Global Perspectives 2025 Exec Summary

7/17/2019 Global Perspectives 2025 Exec Summary

http://slidepdf.com/reader/full/global-perspectives-2025-exec-summary 1/11

GlobalConstruction

A global forecastfor the constructionindustry to 2025



Published by:Global Construction Perspectives and Oxford EconomicsBroadwall House, 21 Broadwall, London SE1 9PLUnited Kingdom Tel: +44 (0)203 0868820E: [email protected]

Published on 1st July 2013

Copyright: All rights, including copyright, in the report are ownedby Global Construction Perspectives Limited andOxford Economics Limited.

Disclaimer: All information provided in this report is for information purposes

only. Although every reasonable effort is made to ensure theaccuracy of the report, it is not intended to be relied upon fordecision making purposes.

British Library Cataloguing in Publication Data. A catalogue record for this book is available fromthe British Library.

ISBN: 978-0-9564-2078-7

Design by

www.un.titled.co.uk

GlobalConstruction

A global forecastfor the constructionindustry to 2025



AcknowledgementsThis global forecast and report has been prepared and written by a n

expert team:

Global Construction Perspectives

— Mike Betts

— Graham Robinson

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.


and Oxford Economics

Broadwall House, 21 Broadwall

London SE1 9PL

United Kingdom

Tel: +44 (0)203 0868820

E: [email protected]

www.globalconstruction2025.com

ForewordConstruction is one of the largest industrial sectors and will account for over

13.5% of world output by 2025.

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:

— 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 u ndertaken 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, Indon esia, Russia,

Canada and Mexico.

— China alone accounts for 36% of all growt h in construction to 2025 and the Chi nese construction market is

expected to be twice the size of th at 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 i n 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 an d India alone by 2025.

Lafarge believes urbanisation is a key challenge of this century. By 2050 the p lanet’s 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 arou nd 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 durab le, 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 worl d. That’s why we innovate. Because living in bet ter cities is an issue which

affects every single one of us.

Bruno Lafont

Chairman and Chief Executive OfficerLafarge

www.lafarge.com



Page 6

Global Sponsors

Page 7

Global Sponsors

Autodesk helps people imagine, design and create a better world. Everyone--fromdesign professionals, engineers and architects to digital artists, students andhobbyists--uses Autodesk software to unlock th eir creativity and solve importantchallenges. Autodesk is a leader in professional and personal 3D 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 continuesto develop a broad portfolio of state-of-the-art software for global markets.

www.autodesk.com

Aedas consistently produces innovative architectural design solutions from our 39offices around the globe. Our active participation within int ernational communitiesallows us the ability to offer an innate knowledge and understanding of localcultures and the skills to lead creative design initiatives where w e can apply ourinternational 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, theMiddle East, Europe and the Americas.

www.aedas.com

China State Construction & Engineering Corporation is the world’s largestconstruction and real estate company. The company’s core businesses arebuilding, real estate development, infrastructure, designing and overseasoperations. It is well known for undertaking super high-rise, grand scale, cutting-edge and novel projects and has built up a great number of prominent projectsboth in the People’s Republic of China and t hroughout the world.

www.cscec.com

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

www.ciob.org.uk

Heidrick & Struggles is the premier professional services firm focused on servingthe leadership needs of top organisations globally. For 60 years, we have focusedon quality service and built strong leadership teams through our relationshipswith clients and individuals worldwide. Our Global Engineering, Construction andInfrastructure Practice has a detailed understanding of the leadership challengestoday’s markets create and has grown into the top leadership advisory team in thesector. Today, Heidrick & Struggles consultants operate from principal businesscenters in North America, Latin America, Europe and Asia Pacific.

www.heidrick.com

Holcim is one of the world’s leading suppliers of cement and aggregates (crushedstone, gravel and sand) as well as further activities such as ready-mix concreteand asphalt including services. The Group holds majority and minority interests inaround 70 countries on all continents.

www.holcim.com

Mace is an international consultancy and construction company, offeringintegrated 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 collaborativeand entrepreneurial culture, constantly striving to find better solutions to complexinfrastructure and property challenges.

www.macegroup.com

Murray & Roberts is a leading South African engineering, contracting andconstruction 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 theglobal underground mining market and selected emerging markets in the naturalresources and infrastructure sectors.

The company operates in Southern Africa, Middle East, Southeast Asia, Australasia and North and South America. The company is based inJohannesburg South Africa, where it has a public listing on the JSE Limited.

www.murrob.com

With more than 390,000 customers—including 100 of the Fortune 100—andwith deployments across a wide variety of industries in more than 145 countriesaround the globe, Oracle offers an optimized and f ully integrated stack of businesshardware and software systems.

