Global construction will grow by 67% from $7.2 trillion to $12 trillion annually by 2020
A new report sponsored by PwC and carried out by Global Construction Perspectives and Oxford Economics predicts growth in global construction will outpace world GDP growth over the next decade. The report, Global Construction 2020, forecasts that global construction will grow by 67% from $7.2 trillion to $12 trillion annually by 2020.
The Middle East and North Africa region is expected to outpace the global growth rate. A total of $4.3 trillion is forecast to be spent on construction in the region over the next decade, representing growth of 80% to 2020.
Mohammad Dahmash, PwC’s leader of real estate, construction & engineering for the Middle East commented, “Particular emphasis will be placed on social and affordable housing to meet the needs of the growing indigenous populations. The procurement process is also getting sophisticated and many countries within the Middle East have started applying ‘Build Operate Transfer’ and ‘Public Private Partnership’ schemes which not only help in financing projects but also ensure the efficient implementation and execution to international standards.”
Within the region, growth in construction will be driven by population increases, economic growth, the desire for diversification and, in some cases, preparations for global sporting events, particularly the 2022 World cup in Qatar. Qatar is the fastest growing construction market covered by the report.
Important facilitators of construction growth in the region are expected to include changes to mortgage laws in Saudi Arabia, driving residential construction, and more private participation in infrastructure investment across the region. The report cautions, however, that recent events in the region may delay the growth in construction in some areas.
Charles Lloyd, PwC’s head of capital projects and infrastructure for the Middle East and North Africa commented: “This report shows that the MENA region is likely to continue to be a major source of growth in the global construction market. Demographic factors, economic growth and regional Governments’ pursuit of more balanced economies will all be powerful stimuli of construction demand.”
However, the report also highlights continued rapid growth in construction in China and India and a rebound in the US market. These factors will mean greater demand for materials and more competition to attract other key parts of the supply chain. Charles Lloyd added: “We may be moving from a buyers’ market globally to a sellers’ one, and all governments will need to market their investment programmes actively if they are to attract world class skills.”