Blog | 28 May 2024

Insight: The Top 5 Global Construction Markets

Nicholas Fearnley

Head of Global Construction Forecasting

Global construction activity has continued to stagnate over 2024 as the impact of high construction costs, policy tightening by central banks, and the real estate downturn in China offset the activity gains from infrastructure stimulus. There are, however, pockets of growth – with strength in emerging Asia and the impact of Giga-projects in Saudi Arabia continuing to shape regional narratives. In this context we have identified what we think will be the top 5 fastest growing construction markets over the next 15 years.

5. Vietnam

Strong demographic trends, robust foreign investment, and plans to be a “developed country with a high-income economy” by 2050 will see Vietnam remain one of the fastest growing national construction markets. The government has invested significantly in housing, and aims to build at least 1 million social housing apartments by 2030. Vietnam has also benefited from US-China tensions and the resulting diversion of supply chains out of China. Foreign investment underpins much of the growth in construction activity and will be supported by various international agreements including the ASEAN Comprehensive Investment Agreement (ACIA) and Regional Comprehensive Economic Partnership (CREP). An ongoing corruption crackdown has seen an increase in caution among investors and bureaucrats, but this is expected to subside.

4. Indonesia

The relocation of Indonesia’s capital city from Jakarta to Nusantara will help Indonesia maintain its place as one of the fastest growing construction markets. Work on the future capital began in 2022, and it is expected to officially become Indonesia’s capital city on 17 August 2024. Construction of the city will continue through to at least the 2040’s – although foreign investors have remained apathetic towards financing the city. Elsewhere, the government continues to support construction activity through polices such as Presidential Regulation 19/2021, which supports land procurement, and schemes including the One Million Houses Program.

3. Bangladesh

A growing population, rapid urbanisation, and an aspiration to become “a developed and prosperous” country by 2041 will drive construction activity growth in Bangladesh. Infrastructure development continues to be turbocharged by foreign investment from key partners including China, Japan, and India, which in turn unlocks new areas for residential projects. Non-residential building activity is being supported by the government’s plan to develop 100 special economic zones by 2030, of which 97 have now been approved. Bangladesh is prone to flooding and has low reserves of fresh water, making it highly susceptible to climate risks. Adaptation to climate change will require a boosting of the resilience of both new and existing infrastructure.

2. Philippines

A very favourable demographic outlook – the working age population is set to expand by 1.5% p.a. over the next decade – will see the Philippines be the second fastest growing construction market over the next 15 years. The government’s public-private partnership initiatives and improved long-term investor confidence are set to support investment – and therefore construction activity – over the next 15 years. Civil engineering will be the fastest growing sector, with activity levels set to double as the government continues to invest heavily in infrastructure, such as through the ‘Build Better More’ Program, which continues the ‘Build, Build, Build’ program. The Philippines is considered to be highly susceptible to climate risks due to the impact of rising sea levels, coastal erosion, flooding, and impact of tropical cyclones.

1. Ukraine

The war in Ukraine has seen a significant fall in construction activity as the economy geared towards a war footing. While the outcome of the war remains unclear, there will need to be a significant reconstruction of both buildings and infrastructure, estimated to be worth hundreds of billions of dollars. While some of this work has started, the level of construction activity in Ukraine remains well below pre-conflict levels. The magnitude of this reconstruction, and the relatively low level of activity currently underway, places Ukraine at the top of our list of fastest-growing construction markets over the next 15 years.

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