Oracle engineers hardware and software to work together in the cloud and inyour data center–from servers and storage, to dat abase and middleware, throughapplications. Combining Oracle Primavera Project Management software withother business critical applications delivers complete industry solutions.

www.oracle.com

Royal BAM Group nv is a successful European construction group. BAM is activein the sectors construction, property, civil engineering, public private partnerships,mechanical and electrical contracting, consultancy and engineering, and facilitiesmanagement.

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 BAM’s prominent features is its widespread regional network of offices,meaning that the company is always close to its customers. BAM has achievedvery high standards in respect of its Corporate responsibility and sustainabilitycredentials, in many cases taking a leading position in its operating count ries.

www.bam.co.uk

ARCADIS is the leading pure play global engineering and consultancy firm,providing consultancy, design, engineering and management services ininfrastructure, water, environment and buildings. We enhance mobility,sustainability and quality of life by creating balance in the built and naturalenvironments. ARCADIS develops, designs, implements, maintains and operatesprojects for companies and governments. With 22,000 employees and morethan €2.5 billion in revenues, the company has an extensive international networksupported by strong local market positions. ARCADIS companies include ECHarris, RTKL and Langdon Seah.

www.arcadis.com

A world leader in building materials, Lafarge employs 65,000 people in 64countries, and posted sales of €15.8 billion in 2012. As a t op-ranking player in itsCement, Aggregates and Concrete businesses, it contributes to the constructionof cities around the world, through its innovative solutions providing them withmore housing and making them more compact, more durable, more beautiful,and better connected. With the world’s leading building materials research facility,Lafarge places innovation at the heart of its priorities in order to contribute to moresustainable construction and to better serve architectural creativity. Since 2010,the Lafarge Group has been part of the Dow Jones Sustainability World Index, thefirst global sustainability benchmark in recognition of its sustainable developmentactions. More information is available on Lafarge’s website:

www.lafarge.com

Aconex provides the world’s most widely used SaaS platform for managinginformation, processes and people throughout the life cycle of construction andengineering projects across multiple industries. The Aconex suite of solutions– secure, neutral and centralized – enables owners, contractors and projectmanagers to reduce the cost and risk inherent in capital projects of all sizes andimprove efficiency, productivity and accountability for all project participants.

Aconex has served projects valued at more than US$700 billion, with over300,000 users. Clients include nine of the world’s top ten EPC/EPCM firms, 23of the 25 largest global design firms, and nearly all Fortune 500 construction andengineering firms.

www.aconex.com

Since 1975, Arabtec Holding PJSC (Arabtec) has completed a number of iconicprojects within the residential and commercial space. Projects include hotels,airports, higher education developments, residential buildings and distributionfacilities, amongst others. Arabtec is also renowned for its expertise in industrialand infrastructure works including oil and gas, pipeline construction, powergeneration, marine works and general manufacturing facilities.

Arabtec was listed on the Dubai Financial Market in 2005, and at the time, wasthe first private construction firm to go public. Today, Arabtec Holding consists ofmany subsidiaries, with specialisation in all construction sectors. The Companycurrently operates in the UAE, Saudi Arabia, Qatar, Kuwait, Bahrain, Egypt, In dia,Jordan, Palestine, Russia and Syria. Arabtec continues to expand int o additionalmarkets; Arabtec recognises that this growth presents a new set of challengesbut is cognisant of the endless opportunities this growth also allows.

www.arabtecholding.com

Armstrong World Industries, Inc. is a global leader in the design and manufactureof floors and ceilings. I n 2012, Armstrong’s consolidated net sales from continuingoperations totaled approximately $2.6 billion. Armstrong operates 34 plants ineight 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 ceilingand wall designs for market segments including office, education, healthcare,transportation, retail, hospitality, and residential.

www.armstrong.com

CEMEX is a global building materials company that provides high-quality productsand reliable service to customers and communities in more than 50 countriesthroughout the world. CEMEX has a rich history of improving the well-being ofthose it serves through its efforts t o pursue innovative industry solutions andefficiency advancements, and to promote a sustainable future.

www.cemex.com



Page 8

Global Sponsors

Rider Levett Bucknall is an independent, global property consultant, providingadvice focused on the cost, quality and sustainability of the built environment. Ithas over 3,000 staff operating from more than 100 global offices.

