Meet the world’s next great construction superpower
Move over, China. Step aside, USA. There’s a new world construction hotbed coming down the pike (more specifically, the Mumbai Nashik Expressway), and it could mean a major boon for AEC firms that are willing to invest the resources in this rapidly developing, yet still enigmatic, market.
India, the world’s seventh-largest economy (by GDP, U.S. dollars), is set to become the third-busiest construction market on the globe, according to a new report, Global Construction 2030,” from Global Construction Perspectives and Oxford Economics.
Bolstered by its booming population, rapid urbanization, healthy income growth, expanding middle class, and steady flow of foreign direct investment money into real estate, India is on pace to surpass Japan as the world’s third-largest construction market by 2021, and grow at twice the rate of China through 2030, according to the report.
The nation’s metro markets will add some 165 million people by 2030. Delhi alone will grow by 10.4 million during that period, making it the globe’s second-largest city (behind Tokyo). More than 90 million people have flocked to its cities during the last decade, resulting in the development of some 2,770 new cities. India has more than 7,930 cities, 53 of which have at least one million people (eight have five million plus).
The nation has a severe housing shortage (KPMG puts the deficit at 18.8 million units), much of its urban infrastructure is either underdeveloped or nonexistent, its younger population has a strong clamoring for retail and entertainment development, and there is growing demand for modern office space as its urban economies begin to mature.
Like any developing market, India poses a host of impediments for foreign real estate players (as outlined by Ernst & Young): political uncertainly, volatile stock market, confounding land laws, uncertainty of raw material supply, labor issues, and concerns over law enforcement and property rights. In short, there’s a gold mine in South Asia, but AEC firms looking to break into this emerging market have their work cut out for them.
Other findings from the GCP/Oxford report:
• China, India, and the U.S. will account for nearly three-fifths of worldwide construction growth over the next 15 years.
• Annual worldwide construction activity will increase by an average of 3.9% over the next decade and a half—one percentage point higher than the projected global GDP over that period.
• Construction output will expand by 85% to $15.5 trillion worldwide in 2030, with the U.S., China, and India accounting for 57% of growth.
• China will remain the world’s largest construction market, but its building activity is slowing and will increase only marginally.
• U.S. construction is expected to grow at a 5% annual clip, led primarily by development in the southern states and its largest cities. New York, Chicago, Los Angeles, and Houston will account for 27% of the country’s entire construction output over this period.
• Europe will experience modest construction growth, and might not reach pre-recession levels again until 2025. One bright spot: the U.K., which is on pace to overtake Germany as the world’s sixth-largest construction market by 2030.
More at: www.BDCnetwork.com/GCPoxford
