Construction and Real Estate

The Construction market includes markets for constructed buildings and engineering projects (e.g., highways and utility systems), and services provided by entities that prepare sites for new construction and those that subdivide land for sale as building sites.

The construction industry covers the residential, commercial, environmental and energy, industrial, transportation and defense sectors. Furthermore, the sector includes on-site assembly of prefabricated buildings.

Real-estate agents, residential and non-residential builders, contractors, engineering firms and heavy construction firms are the main sectors in construction industry.

The global construction industry is growing rapidly. Population growth coupled with increased per capita income in emerging economies, and lower unemployment rate for advanced economies are driving market growth, and is estimated to grow at a CAGR of 4-5% in the next five years, with commercial construction poised to lead market growth.

Construction output index of new public housing in Great Britain

Real Estate Buying, Selling and Renting: Information and market data on real estate buying, selling and renting.

S&P/Case Shiller U.S. National Home Price Index

Economic development is increasing demand for new constructions and expansions to existing infrastructures.

Asia-Pacific is expected to lead the construction market in the coming years, with China and India, and some Middle East countries driving the growth.

A noteable trend is for governments developing public-private partnerships (PPPs), to partner with construction companies to repair and upgrade national infrastructures.

Our reports contain facts and data on market sizes, revenue, value chain, price trends and regulations, leading players key developments, strategy and profiles.

Construction Industry | Green Focus

As the benefits of going green become clearer and more affordable, tenant and investor demands for sustainable buildings are increasing. Construction companies around the world are building more and more environmentally friendly buildings, and existing buildings are being upgraded to meet these standards as well. Green buildings can also have a demonstrable impact on the corporate bottom line.

The construction industry focus is on lower costs, faster delivery, and lower emissions:

  • Activities associated with low-carbon built environment solutions, driven by technological change, and increasing environmental awareness

  • The cost and benefit analysis of energy applications

  • Achieving specific green building certification standards, such as the Leadership in Energy and Environmental Design (LEED) green building rating system, which has been introduced around the globe

  • Tax credits and incentives available – at the federal, state and local level in countries around the world – to improve the energy efficiency of buildings, which could possibly outweigh the cost of certification standards

  • Cost reductions, operational efficiencies and other rewards that can have a direct impact on a company’s performance and results

With larger contractors bidding for smaller-scale and lower value work in order to maintain their pipelines, there is now intense competition with smaller, regional companies.
Those firms that have done well are all highly diversified and have large Facilities Management operations.
Companies with a particular focus on the utilities sector have also done comparatively well, as have smaller, regional companies with a particular focus on sectors such as housing.

Going forward, the outlook for non-residential construction output remains relatively positive into the short-medium term, with indications of a steady recovery for key sectors such as offices, industrial and retail, though balanced by more muted performance from key public sectors such as health and education.

Challenges

Uneven Cash-flow, Upfront Expenses
Contractors incur a steady stream of expenses, while payments from customers are periodic, including amounts retained until after a project is complete. Bad weather can significantly delay construction schedules, creating uneven cash flow. Prices of raw materials like lumber, structural steel, and concrete change rapidly.

Cost Overruns
Construction contractors have significant numbers of projects based on fixed price contracts, in which they bear the risk for cost overruns. The longer the term of the contract, the greater the potential deviation from original estimates. Sometimes they can pass higher labor and material prices to consumers; however, when prices rise quickly, some builders, especially smaller ones with less leverage, can get caught with the costs between the time they agree on a price for a project and the time they finish.

Dependence on Few Projects, Customers
Customer consolidation and concentration led to greater risk for many contractors, as they depend on fewer contracts. Customer concentration also increases risk, especially for small construction companies that depend on a few customers for the majority of revenue.

High Insurance Costs
Most construction contractors pay relatively high premiums for various types of insurance, including worker compensation, general liability, and surety. Construction delays and defects, accidents by inexperienced or overworked employees, and poor bookkeeping are major insurance issues.

Safety Liability
Contractors carry liability insurance to protect against lawsuits brought from injuries to employees or job site visitors.