The firm’s philosophy is to combine global best practice with local know-how,utilising the latest cost data and innovat ions to deliver full property solutions forclients across a number of sectors. Services provided include Cost Management,Project Management and Advisory.

www.rlb.com

PwC helps organisations and individuals create the value th ey’re looking for.We’re a network of firms in 158 countries w ith more than 180,000 people whoare committed to delivering quality industry focussed assurance, tax and advisoryservices.

www.pwc.com

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

Our analytics and brokerage teams work side by side in order to provide trulyholistic solutions to our clients who face an increasingly complex businessenvironment in terms of capital management, risk transfer, regulation, catastrophemodelling and enterprise risk management.

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

www.willis.com

Textura is the leading provider of on-demand business collaboration software tothe commercial construction industry. Our solutions serve all construction industryprofessionals across the project lifecycle – from takeoff, estimating, design andpre-qualification to bid management, submittals, LEED® management andpayment. Our solutions increase efficiency, enable better risk management, andprovide improved visibility and control of construction activities for our clients.

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 onover 13,000 commercial construction projects worldwide. With award winningtechnology, world-class customer support and consistent growth, Textura isleading the construction industry’s technology transformation.

www.texturacorp.com

Speedy Services is the UK’s leading provider of equipment and support servicesto the Construction, Infrastructure and Industrial markets.

Working closely together in partnership allows the identification of innovative,sustainable and integrated long term solutions, which drive added value andreturn on investment.

This collaborative approach focuses on addressing a client’s unique challenges;allowing them to optimise assets, reduce risk and enable delivery of projects.

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

www.speedyservices.com

United Rentals, Inc. is the largest equipment rental company in the world, withan integrated network of 830 rental locations in 49 states and 10 Canadianprovinces. The company’s approximately 11,400 employees serve constructionand industrial customers, utilities, municipalities, homeowners and others. Thecompany offers for rent approximately 3,300 classes of equipment with a totaloriginal cost of $7.24 billion.

www.unitedrentals.com

For over 35 years, Viewpoint Construction Software ® has been meeting theinformation 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 contentmanagement solutions that can be acquired separately or as a total solution toenhance a contractor’s business model. Viewpoint works with customers andindustry partners to produce cloud, SaaS, mobile and on-premise products thataddress the unique needs of construction firms th roughout the U.S., Australia,Canada, Europe, New Zealand, Middle East, South Africa and the U.K.

www.viewpointcs.com

OCI N.V.’s (formerly Orascom Construction Industries) Construction Group isa leading international engineering & construction company focused on large,complex and demanding projects primarily in the power, petrochemical, transportinfrastructure and water treatment sectors. OCI N.V. is one of th e largest globallyranked corporations with projects and investments across the United States,Europe, North Africa, the Middle East and Central Asia, offering a comprehensiverange of engineering & construction services primarily on infrastructure, industrialand high-end commercial projects for public and private clients.

www.orascomci.com

Executive Summary 10

Introduction 19

Global Outlook 20

Global Economic Outlook 22

Global Construction Outlook 29

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

Box: The Future of Infrastructure 86 FinancingJonathan Hook, Partner, PwC

North America 88United States of America and Canada.

Box: US Construction Market: State 100 by StateAmit Sharda, Economist, OxfordEconomics and Graham D. Robinson,Executive Director, Global ConstructionPerspectives Box: The Impact of the US Shale Gas 110 Boom on Construction ActivityJeremy Leonard, Head of IndustryServices and Amit Sharda, Economist,Oxford Economics

Developed Asia Pacific 112Australia, Japan and Hong Kong.

Box: Public Private Partnerships 134PendingJon Hart, Partner, Pinsent Masons LLP– member of the Pinsent Masons GlobalPPP Group – Hong Kong, Singapore,Beijing, Shanghai, Dubai, Doha, Munich,Paris and London

Emerging Asia Pacific 136China, Singapore, India, Malaysia,Vietnam, Thailand, Indonesia,Philippines and South Korea.

Box: From Smart 190Buildings to Smart CitiesPaul Doherty, AIA 2013President/CEO of the Digit Group Inc

Middle East and North Africa 192UAE, Saudi Arabia, Kuwait, Qatar, Egypt,Morocco, Libya and Algeria.

Sub Saharan Africa 234South Africa and Nigeria.

Box: Africa - Unleashing the 248PotentialAmal Tantawi, Group VP - Strategy,Development and M&A, Africa MiddleEast, Eric Schneider, Group VP - Strategy,Development and M&A, FinancialForecasts, Christel Monot, SeniorAnalyst - Strategy, Development andM&A, Financial Forecasts

South and Central America 250Brazil, Colombia, Mexico, Chileand Argentina.

