Construction Market Definition
The construction market consists of the sales revenues earned by entities (organizations, sole traders and partnerships) that construct buildings or engineering projects (e.g., highways and utility systems). Establishments that prepare sites for new construction and those that subdivide land for sale as building sites are included in this market. The construction market includes new work, additions, alterations, maintenance, and repairs.
Construction is the process of constructing a structure such as building, framework or model using various materials. Any construction project is made out of specific variations within a fixed framework of distinct stages - design, production and conversion of raw materials into manufactured products, and construction. Each of these stages consist of its own internal stages, processes, and aspects that combine together to complete a construction project.
Construction Market Competitive Landscape
The Construction market is relatively fragmented, with the top eight competitors making up around 28% of the total market in 2018. Players in the market include China State Construction Engineering Corp., China Railway Group Ltd. (CREC), China Railway Construction Corporation Limited.
China, Japan, India, Australia, USA, Brazil, UK, Germany, France, Spain, Italy, Russia
Construction Market Size
The global construction market reached a value of nearly $12,558.2 billion in 2018, having grown at a compound annual growth rate (CAGR) of 8.3% since 2014, and is expected to grow at a CAGR of 10.6% to nearly $18,775.3 billion by 2022.
Growth in the historic period resulted from strong economic growth in emerging markets, low interest rates, and technological advances. Factors that negatively affected growth in the historic period were geo-political tensions that hampered construction activity globally.
Going forward, faster global economic growth, and rapid urbanization in developing countries will drive growth. Factors that could hinder the growth of the construction market in the future include rising interest rates in most developed and developing countries.
Construction Market Drivers
The key drivers of the construction market include:
Strong Economic Growth In Emerging Markets
The construction market was mainly driven by rapid growth in emerging markets in the historic period. Emerging markets growth was aided by rising disposable income, stable political environment and increasing foreign investments in these countries. For instance, according to the IMF, China’s GDP grew from $10.5 trillion in 2014 to $14 trillion in 2018. Additionally, according to a report by the IMF in 2018, emerging markets and developing economies together registered a growth of 4.3% in 2015 and this increased to 4.7% in 2018. Strong economic growth boosted the demand for construction services and this drove the market during the historic period. These factors boosted the construction demand from emerging markets such as China, India, Brazil, Saudi Arabia, and Indonesia, and drove the market during the historic period.
Construction Market Restraints
The key restraints of the construction market include:
Geopolitical tensions had a negative impact on the construction market during the historic period. Repercussions of geopolitical tensions included sanctions on Russia, trade protectionism and heightened military tensions in the Middle East. Many countries placed trade restrictions, especially on imports, to boost local production of wood and metal products which are widely used in the construction industry. The US is also implementing several trade restrictions, especially with China, to boost its local production. For instance, the US imposed 25% tariff on steel and 10% tariff on aluminum, in 2018. Continued violence and terrorism in the Middle East and other parts globally are also expected to have a negative impact on the market as this hampers construction activity.
Construction Market Trends
Major trends influencing the construction market include:
Use Of Autonomous Construction Vehicles
Construction companies are increasingly using autonomous construction vehicles and heavy equipment to improve productivity. These automated vehicles are equipped with sensors, cameras and GPS. Real-time data obtained from these devices helps in remote monitoring of a jobsite and reduces construction time. Vehicles connected through IoT, telematics and RFID tracking technologies are also helping the construction industry to be more collaborative, efficient and safe. Leading manufacturers such as Komatsu, Caterpillar and Volvo CE are continuously releasing new models of autonomous, semi-autonomous and remote controlled excavators and other heavy equipment. Royal Truck & Equipment is pilot testing with Florida DOT for self-driving crash trucks for work zones.
Green Construction Projects
Building construction companies are increasingly using green construction techniques to build energy efficient buildings and reduce construction costs. Green construction refers to the practice of using sustainable building materials and construction processes to create energy-efficient buildings with minimal environmental impact. According to the World Green Building Trends Survey 2015, about 51% of construction firms in the UK were involved in green construction projects. Certifications such as Leadership in Energy and Environmental Design (LEED) help construction companies to develop high-performance, sustainable residential and commercial buildings, and also offer a variety of benefits, from tax deductions to marketing opportunities. Sustainable construction materials such as natural paints and steel beams made from recycled material are being widely used in the UK. Other green construction techniques such as cross-ventilation for more natural environment, green construction software such as Construction Suite to ensure green compliance, and Green Globes management tool are also being used in the construction industry.
