TOP MARKETS

WHAT HAPPENED?

A report into the global construction market has revealed the five top-performing sectors.

Turner & Townsend’s latest International Market Survey offers an outlook on the global economy and construction industry.

It tracked activity levels in 18 different sectors within the construction market. The five top-performing sectors were: Industrial, manufacturing and distribution; residential and social housing; transport; data centres; corporate occupier (office fit-out).

Further down the list, mixed-use developments, oil and gas projects and retail stores all saw an increase in construction activity.

WHAT IT MEANS

Turner & Townsend said that continued growth in e-commerce assured industrial, manufacturing and distribution the top spot. Growth in that sector has also been driven by the fall-out from the pandemic and geopolitical tensions, which has highlighted the need for countries to restructure and build resilience into their supply chain by re-shoring production or moving it closer.

Meanwhile, demographic changes and a greater emphasis on public housing investment to reduce home shortages put residential and social housing in second place, despite rising interest rates.

There were large pipelines of transport infrastructure projects to be delivered across many markets, with infrastructure spending remaining robust.

Data centre construction is booming

There was strong continued strong investment in data centres and the report predicted that this investment would continue.

Commercial office development fell from fifth spot to ninth. Ongoing work-from-home arrangements, sustainability, and high costs meant there was less appetite for new office buildings. But this same trend has driven more growth in the office fit-out sector, which has moved up from seventh place last year to fifth.

WHAT’S NEXT?

The survey revealed that the “heat is coming out” of many markets in advanced economies, driven by challenging market conditions and tougher financial conditions. But it also pointed to growth potential in emerging and developing economies like Africa, Asia, and the Middle East, all of which are expected to see more vibrant activity.

Overall, construction activity is softening. Just 23 of 89 markets in its survey reported tendering activity as either “hot” or “overheating”, a reduction of nearly a third compared to last year. Markets where tendering conditions are cold or lukewarm have high competition between contractors, resulting in greater commercial tension.