Box: CEMEX: Industrial Approach to 278 Global Affordable Housing ChallengeJuan Luis Alfiero, Director for CEMEXGlobal Housing Initiatives

Eastern Europe, Russia, Turkey and 280Ukraine

Turkey, Russia, Ukraine, Poland,Czech Republic, Romania, Hungaryand Bulgaria.

Box: Global Talent 2025: The Age of 324the InnovatorCharles Commander (New York),Jamie Page (London) and StaffordBagot (Singapore) Co-leads of Heidrick& Struggles Global Engineering,Construction and Infrastructure Practice2013

Methodology and Interpretation 326

Contents – Global Construction

1

2

3

4

5

6

7

8

9

10



Page 10

Global Construction 2025

Executive Summary

Page 11


Executive Summary

Global Construction 2025Executive 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 businessleaders in the construction and engineering industry from North America,Latin America, Europe, MENA, sub-Saharan Africa and Asia Pacific, with thepurpose of understanding the global construction and engineering marketand the forces shaping future demand to 2025.

In this Executive Summary we give an overview of the health of the globaleconomy 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 andothers with a special interest in helping to shape the future of the globalconstruction and engineering industry. Others including financial institutionsand aspiring leaders of the future will find much of interest in the GlobalConstruction 2025 forecast and report which includes considerable data,information, analysis and insight into global trends as well as individualforecasts for all major construction markets globall y.

More detailed forecasts and analysis of key construction markets is presentedin the main Global Construction 2025 report (328 pages, 683 charts andtables) as well as in over 50 separate databases that provide annual d ata overa 20 year period from 2005 to 2025 for all markets.

China, US and India Drive GlobalConstruction 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 justthree countries: China, India and the United States.

China overtook the US as th e world’s largest construction market in 2010, andnow accounts for 18% of total global construction in 2012.

By 2025, we forecast China will represent over a quarter of all constructionoutput globally.

Our forecasts show that growth in construction in China will slow over theperiod to 2025 and more considerably af ter 2020. Nonetheless, even in 2020-25, growth will average over 6% pa, keeping Ch ina among the five fastest-growing construction markets.

The slowdown in growth in China is due to both lower population growth,a legacy of the ‘one child’ p olicy in place since 1979, and a slowdown ineconomic growth as the economy rebalances away from investment andexport-led growth toward household consumption. But this shift will havean offsetting impact, as increasingly affluent consumers will demand largerhomes and drive the retail and wholesale distribution networks essential for aconsumption-oriented society. We expect the number of Chinese householdswith at least $30,000 income to increase tenfold to at least 30 mill ion by 2020.

We expect India to be a faster-growing construction market than China overthe period from 2012 to 2025.

Not only are similar dynamics at work with regard to explosive growth in thenumber of middle class households, but population in India will grow muchmore strongly.

Stabilisation in Western Europe is one of the main drivers of the renewedglobal 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 inconstruction activity du ring 2008-10 and 2012-13, will be very weak. Wi thhousehold purchasing power declining amid declining real wages and record-high unemployment, there will be little source of residential constructiondemand. Cash-strapped governments have little scope for significantinfrastructure investment, and uncertainty over finding a long-term solutionto the deep-rooted financial and fiscal woes in the Eurozone are severelyconstraining business investment in new capacity. As a result, we foresee verysubdued growth in construction, not reaching 2% in any year between nowand 2025.

We expect Germany to remain the largest construction market in WesternEurope throughout the forecast period, ahead of France, but population isexpected to shrink by almost two million people by 2025, leading to lessdemand for new housing. A smaller working age population by 2025 couldreduce demand for offices, factories and other buildings, whilst socialinfrastructure such as hospitals and clinics could increase as the populationages. Nonetheless, despite an expected short-term cyclical recovery, thegrowth outlook for Germany is among the weakest in Western Europe.

The expected recovery in Spain will still leave construction volumes in2025 almost 25% lower than their 2007 pre-recession peak, reflecting themagnitude of Spain’s housing bubble. At its peak, the construction marketin Spain was 12% larger than in the UK, despite having a population that is25% smaller. Even though the number of new homes built each year in Sp ainis likely to more than double from current levels to an average of around170,000, this would still be less than half the average 450,000 housingcompletions a year since 2000.

Despite near-term weakness, the UK stands out from the rest of WesternEurope as a growth market.

We forecast that construction volumes in the UK will grow at more thandouble the average rate in Western Europe to 2025 and the size of the UKconstruction market will rival Germany’s by 2025.

