Trends, Challenges and Opportunities in the Global Construction Sector

SHIJU PHILIPOSE
Blog
5 MINS READ
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20 March, 2023

The construction industry is a vital component of the global economy, responsible for building the infrastructure and structures necessary for modern society to function. However, the industry is facing a range of challenges and opportunities that are shaping its future.

The global construction market reached a value of nearly $13,570.90 billion in 2021, having increased at a compound annual growth rate (CAGR) of 4.6% since 2016. The market is expected to grow from $13,570.90 billion in 2021 to $22,873.96 billion in 2026 at a rate of 9.8%. The market is then expected to grow at a CAGR of 11.5% from 2026 and reach $39,352.08 billion in 2031. The buildings construction market is expected to be the fastest-growing segment going forward at a CAGR of 10.6% during the 2021-2026 period (Research and Markets).

The latest trends in the construction industry are driven by technological innovation. In recent years, there has been a significant increase in the use of Building Information Modelling (BIM) technology. This digital approach to building design and construction allows architects, engineers, and contractors to collaborate more effectively, reduce errors, and improve efficiency. BIM is particularly useful for complex construction projects, as it can help to identify and resolve potential issues before construction work begins.

Another trend that is gaining momentum in the construction industry is the use of modular construction. This approach involves building structures off-site in a factory or workshop, before transporting them to the construction site for assembly. Modular construction offers a range of benefits, including reduced construction time, improved quality control, and lower waste and material costs.

The construction industry is facing a number of challenges, including a shortage of skilled workers, safety concerns, and regulatory compliance. Skilled workers, such as architects, engineers, and construction workers, are in high demand but in short supply, which can lead to delays and higher costs for construction projects. Construction sites are also inherently dangerous places, and accidents can be serious or even fatal. Building codes and regulations vary by jurisdiction, and keeping up with these requirements can be a complex and time-consuming process.

Another key challenge facing the construction industry is reducing carbon footprints and achieving sustainable development goals. The United Nations’ Sustainable Development Goals (SDGs) have set targets for reducing carbon emissions and increasing energy efficiency, and the construction industry has an important role to play in achieving these goals. According to the World Green Building Council, the construction and operation of buildings account for around 39% of global energy-related carbon dioxide (CO2) emissions.

To reduce carbon emissions, the construction industry is adopting a range of measures. For example, renewable energy sources, such as solar and wind power, are being used more widely in construction projects. According to the International Energy Agency, renewable energy sources accounted for nearly 72% of global electricity capacity additions in 2019. Green building materials, such as low-emission concrete and sustainable timber, are also being developed and used more frequently. Finally, energy-efficient building designs are becoming more popular, incorporating features such as insulation, ventilation, and lighting systems that reduce energy consumption.

The construction industry is also making progress in reducing waste and improving recycling. According to the United Nations Environment Programme, the construction industry generates around 40% of the world’s total waste. To address this issue, many construction companies are implementing waste reduction programs, which aim to minimize waste and recycle materials wherever possible. For example, the construction industry is increasingly using recycled concrete and other building materials, which can reduce waste and lower costs.

The building industry has received a lot of criticism for its unfriendly environmental practices. Yet, a lot of contractors are making an effort to minimize the effect with their methods and supplies. Below are some interesting facts on green architecture and technology.

  • Buildings account for around 40% of global energy-related CO2 emissions. (USGBC)
  • Emissions from commercial buildings may grow to 1.8% in 2030. (Bold Business)
  • LEED buildings have around 20% lower maintenance costs than usual commercial buildings. (Dodge Data & Analytics)
  • The global green buildings market is expected to grow at a CAGR of 10.26% from 2018 to 2023. (Market Research Future)
  • Green buildings reduce carbon emissions by 34%. Also, they can consume up to 25% less energy than conventional buildings. (Market Research Future)
  • Exterior products such as smart lighting, solar products, and HVAC systems dominate the segment, taking up 79.6% of the construction industry market size. (Market Research Future)
  • Experts expect the non-residential green building segment to experience a 9.25% CAGR by the end of 2023. (Market Research Future)

Eindhoven, a Dutch city, declared that they will 3D print a neighbourhood of five homes. Even though there are currently some 3D-printed homes, many of them do not adhere to building codes. As a result, we may anticipate a slow but constant increase in the adoption of this technology in the future. (The B1M)

Researchers forecast that adopting cutting-edge technologies like "self-healing concrete," which utilizes microbes to fix itself, will become commonplace. These kinds of technologies will lower the cost of upkeep. But on the other hand, advanced materials are still rather pricey and therefore, they won't be used on a large scale any time soon.

The construction industry seems to be lagging when it comes to technology adoption. However, we can expect the industry to catch up in the next five years. Even with all the challenges, the future of the construction industry seems to be bright and very exciting. Robotics and AI are poised to enter the sector in a big way, which will definitely accelerate the growth in the construction sector. 

To conclude, the construction industry is a significant contributor to the world’s GDP, and its contribution is expected to continue growing in the coming years. However, the industry faces challenges, including the need to reduce carbon footprints and achieve sustainable development goals, which require the adoption of new technologies and practices.

Reference:

The "Construction Global Market Opportunities And Strategies To 2031: COVID-19 Impact And Recovery" by ResearchAndMarkets.com (August 2022)

Shiju Philipose
Portfolio Manager

UniAthena

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