Demand for new housing and commercial real estate has generally kept growing in recent years, but supply struggles to keep up. Not only can construction space be scarce in the largest cities, but during the past years there have also been material and staff shortages, while more recently, inflation has kept material prices high. The increasing global awareness of climate changes has fostered some change in the industry, including the growth of the green building construction segment. However, those new trends and challenges have not hampered the growth of the construction industry.
The United States, as one of the largest economies in the world, has an equivalently large building construction industry. Its residential segment alone is expected to reach a value of over one trillion U.S. dollars before the end of the decade. On the supply side, rising construction costs could have a negative impact on the revenue of that segment. However, the development of this industry also depends heavily on the real estate market, which signals demand for housing and other buildings.
The construction cost of an industrial building can vary significantly from city to city. These differences depend on several factors, like the price of land, the availability and price of materials, or the average salary. However, other developments can also affect these costs. During the early years of the COVID-19 pandemic, there was an increased demand for logistics which brought more attention to warehouse construction. More recently, inflation has had increased the cost of materials.
The demand for structures with low greenhouse gas emissions – ideally both during as well after its construction – increased as climate change concerns grew. Whilst there is no unified global approach to how to best construct this type of building, it is believed its market size would more than double in six years’ time. In addition to having a smaller carbon footprint, green buildings also help reduce operational and maintenance costs.
The home construction segment plays a big role in most countries, but its structure can vary from region to region. In the U.S., for instance, construction companies like Lennar Corp and D.R. Horton are specialized in the construction of residential property. This is unlike Europe, though, where residential is but one part found within a larger company. France’s Vinci – Europe’s largest construction company – has several construction activities within several branches, not just residential.
(changes in red) The heating, ventilation, and air conditioning (HVAC) market has become increasingly relevant in the past years. Increasing global temperatures are a driver of this development, alongside an increasing demand for this kind of equipment. Some countries, such as China, the U.S. or Italy, already use these systems extensively. Others could follow soon, the German HVAC market, for example, has grown significantly in the last decade.
The section Building Construction covers everything that impacts the process of adding structures to plots of land – such as residential and non-residential buildings (a category which includes commercial and industrial ones). This includes some other topics such as construction starts, building permits, green buildings, and HVAC&R – heating, ventilation, air conditioning and refrigeration.