There is a pressing need to modernise ageing infrastructure and to build morenew homes to prevent a widening housing deficit in the UK. Until recently,house building has remained stubbornly low since the onset of the globalfinancial crisis. The government’s housing stimulus measures are providingmost of the growth in UK construction at present, but we also expect to seemore investment in UK infrastructure and real estate from China and otherMiddle East sovereign wealth funds. In addition, stronger trade links to a

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

We forecast India will overtake Japan as the third-largest construction marketby 2022. This is later than we previously forecast due to short-term economicweakness in India as well as a temporary boost in construction output as aresult of natural disasters in J apan during 2011.

We estimate that 270 million new homes will be needed in China and Indiaalone by 2025 to meet the needs of population growth and urbanisationtrends. The majority is likely to be affordable housing. In this report, Cemexdescribes how it is targeting the affordable housing market, particularly inLatin America.

Despite being cyclically weak with construction output depressed by 30% inthe seven years to 2012, the US is still the second largest constru ction market.

The US share of the global construction market is one and a half times that ofJapan, the third largest construction market.

The recovery in the US construction market which started last year is forecastto continue with housing remainin g the fastest growing sector. We forecastthe volume of construction output in the US to grow by over 75% between2012 and 2025.

We estimate the US needs almost 20 million new homes by 2025, an averageof 1.5 million new homes that need to be built each year.

Globally, construction, taking our measure of gross out put, accounted for12.2% of world GDP in 2012, but by 2025 we forecast this will rise to over13.5%, as growth in construction continues to rise more strongly th an GDP.

We expect construction output in emerging markets will be 16.7% of GDPby 2025, compared with 10.3% for developed countries, reflecting the higherinvestment requirements in industrialising economies.

Developed Economies are Mixed – North America Growing Strongly but a LostDecade 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 bealmost 40% larger by 2025.

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 inthe world



Page 13


Executive Summary

Key Natural Resource Markets inDeveloped Countries Mixed – Australiaand Canada Experiencing DifferentCycles

The mining and natural resources driven boom in Australia resulted in anaverage annual growth rate in inf rastructure volumes of almost 16% pabetween 2005 and 2012, as investment in new mining capacity and theinfrastructure necessary for export boomed. However, as this new extractioncapacity moves to the production phase, we expect minimal growth this yearand next year, with small declines then following until 2025. This is likely toslow 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.

In contrast, Canada’s growth in oil sands an d shale gas related constructionhas been much less dramatic, as political pressures relating to theenvironmental impact of both the extraction itself and the construction ofnew pipelines have prevented the type of boom seen in Australia. But by thesame token, strong global demand for fossil fuels over the forecast horizonmeans the scope for additional construction activity in the sector is strong. Inaddition, there is an increasing desire to refine in Canada to capture additional

value from the extraction value chain.

Added to this is Canada’s decades-long neglect of its highways, sewers andother municipal infrastructure, which will increase demand for constructionwhether governments like it or not. Numerous bridge collapses and near-misses have stoked public opinion for action and Canada’s federal andprovincial governments have responded with long-term investment programsin infrastructure, helping to drive growth. As a result, average growth inCanadian infrastructure construction is expected to be 3.1% pa through 2025,more than double that in Australia.

growing US economy and more positive population and demographic driverspoint to a stronger medium-term performance for the UK construction marketrelative to the rest of Western Europe.

North America will account for a significant proportion of the increase indeveloped-world construction volumes in 2012-25. The US h as several strongpositive drivers for construction growth not shared elsewhere in the developedworld. Growth in population is high by developed-world standards and the USmanufacturing sector is as competitive as it has been in decades. Anecdotalevidence points to a strong trend towards ‘re-shoring’ of manufacturingoperations as well as strong growth prospects for firms already producingdomestically 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 evenfaster population growth than the US.

In addition, shale gas and oil has led to increased construction output inboth the US and Canada as a result of investment in infrastructure and otherfacilities related to its extraction, which is having further positive knock-oneffects on competitiveness via significantly lower energy prices.

Japan Boosted by Rebuilding and Abenomics, but Longer-Term Trend isWeak

In the short-term demand in Japan continues to be boosted by the rebuildingafter the March 2011 earthquake and tsunami in north eastern Japan. Thishas been reinforced by the ambitious policy actions to combat deflation andshake off two decades of economic stagnation. One of the elements of theso-called ‘Abenomics’ is a fiscal stimulus in the order of 2% of GDP, whichmay well succeed in improving prospects over the next couple of years, butthe impact of accelerating population decline will offset this over the rest of theforecast horizon, with construction output slowing to well under 1% pa. As aresult, the size of the construction sector in 2025 will be about what it was in2005, causing Japan’s global share to fall from 8% to 5% of the total.