Opportunities And Recommendations In The Construction Market
Opportunities – The top opportunities in the global construction market will arise in the buildings construction segment, which will gain $3,071.5 billion of global annual sales by 2022. The construction market size will gain the most in China at $1,178 billion. The top opportunities in the global buildings construction market will arise in the residential building construction segment, which will gain $1653.8 billion of global annual sales by 2022. The top opportunities in the global heavy and civil engineering construction market will arise in the utility system construction segment, which will gain $416.4 billion of global annual sales by 2022. The top opportunities in the global specialty trade contractors market will arise in the building equipment contractors segment, which will gain $836.8 billion of global annual sales by 2022. The top opportunities in the global land planning and development market will arise in the residential land planning and development segment, which will gain $69.3 billion of global annual sales by 2022.
Recommendations – Market-trend-based strategies for the construction market include using autonomous construction vehicles, adopting green construction techniques, using digital technologies to improve construction safety, and using advanced building materials. Player-adopted strategies in the construction industry include investing in green building projects, and expanding businesses through strategic partnerships and acquisitions, among other strategies.
Construction Market Segmentation
The construction market is segmented by type of construction and by geography.
By Type Of Construction-
The construction market can be segmented by type of construction
Buildings construction was the largest segment of the construction market in 2018 at 50.5%. The land planning and development market is expected to be the fastest-growing segment going forward at a CAGR of 13.3%.
- a) Buildings Construction
- b) Specialty Trade Contractors
- c) Heavy and Civil Engineering Construction
- d) Land Planning and Development
Buildings Construction Is Further Segmented By Type Of Construction-
New housing for-sale builders was the largest segment in the residential building construction market in 2018 at 38.3%.
- a) Residential Building Construction
- i. New Housing For-Sale Builders
- ii. Residential Remodelers
- iii. Single-Family Housing Construction (Individual Houses)
- iv. Multifamily Housing Construction (Apartments)
Commercial buildings was the largest segment in the non-residential building construction market in 2018 at 51.6%.
Residential building construction was the largest segment of the buildings construction market in 2018 at 55.6%. The non-residential building construction market is expected to be the fastest-growing segment going forward at a CAGR of 10.7%.
- b) Nonresidential Building Construction
- i. Commercial Buildings
- ii. Institutional Buildings
Specialty Trade Contractors Is Further Segmented By Type Of Contractor-
Concrete work was the largest segment in the foundation, structure, and building exterior contractors market in 2018 at 40.9%.
- a) Foundation, Structure, And Building Exterior Contractors
- i. Concrete Work
- ii. Roofing Contractors
- iii. Masonry Contractors
- iv. Framing Contractors
- v. Glass and Glazing Contractors
- vi. Other Foundation, Structure, And Building Exterior Contractors
- vii. Siding Contractors
Plumbing, heating and air-conditioning contractors was the largest segment in the building equipment contractors market in 2018 at 52.1%.
- b) Building Equipment Contractors
- i. Plumbing, Heating And Air-Conditioning Contractors
- ii. Electrical Contractors And Other Wiring Installation Contractors
- iii. Other Building Equipment Contractors
Drywall and insulation contractors was the largest segment in the building finishing contractors market in 2018 at 32.9%.
d) Other Specialty Trade Contractors
Building equipment contractors was the largest segment of the specialty trade contractors market in 2018 at 44.1%. The building finishing contractors market is expected to be the fastest-growing segment going forward at a CAGR of 12.1%.
- c) Building Finishing Contractors
- i. Drywall And Insulation Contractors
- ii. Painting And Wall Covering Contractors
- iii. Finish Carpentry Contractors, Flooring Contractors
- iv. Tile and Terrazzo Contractors
- v. Other Building Finishing Contractors
Heavy and Civil Engineering Construction Is Further Segmented By Type Of Construction -
Power and communication line and related structures construction was the largest segment in the utility system construction market in 2018 at 35.0%.
