
We estimate that over 27.5 million new homes will be needed in Brazil and
Mexico alone by 2025.
This suggests that private investment in the development of affordable
housing solutions for the Latin American market represents a major
opportunity for companies prepared to develop innovative and low cost
solutions to meet a growing need.

Public Private Partnerships Could be

Used to Deliver Large Scale Investment
in Infrastructure Globally
It is clear from the infrastructure needs of the 46 countries examined in this
report that there is a growing and widening infrastructure deficit which cannot
be met adequately from government funding alone as many developed and
emerging nations, have high levels of public debt.
As a result, many developed and emerging economies are looking at Public
Private Partnerships as a way of delivering infrastructure without committing
large amounts of public funds. However, it is clear that deeper reforms and
modernisation of procurement practices are needed to enable models
involving the private funding of infrastructure to succeed.

Growing Global Mega Cities An

Engineering and Construction Challenge,
as well as a Sustainability Challenge
Urbanisation is one of the largest challenges facing the human race. Growth
in the worlds Global Mega Cities gives rise to major challenges for the
engineering and construction industry. Some two billion additional citydwellers are expected by 2050, giving rise to challenges around providing
power, water, sanitation, housing, offices and transportation as well as doing
this sustainably and developing new cities of the future.

Page 18
Global Construction 2025
Executive Summary

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