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

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

KPF: The Scalpel, joining a cluster of skyscrape rs in and around London’s main financialdistrict. It will be 190 metres tall and contain 560,000 sq ft of offices

Nine Elms on the South Bank, will be one of London’s greatest transformations, becoming anultra-modern complex offering 16,000 homes and 25,000 jobs, schools, parks, c ulture and thearts, set over 196 hectares including the iconic Batter sea Power Station



RLB: Msheireb, Doha, Qatar. The 31 hectare development will be the world’s first sustainable downtown regeneration project a nd thelargest collection of LEED certified buildings and whilst preserving the historical heart of Doha

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

Page 14


Executive Summary

New Generation of Asian Tigers PropelGrowth in Emerging Asia

The dynamism of economies in Emerging Asia over the past two decades isbreath-taking. The ‘Asian Tigers’ of the 1990s – of which South Korea and

Taiwan are the key examples – have now all but become developed andindustrialised economies. The massive development of the infrastructure andproduction capacity that underpins an industrial economy and the housingthat increasingly wealthy citizens desire has largely been accomplished, soit is not surprising to observe that South Korea, with growt h averaging 3.5%pa in 2012-25, is the slowest-growing of the Emerging Asian constructionmarkets we have examined.

While China is far from becoming a developed economy, it is facing significantgrowing pains. Unit labour costs have trebled over the past ten years asworkers clamour for higher wages and productivity struggles to keep pace.

This has allowed other countries in the region to draw businesses in textilesand manufacturing assembly, causing China to become the ‘victim’ ratherthan the ‘beneficiary’ of offshoring. Moving up the value chain is proving tobe more challenging than perhaps expected for Chinese producers, as theimportance of innovation (and the protection of intellectual property that itentails), product quality and speed to market become more critical. Thesechallenges do not reduce China’s importance as a large and fast-growingconstruction market, but they do open up opportunities in a new generation offaster growing Asian Tigers that will help propel regional growth.

Perhaps the most dynamic new Asian Tiger construction market is Indonesia,the world’s fourth most populous nation. We expect the construction marketto grow by an average of over 6% pa in 2012-25, raising its global ranking f rom10th largest in 2012 to fifth largest in 2025.

Indonesia will become the world’s third largest housing market globally bynumber of new homes that it needs to build each year, slightly more than theaverage number for the US. Indonesia’s key Economic Corridors are centredon growth of key industrial sectors and building the necessary infrastructure tosupport economic growth.

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

“Global Construction 2020 has givenRoyal BAM Group a clear perspectiveon emerging global markets,supported by reliable forecasts”

— Martin Rogers,

Executive Board Director, Royal BAM Group

“Global Construction 2020 is thedefinitive overview of one of themost important sectors of the globaleconomy. We have found it invaluablein preparing our global strategy”

– Patrick Allin,

Chairman and Chief Executive Officer, Textura Corporation



Page 17


Executive Summary

Page 16


Executive Summary

Russia and Turkey Lead Growth inEastern Europe

The population in Eastern Europe is forecast to decline by an average of0.2% pa, but increased demand for construction is expected from strongereconomic 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. Asa result, construction output in Eastern Europe is forecast to increase by anaverage of 4.6% pa between 2012 and 2025, marginally higher than the globalaverage. However, there are some key divergences with, for example, growthlikely to be strongest in Russia and Turkey, in both cases exceeding 5% paaverage over 2012-25.

Russia was the ninth l argest construction market globally in 2012. In 2025, weexpect Russia to be the sixth largest.

In comparison to most other Eastern European countries, GDP growth inRussia is not being af fected by severe austerity measures. However, theeconomy will be more reliant on productivity ‘catch-up’ to maintain GDPgrowth. And we expect the implementation of structural reforms necessaryto achieve this to be implemented gradually, supporting solid medium termeconomic growth. On the upside, a more rapid and deeper modernisation

agenda could raise medium-term potential growth higher than we areforecasting. Furthermore, the expansion in construction output over theforecast period will be boosted by the upcoming 2014 Winter Olympics andFIFA 2018 World Cup, which will provide the in centive to improve infrastructureand new building work such as hotels. Moreover, better infrastructure linksand the ability to implement structural reforms should lead manufacturerstowards Russia.

Despite the relative strength in Russia, We forecast that constructionvolumes will grow more rapidly in Turkey than any other market in th e region.

Turkey will be supported by better long term economic fundamentalscompared to neighbouring countries in the region. In addition, a more stablemacroeconomic environment and strong trade links to fast growing emergingmarkets, such as those in East Asia, should help to attract investment. Urbanpopulation in particular in Turkey is expected to grow by around one-third.Forecasts for housing are relatively robust in Turkey, mainly driven by the needto replace and upgrade existing aged housing.