Toxic materials
Numerous lawsuits are filed against contractors accused of using toxic materials or inefficient building techniques that contribute to mold litigation.

Excess Supply, Vacancies
Lead builders to cut construction to prevent holding unsold homes in inventory for extended periods.

Site Vandalising
Damage by and theft of construction equipment and raw materials are costly to replace, cutting into profits. Some builders are protecting jobsites by installing cameras and alarm systems, lighting them, building fences, scheduling just-in-time deliveries of supplies, or securing equipment and supplies in onsite containers. And those costs have to be absorbed by the tender of the project.

Regulatory requirements
Today’s construction industry must adopt new approaches to address regulatory requirements and financial risks – while meeting the challenges of expanding globally and achieving sustainable growth.

Sustainability / Green Construction
Sustainability continues to grow in importance organizations tend to incorporate it into new construction operations.

There is a growing awareness towards the benefits of using new and efficient technologies, such as, seismic isolation, base isolation techniques and seismic protection systems. Countries such as China, India and the U.S. are expected to occupy major share of the market.

Equipment manufacturers have developed innovative and efficient machines that take care of various functions in the construction industry. The main focus of manufacturers has been on maintaining fuel economy and to meet the global emission reduction directives. The latest trend being the implementation of a tracking and communication device to be informed about the functioning of the machine through messages forwarded on mobile phones.

In terms of construction equipment, the major categories include concrete mixers and pumps, articulating lift, winches, excavators and dozers, wheel loaders, graders, aerial work platforms, cranes and other ancillary equipment. US-based Caterpillar, Japan’s Komatsu and Sweden’s Volvo are the biggest players in the construction equipment business.

Building & Construction Materials

Strict environmental regulations and policies are pushing for the development of sustainable building and environmental friendly construction materials.
The most important building materials include gypsum and wallboard, cement and concrete, ferrous metals, wood, plastics, as well as stone and clay.

Cement consumption in the U.S. (1,000 metric tons)

Civil engineering infrastructure-related construction projects - water and sewer, conservation and development, as well as power, communication and transportation infrastructure construction.

Civil engineering infrastructure-related construction is heavily influenced by direct and indirect investment from the public sector, and commitments to renew and expand national infrastructure are a driver for the future of the sector.

China’s CRCC, Spain’s ACS Group and France’s Vinci and Germany’s Hochtief are among the world’s leading companies in this field.

Largest construction companies in Europe based on sales (in billion euros)

Facility management services, include the building fabric, air conditioning, plumbing & drainage, fire safety system and lift & escalator maintenance, but also services such as cleaning, security, handyman services and waste disposal.

The Fluor Corporation, rooted in the construction industry, is an example of a company providing facility management services. The French food services and facilities management company Sodexo and the American company Aramark are more examples of such companies.

Property is a main company asset and property management needs to be part of company strategy.

Facility managers today are expected to understand their company’s core business and contribute to the bottom line — not only by reducing facility costs, but also by improving the productivity, revenue generating capacity and image of their organizations.

The increasing quantity and complexity of data available to facility managers through new reporting protocols poses challenges. This calls for enhanced ability to convert raw data into usable and meaningful information that fosters informed decision making.

Facility management increasingly faces challenges posed by open work plan arrangements, differing hours of operation, and varying occupancy rates and densities — all of which impact power use and other considerations.

Facility managers play a critical role in business continuity after a disrupting event, not only by crafting and implementing the prepared response plan, but also by serving as role models for the organization in emergency preparedness and business continuity planning.

Our reports provide key statistics and analysis on market operating conditions, business challenges, current and historical industry growth trends, and more. They offer an explanation of the structure of the industry and analysis across the value chain, market sizes, revenue growth, market and product trends, demographics, price trends, product/company rankings or comparisons, key players profiles, comparing national and multinational operators by sales, market share, investments, projects, partners and expansion strategies,designed to provide a better understanding of a market's competitive landscape, and market forecasts, projecting how current trends will influence industry sales and consumption patterns in the future, latest market developments and analyzing the potential effects of regulatory changes in conjunction with the background macroeconomic outlook.