Report: International construction market output to hit $13 trillion by 2022
- Digital media and research company GlobalData predicts that global construction output will increase by 3.6% per year for the next five years, reaching $12.9 trillion by 2022. This represents an increase of almost 20% from $10.8 trillion as of the end of 2017.
- The Middle East and Africa region is expected to grow at the fastest rate between 2018 and 2022, 6.4% a year. This is partially driven by an uptick in oil prices in Gulf Cooperation Council nations. Those countries will likely start spending significant amounts of those funds on major infrastructure projects. When looking at sub-Saharan Africa alone, the pace of growth should be 6.6%, thanks to government-sponsored construction programs. The largest share of the total value of output will stay in the Asia-Pacific region, particularly China, Japan and India, even though the rate of growth there will slow due to reduced construction activity in China.
- Growth in the U.S. construction industry should also help to push the global market along, but some Eastern European and Latin American markets will remain a drag on international industry performance because of slow government funding and weak economic performance in some countries in those regions. Potential global headwinds include fallout from the U.S.-China trade war and increased borrowing costs, although interest rates are still near all-time lows in many parts of the world.
In the U.S., a recent Dodge Data & Analytics report on construction starts indicates that despite month-to-month volatility, mostly due to a variation in the number of large projects getting underway each month, nonresidential sector fundamentals are strong. In addition, public works projects — highways, environmental projects, energy pipelines, rail — continue to exhibit strong growth. For example, in August, growth in the nonbuilding category's electric utility and gas plant segment jumped by 44% because of large projects like a $1.3 billion natural gas-fired power plant in Ohio.
There are some standout U.S. market segments as well. A September Lodging Econometrics report revealed a record-setting pipeline for hotel projects around the world. The U.S. contributed 40% of the almost 12,900 hotel projects either under construction or in the planning stages. In addition, of the 10 global cities with the most hotel construction activity, six were in the U.S. New York was No. 1 with 169 projects (29,365 rooms), followed by Dallas (156 hotel project with 18,908 rooms) and Houston (150 projects; 16,321 rooms).
Marriott International, Hilton Worldwide and InterContinental Hotels Group were the most active hotel chains in the U.S., the report found.
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