Mexico, Chile and Colombia DriveGrowth in Latin America

Growth in construction output in Latin America is expected to be slower thanthe global average. Although most countries within the region are alreadyhighly urbanised, limiting the scope for further strong increases, a closer lookshows that some parts of Latin America will perform better than others.

The largest Latin American construction market, Brazil, is only expected tosee average growth in construction output of 2% pa, much lower than theregional average. Work has been brought forward, with Brazil hosting theFIFA 2014 World Cup and the 2016 Olympics in Rio. But l ong term growth

will be constrained by the inability to enact deep and necessary reformswithin the economy in order to unlock higher economic growth. Such reformswould need to be targeted at the current poor state of infrastructure, highand complex taxes and excessive bureaucracy. However, if these problemsare addressed then we may see stronger growth in Brazil than currentlyenvisaged.

The expansion of mining capacity in Chile and expansion of extractiveindustries in Colombia will help to support longer term growth, while long termgrowth in Mexico will be aided by its proliferation of bilateral trade agreements,competitive exchange rate, low unit labour costs and longstanding deep tradelinks with the US. Overall, we believe construction in Chile and Colombia willgrow at rates of over 4% pa or more between 2012 and 2025 but Mexico’s willbe slightly higher at almost 5%.

Affordable Housing in Latin America – A Key Growth Opportuni ty

Brazil and Mexico are the world’s sixth and seventh largest housing markets

globally by number of housing completions. Nonetheless, Latin America, as awhole, faces a large and growing housing deficit. In Mexico alone, the housingdeficit is currently estimated to be 8.9 million homes, whilst in Brazil housingshortages stand at between six and eight million.

In addition, a total of almost 60 million people in Latin America and Caribbeanlive in houses that are not classed as fit for habitation.

We estimate that over 27.5 million new homes will be needed in Brazil andMexico alone by 2025.

This suggests that private investment in the development of affordablehousing solutions for the Latin American market represents a majoropportunity for companies prepared to develop innovative and low costsolutions to meet a growing need.

Qatar is Fastest Growing ConstructionMarket Globally

Qatar is forecast to have the fastest growing construction market amongst the46 countries examined in this report, with average double-digit growth of10% pa between 2012 and 2025. Qatar will benefit from the count ry’s hostingof 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 FastestGrowing Construction Region to 2025 After Emerging Asia

The population of sub-Saharan Africa is rising fast, with total populationexpected to reach almost 1.2 billion by 2025, over 40% higher th an today’spopulation, and growing at a rate of over two and a half times the rate ofpopulation growth in Emerging Asia.

African nations are also urbanising fast and the urban population of sub-Saharan Africa is expected to grow almost 70% by 2025 and is also expectedto become increasingly middle-class. As a result, there will be a significantneed for construction of housing, urban transportation, medical andeducational facilities.

We expect Nigeria to be the second fastest growing construction marketamongst the 46 countries we have examined, b ehind Qatar, with averagegrowth in construction of 8% pa in 2012-25.

The population of Nigeria, already seventh-largest in the world, is growingrapidly, with an average growth rate of 2.5% pa forecast for 2012-25, muchhigher than the global average. At the same time, GDP is also forecast to growby an average of 5.4% pa over the same period, signi ficantly above the globalaverage.

We estimate an average of slightly less than 1.5 million new homes a year willneed to be built in Nigeria between 2012 and 2025, making Nigeria the fifthlargest housing market in the world after the US.

Public Private Partnerships Could beUsed to Deliver Large Scale Investmentin Infrastructure Globally

It is clear from the infrastructure needs of the 46 countries examined in thisreport that there is a growing and widening infrastructure deficit which cannotbe met adequately from government funding alone as many developed andemerging nations, have high levels of public debt.

As a result, many developed and emerging economies are looking at PublicPrivate Partnerships as a way of delivering infrastructure without committing

large amounts of public f unds. However, it is clear that deeper reforms andmodernisation of procurement practices are needed to enable modelsinvolving the private funding of infrastructure to succeed.

Growing Global Mega Cities – AnEngineering and Construction Challenge,as well as a Sustainability Challenge

Urbanisation is one of the largest challenges facing the human race. Growthin the world’s Global Mega Cities gives rise to major challenges for th eengineering and construction industry. Some two billion additional city-dwellers are expected by 2050, giving rise to challenges around providingpower, water, sanitation, housing, offices and transportation as well as doingthis sustainably and developing new cities of the future.

