The construction industry forms a vital part in the economy of any region because it can help boost economic growth. The construction sector consists of a range of activities which include designing, planning, commercial estimating, maintenance, and repairs among other important activities. There are many stakeholders who are involved in the construction sector. These stakeholders include suppliers, public authorities, advisors, financial institutions, contractors, and professional bodies among others. The construction sector can be broadly divided into three sectors; special trade construction, building construction, and infrastructure construction.
The building construction sector consists of industrial, residential, commercial, or farm buildings. The special trade construction comprises of paintings, electrical work, fittings, and so on. The infrastructure construction sector consists of bridges, flood control projects, roads, railways, etc. The Asia Pacific construction market intelligence is of utmost importance because the market size of the construction sector is more than $4.5 trillion. Out of this Japan has the largest market size of $607.4 billion. According to prediction, the Asia Pacific region is likely to continue growing at a CAGR of more than 4% until the end of 2021.
According to the 2020 construction market intelligence report by Beroe, the Asia Pacific region is likely to contribute to approximately 50% of the global construction spending. The main global regions that will drive the construction sector growth are Japan, Malaysia, South Korea, China, and Indonesia. This is because of the constant increase in demand for construction and an increase in disposable incomes. Moreover, policy support is likely to drive the market too. All of these regions are likely to grow at a rapid pace and provide better margins when compared to other regions in the Asia Pacific.
In the past, Japan and Indonesia saw an increase in revenue due to the construction industry. This was because the governments heavily invested in the construction sector. In addition to that, an increase in the private sector construction requirements helped boost the growth even further. Japan is of particular interest because it is one of the biggest contributors to the construction sector. There are many drivers that resulted in Japan’s construction sector boom. Mostly, an increase in investment in housing projects, education institutions, healthcare projects, and infrastructure will help drive the growth of the sector in the future.
Japan is likely to spend more than $65 billion on the engineering and design industry. While Japan’s residential construction accounts for 33% of the construction activities, the infrastructure construction accounts for 28% of the construction activity. Due to project delays in the past, Japan is likely to catch up by speeding up constructions to ensure all the projects are completed by the deadline. This will help boost the economy and will help drive the growth of the construction industry in the future. Moreover, the Tokyo Olympics 2020 has helped further push the growth of the industry since more building projects are in the pipeline.
Japan had to bear the brunt of natural calamities in the past. This has led to an increase in the construction sector because people want houses with certain properties. For example, people are more interested in earthquake-resistant houses now more than ever in Japan and this has led to an increase in demand for such houses. Other types of houses that are in demand in Japan include fireproof houses and energy savings houses. This interest in particular house types is likely to continue in Japan which will enable the construction industry to grow even if it happens at a slower and steadier rate.
The construction business can help improve the economy because it will boost employment. There is another benefit of training which will help bring the necessary skills which can then help employees become better at their job thus increasing efficiency. Construction opportunities from the private sector will help give rise to employment too. The continuous efforts of the governments to enhance and improve the economy will create more jobs and thus more employment opportunities for people. Investments can help the construction sector to flourish and this is one of the driving factors of the industry.
While the growth of the construction industry helps boost the economy overall, there are many hurdles in the way too which can hamper the growth. If investments are hit then it can directly impact the construction sector as there will be insufficient funds to construct. Moreover, improper construction business management can impact too. An increase in prices of raw materials for construction can cause slow growth too. The construction market is not stable and so this can have a huge impact on the industry in the long-term. Environmental policies and regulations can put a stop or reduce the activities in the Asia Pacific region.