The future of the construction industry looks promising, with the global construction market growth initially estimated to reach $10.5 trillion by 2023. Factors such as urbanization, affordable financing, demand for green infrastructure, and government support have been the driving factors contributing to the boom in the construction industry.
However, since 2020, this steady growth trend ended up declining due to lockdowns and social distancing measures imposed to curb the spread of covid-19 in most countries. The demand for in-person meetups at work and social places went down as people switched to working from home and tuning in to online forms of entertainment. Gamblers, for instance, embraced popular online gaming platforms like ggBet as casinos across the world were forced to shut down until the spread of the virus could be managed.
So, how has the past year shifted the construction trends? Read on to discover how 2020’s pandemic changed the landscape of the global construction market:
With a 9.6% growth rate, the construction market in Vietnam is the best performing in the Asia-Pacific region. The market was initially expected to grow to $94.93 billion by the year 2026. But due to the covid-19 pandemic, the growth rate has fallen to below 5%.
The Vietnam government has invested in housing projects to support demands due to rural-urban migration. There is also demand for high-end residential buildings due to increased economic growth in cities such as Hanoi and Ho Chi Minh. Moreover, focus on regional connectivity has led to the construction of roads, rail, and air transport. For example, the 235km Nha Trang-Phan Thiet Expressway and 200km Dau Giay-Lien Khuong Expressway began in 2019. In 2021, the construction of the 16 billion USD Long Thanh International Airport in Dong Nai province commenced.
The Vietnamese government has also made an effort to increase energy production and increase trade volume by expanding its seaports. All these have contributed to the increasing growth in its construction market.
United Arab Emirates (UAE)
UAE recorded a construction market of $101.45 billion in 2020 and is estimated to reach $133.56 billion by 2026, which translates to a Compound Annual Growth Rate (CAGR) of 4.69% between 2021 and 2026. The most significant projects underway include:
Energy Strategy 2050
Launched in 2017, the strategy is to diversify the production of clean energy by the year 2050. The clean energy UAE is focusing on is 44% clean energy, 38% gas, 12% coal, and 6% nuclear energy.
Sheikh Zayed Housing Programme
Focus on expanding retail and office space by 4 million and 7.5 million square meters consecutively by 2030. Through this program, banks such as the Emirates Development Bank are providing housing finance to UAE nationals.
Dubai Tourism Strategy
It was a strategy to expand infrastructure in the hotel industry to accommodate 20 million visitors every year.
The Covid-19 pandemic has adversely affected the construction market in Malaysia, forcing most construction work to go to a complete halt all over the country. Sectors such as civil engineering saw a decline of 24%, residential and non-residential buildings both witnessed a drop of 17% each.
Projects in Malaysia’s construction pipeline include:
- The construction of transit-oriented development on 196.7ha will cost about $33.8 billion. The development will consist of office spaces, commercial centers, and 10,000 residential houses.
- Construction of transport infrastructure includes a 640 km rail link plan, Klang Valley Double Track Phase 2, Mass Rail Transit 2, and the Coastal Highway in Sarawak.
- Construction of residential houses such as the 1Malaysia Civil Servants Housing project focused on providing 175,000 affordable homes. Other programs include First House Deposit Financing, Program Rumah Mesra Rakyat, and the People’s Housing Program.
Due to Covid-19, Oman’s construction market is low with a CAGR of below 5%, and recovery is likely to be slow. Because the economy is heavily reliant on oil, the Oman government has a Five-Year Plan known as the Economic Diversification program.
This plan aims to help the country reduce its carbon footprint, with the government reducing the GDP contribution of the oil sector to only 9%. The country plans to diversify its sources of income to sectors such as manufacturing, tourism, logistics, manufacturing, mining, and fisheries.
Oman’s government plans to receive about 11.7 million tourists by 2040 by building about 80,000 accommodation facilities. In addition, tourism infrastructure will be built around the country according to its regional features. Projects that have commenced include Yeti Sustainable Tourism City. Furthermore, to increase participation by the private sector, the Oman government has reduced income tax for small and medium businesses and offers long-term residency to foreign investors.
North America (USA)
The construction market in North America is estimated to be at $2 trillion. Over a forecasted period of between 2021 to 2026, the market is expected to record a CAGR of 5.2%. Factors that led to growth in the industry are high demand for houses and low borrowing costs.
In the USA, construction backs around 4.1% of the GDP, making it the largest contributor to the economy. The private sector has invested $977 billion, with about 11.2 million people employed in the industry. Despite its strong performance to date, the industry was also significantly affected by the pandemic.
Currently, the US government is investing in non-residential structures and the transport sector to boost post-pandemic recovery. Massive projects underway include Houston Bullet-Train Station, the LaGuardia Airport Construction Project, and the Sound Transit 3 (ST3) Construction Project.
The Coronavirus has greatly affected the construction industry, with some regions experiencing a complete halt in activities. As such, the expected growth forecast will, of course, dip. But then, as different countries continue rolling out Covid-19 vaccinations, the construction sector will likely get back on track by the end of 2022.