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

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



About Global Construction 2025

Global Construction 2025 is the third in a series of major global studies of the

construction and engineering industry to be published by Global Construction

Perspectives and Oxford Economics. The report and over 50 separate databases

provide accurate and reliable forecasts to 2025 and analyse the market dynamics in

46 major construction markets representing over 85% of world output. The report

and databases provide forecasts for construction and engineering globally as well

as for key regional and country markets. The report and databases also examine

trends and give forecasts for key sectors such as infrastructure, residential and

non-residential markets globally, regionally and for 27 major construction markets.

Global Construction 2025 is an invaluabl e tool for senior executives and policy makers

globally who seek to gain a clear perspective on the global construction industry. The

forecasts and report have been written by an expert team from Global Construction

Perspectives and Oxford Economics.

Further details can be found at: www.globalconstruction2025.com

About Global Construction Perspectives

Provides detailed forecasts of construction providing accurate and valuable

analysis and evidence on the future of the global construction and engineering

industry. Reports such as Global Construction 2025 help senior executives within

the global construction industry make the right decisions about future strategy

and direction. Global Construction Perspectives works in partnership with Oxford

Economics to produce high quality forecasts for the global construction industry.Global Construction Perspectives publishes reports on issues of strategic interest

to the global construction and engineering industry and works with a wide range of

sponsors and partners. Staff and consultants at Global Construction Perspectives

have a wide range and depth of skills and a deep understanding of current and future

trends in global construction.

About Oxford Economics

Was founded in 1981 as a commercial venture with Oxford University’s business

college to provide economic advice, forecasts and analytical tools to international

institutions, governments and blue-chip companies. Building on these foundations,

Oxford Economics is now an independently-owned world-leader in high quality,

quantitative analysis and evidence-based business and public policy advice.

Combining skilled analysis with detailed information on the global economic

environment creates a firm base for decisions. Oxford Economics works in

partnership with Global Construction Perspectives to produce high quality forecasts

for the global construction and engineering industry and operates a linked global

macroeconomic model that drives a global industry model from which construction

forecasts are derived. This ensures complete consistency between the broad

economic outlook and the prospects for the construction industry worldwide.


and Oxford Economics

Broadwall House, 21 Broadwall

London SE1 9PL

United Kingdom

Tel: +44 (0)203 0868820

E: [email protected]

www.globalconstruction2025.com

Page 18


Executive Summary

Report Products

Licences to access digital versions of Global Construction 2025 report or

alternativelyprinted versions of the Global Construction 2025 report can be

ordered via w ww.globalconstruction2025.com

Reports give a comprehensive overview with forecasts for trend growth

in construction to 2025 (328 pages, 683 figures and tables). The repor t

explains trends and gives analysis of the key drivers for growth.

Data is given in USD for meaningful comparison between regions, sectorsand countries. A total of 46 major construction markets are analysed,

including eight major regions, representing over 85% of world output. Data

is modelled and generated using a consistent methodology across all

countries, regions and sectors.

Data Products

Licences giving access to over 50 separate Gl obal Construction 2025

databases presented on an Excel platform are also available and can be

ordered via w ww.globalconstruction2025.com

Each database gives 20 years of data from 2005 to 2025 for each

construction market, measuring size of market for each year as well as

annual rates of growth for construction output covering each country,

region and sector and including forecasts for GDP for each country and

region. Data isprovided using a consistent methodology across all countries,

regions and sectors.

Data for all countries is presented in both USD and in local currency in

2012 prices and supplied via Excel platform for convenient analysis. A

comprehensive Technical Annex describing methodology is also provided

with each database.

Data Products also include one-off and quarterly updated databases and

can also be packaged together with Report Products for convenience

and value.

Packaged Products

Licences for Packaged Products of individual Report Products and Data

Products are available via ww w.globalconstruction2025.com

Please contact us via email anytime or via telephone during normal business

operating hours for details of any other Packaged Product combination to

suit the needs of your organisation.

Telephone Orders

Alternatively, orders can be placed by calling our Sales Team in London on

+44(0) 203 0868820 with lines open durin g normal UK business hours from

07:00 until 19:00 on normal business working days.

Email Enquiries

For email enquiries please contact us at [email protected]

or alternatively use the email enquiries facility via our website.

Website Orders

All orders should be processed via www.globalconstruction2025.com.

Our website accepts all major credit and debit cards allowing Report

Products, Data Products and Packaged Products to be convenientl y and

easily downloaded directly from our web site after completing an online

order. Payment for your order is processed securely and independently

via a globally recognised third party vendor.

How to Order GlobalConstruction 2025Please visit the Global Construction 2025 web site

www.globalconstruction2025.com to order Global

Construction 2025 Reports products and Data products.



Documents

Global Perspectives 2025 Exec Summary