Global Overview of the Construction and Real Estate Industry

May 2022

The global construction and real estate industry recorded robust growth in value after COVID-19, stimulated by infrastructure investment and rebounding consumer and business confidence. Booming steel, structural metal and energy prices will play a key role in diminishing profitability, with rises in costs and property prices. Residential construction is projected to see slower growth, given increased uncertainty and an anticipated rise in borrowing costs.

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Examining Four Trends Shaping the Construction and Real Estate Industry

Innovations construction methods and technologies

Rising prices of construction materials in the medium term will encourage builders to look for alternative materials and innovative solutions to mitigate cost increases. For instance, using larger prefabricated modules could allow builders to use a wider variety of materials, while modular designs can reduce construction time.

Diversification and localisation of suppliers

Supply chain disruptions during COVID-19 have already fostered diversification and localisation, while Russia’s invasion of Ukraine has also posed similar issues for European countries. Construction companies are projected to continue investing in supply localisation and diversification to avoid similar disruptions.

Booming energy and construction material prices

Energy and construction prices picked up as the industry entered a robust recovery. Russia’s invasion of Ukraine added more fuel to the flame, leading to skyrocketing oil, gas, metal and cement prices. Booming logistics costs will lead to substantial increases in construction budgets and final property prices, which in turn might negatively affect both industry profitability and demand.

Green building and sustainability

The construction sector and its supply chain play a major role in CO2 emissions. Hence, with rising environmental awareness, companies are increasing their sustainability investments. For instance, the industry is searching for alternative renewable and more environmentally-friendly materials, such as timbercrete (mix of sawmill waste and concrete), hempcrete and bamboo. Consumers are also seeking better energy efficiency, fuelling a shift towards greener buildings.

Introduction

Scope
Examining four trends shaping the construction and real estate industry
Key trends impacting the industry in 2022

Global Overview

Construction and real estate records solid growth despite persisting turbulence
After swift recovery from the COVID-19 shock, construction to maintain stable growth
Global industry will remain dominated by China and the US
Profit margins bounced back swiftly in 2021, but might be hindered by rising prices
B2B demand and infrastructure investments drive market expansion
Rising metal and energy prices pressure construction industry

Global overview

Rising metal and energy prices forecast to peak in 2023

Leading Companies

Chinese state-owned enterprises continue to lead the global construction market
As industry recovered from COVID-19, the number of companies operating increased
Industry concentration remains low despite rising costs

Global Outlook

T he US and Southeast Asia forecast to see fastest construction value growth
Following swift recovery the industry to record solid growth, but Latin America stagnates
Key future trends shaping the global industry

Country Snapshots

China: Following boom in 2021, industry will continue recording steady growth
Swift recovery might see setback as booming costs hamper affordability
US: Industry to maintain healthy growth
Booming housing market might be curbed by rising interest rates
Japan: Infrastructure developments will support industry growth
With robust rises in material and energy prices, industry will see short-term value growth
Germany: Industry to maintain steady growth
Housing demand to maintain momentum despite robust price increases
UK: After swift recovery, industry to maintain growth
Infrastructure developments to continue to drive industry’s performance
India: Industry to maintain solid growth rate
Solid infrastructure investments to aid future growth
France: Industry to record growth on the back of rising infrastructure spending
Slower commercial and residential demand to be compensated by rising property prices
Canada: Industry to post substantial growth
Healthy housing market growth and commercial demand to stimulate construction growth
Australia: Construction growth to maintain solid pace
Australian infrastructure investment to drive industry growth
Italy: Sluggish economic growth drags down construction industry’s performance
Infrastructure spending to partially compensate for sluggish residential construction
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