- a) Utility System Construction
- i. Power And Communication Line And Related Structures Construction
- ii. Water And Sewer Line And Related Structures Construction
- iii. Oil And Gas Pipeline and Related Structures Construction
Roads and highways was the largest segment in the highway, street, and bridge construction market in 2018 at 84.0%.
c) Other Heavy And Civil Engineering Construction
Utility system construction was the largest segment of the heavy and civil engineering construction market in 2018 at 43.5%. The other heavy and civil engineering construction market is expected to be the fastest-growing segment going forward at a CAGR of 11.7%.
- b) Highway, Street, And Bridge Construction
- i. Roads And Highways
- ii. Bridges And Tunnels
- iii. Others
Land Planning and Development Is Further Segmented By Type Of End Use Purpose -
Houses and housing estate developments was the largest segment in the residential land planning and development market in 2018 at 65.7%.
- a) Residential Land Planning And Development
- i. Houses And Housing Estate Developments
- ii. Apartments And Other Residential Developments
Commercial land planning and development was the largest segment in the commercial and institutional land planning and development market in 2018 at 57.8%.
- b) Commercial And Institutional Land Planning And Development
- i. Commercial Land Planning And Development
- ii. Institutional Land Planning And Development
Other industrial land planning and development was the largest segment in the industrial land planning and development market in 2018 at 70.7%.
Residential land planning and development was the largest segment of the land planning and development market in 2018 at 77.8%. This market is expected to be the fastest-growing segment going forward at a CAGR of 13.5%.
- c) Industrial Land Planning And Development
- i. Others Industrial Land Planning And Development
- ii. Factories Land Planning And Development
By Geography- The construction market is segmented into
Asia-Pacific was the largest market for construction, accounting for 42.1% of the global market in 2018. It was followed by North America, Western Europe and then the other regions. Going forward, the fastest-growing regions in the construction market will be Africa and the Middle East.
- o North America
- o Western Europe
- o Asia Pacific
- o Eastern Europe
- o South America
- o Middle East
- o Africa
Construction Competitive Landscape
Major Competitors are:
Other Competitors Include:
- • China State Construction Engineering Co., Ltd.
- • China Railway Group Ltd.
- • China Railway Construction Corporation Limited
- • China Communications Construction Group Ltd.
- • Vinci S.A.
- • Power Construction Corp. Of China
- • Grupo ACS
- • Bouygues S.A.
- • Bechtel Corporation
- • Skanska Group
- • Fluor Corporation
- • Kiewit
- • Ledcor Group of Companies
- • EllisDon Inc
- • Aecon Group
- • SGS
- • Interconstruct
- • Anker Hansen & Co A/S
- • Christiansen & Essenbæk A/S
- • CC Contractor A/S
- • EKE-Construction Ltd
- • Colas Group
- • Eiffage Construction
- • Bauer Group
- • Bennett Construction Limited
- • Collen Construction Limited
- • Casais Group
- • Balfour Beatty
- • Carillion
- • Laing O’ Rourke
- • Interserve
- • Morgan Sindall
- • Kier
- • Galliford Try
- • CIMIC Group
- • Lendlease Group
- • China State Construction Engineering Corp Ltd
- • Shimizu Corporation
- • Hindustan Construction Company
- • Shanghai Construction Group Co Ltd
- • Shaanxi Construction Engineering Group Corp Ltd
- • Hunan Construction Engineering Group Corp
- • DLF
- • Tata Projects
- • Punj Lioyd
- • Larsen & Toubro
- • Reliance Infrastructure Limited
- • JGC Corporation
- • Obayashi Corporation
- • Takenaka Corporation
- • Kajima Corporation
- • ESTA Construction
- • Etalon Group
- • Glavstroy
- • LLC Stroygazmontazh
- • Denezam
- • DG Construction
- • Construction Group International
- • GERC
- • Perry Construction
- • CTR Group as
- • Babis Vovos International Construction
- • Berios
- • Consolidated Contractors Group
- • Oderbrecht
- • Camargo Corrêa
- • Andrade Gutierrez
- • Queiroz Galvão
- • MRV Engenharia
- • SalfaCorp
- • Mourik General Contractors
- • Gilbane Building Company
- • McCrory Construction Company
- • Al Habtoor Group LLC
- • Al-Naboodah Constructing
- • Arabian Construction Company
- • Dutco Balfour Beatty LLC
- • Julius Berger
- • Reynolds Construction Company
- • Thabimndeni Construction & Projects CC
- • Orascom Contstruction
- • Lubrik Construction Company