This is marketing research on the non-residential construction industry and can include information on the background, market structure, definitions, competitors, trends and developments of non-residential construction and is related to other topics such as building and housing.

Table of Contents

[edit] Background

The global construction market is currently estimated at approximately US $4.8 trillion, with a recent growth rate of 5% per year. Non-residential construction includes the development of retail, office, institutional/commercial and industrial complexes and buildings.

As a rule, construction generally is a cyclical industry which is dependent on a particular country’s economic health in any given year. For example, the U.S. currently accounts for about 21 % of global construction spending. Similarly, the gross output of the construction industry in Canada is around $138 billion. Another example, the UK, has the building industry as probably its largest single largest employer. Construction as a percentage of GDP varies widely across the rest of Europe. In Portugal and Ireland, for example, construction accounted for some 18.3% and 17.3% of GDP respectively in 2001, while in other Western European countries, construction accounts for between 9 and 11.5% of the GDP.

[edit] Market Structure

Due to the terrorist attacks in 2001 and the resultant global economic slowdown, the U.S. construction industry in 2002 stayed about where it was the year prior, in spite of the prior ten straight years of expansion. The weak U.S. economy over that year led to sharp declines for non-residential building such as commercial structures, but was slightly boosted by growth in single-family housing, public works and institutional building construction. In the last eight months of 2002, however, the US spending moved up by 1% over the corresponding previous period. Construction has expanded appreciably since then. In this period, residential building and non-building construction gained some ground, while non-residential building construction showed modest improvements. In Canada, on the other hand, the construction industry grew a significant 3.2% in 2001-02. The growth was led by the residential sector and not the non-residential building sector. However, the construction forecasts for Canada are negative. The non-residential construction sector is expected to stay flat, with weak private sector investments following the economic slowdown.

The UK construction industry represents a significant 8% of the GDP and spending on construction grew by 3.3% in 2002, marginally down from the 3.5% the previous year. The growth rate projection for the next few years is forecast to be only around 2.5%. Other markets in Europe entered a phase of consolidation with the market stabilizing in 2001 due to the weakening confidence of consumers and businesses and a recession in the construction sectors of Poland and Germany. Most countries witnessed negative growth rates, where there have been substantial increases in building and infrastructure investment. In Sweden and the UK growth rates were well below the prior average of 10%, while the Western European economies, as a whole, in 2002, saw a low 7.6% growth in construction as a percentage of GDP. In Central and Eastern European countries, construction accounted for 11.3% of their GDPs on average.

Among the major Asian economies, China's construction industry is one of the largest and growing at a rapid pace. The non-residential construction segment is becoming as important as the fast growing residential sector. However, the industry is highly fragmented and no major player has more than about a 1% market share. There are potentially 500,000 construction-related companies in the country with the top 20 representing a mere 10% of the industry. China spent about US $120 billion in construction activities in 2002. In the coming years, approximately US $35 billion is forecast for non-residential construction as Beijing gears itself up for the 2008 Olympics.

The Japanese economy has recently been locked in a debilitating cycle of debt, deflation and low growth. The global construction and economic slowdown, before and after September 11, has added to the situation. The cost of construction in Japan is still much higher than in other developed countries and the industry employs about 10 % of Japan's work force, contributing to the amount of 7% to its GDP.

[edit] Industry Definitions

• Building

a rigid, fixed and permanent structure with a roof. Its intended purpose is primarily to house people, plant, machinery, vehicles, goods or livestock.

• Commercial building

buildings primarily occupied by or engaged in commercial trade or work intended for commercial trade, including office and transport activities

• Educational buildings

buildings used in the provision or support of educational services, including group accommodation buildings, school canteens, student dormitories.

• Entertainment and recreational

buildings used in the provision of entertainment and recreational facilities or services, such as libraries, museums, casinos, cinemas, and sports and recreation centers.

• Factories

buildings housing, or associated with, production and assembly processes of intermediate and final goods.

• Industrial buildings

buildings used for warehousing and the production and assembly activities of industrial establishments, as well as buildings used for agricultural and aquacultural activities. Examples include factories and plants.

• Non-residential building

buildings primarily intended for purposes other than long-term residential use. Non-residential building activity includes commercial and industrial building activity such as the building of factories for manufacturing purposes. This category also includes buildings for short-term residential accommodation, such as hotels and motels.

• Offices

buildings primarily used in the provision of professional services or public administration. For example, banks, council chambers, insurance or finance buildings.

[edit] Market Metrics

Construction predictions for 2007

The contribution to GDP made by the construction industry in in representative countries in 2002

      Country	          Percent of GDP


      Portugal 	                18%
      Ireland	                17%
      Canada	                13%
      Poland	                12%
      UK	                 8%
      U.S.	                 8%
      Japan	                 7%
      Slovak Rep.	         6%
      India	                 5%
      China	                 3%

Total construction spending, worldwide, in US $ trillion:

      Year	              Spending	                 CAGR


      1998	               3.05	
      2003	               3.50	                 2.9%
      2008 	               4.80(forecast)	         6.7% (projected)

[edit] Trends and Recent Developments

The current global non-residential construction industry is expected to grow as much as 37% in the next five years. Globally, the non-residential construction industry continues to experience robust growth based on the acknowledgement that good infrastructure is a key determinant of economic growth.

Generally retail and office accommodation developments are expected to see growth levels of 6% – 7% a year for the next three years. Higher prices and lower vacancy rates are the current trends that already point to an ongoing increase in demand. Many previously un-serviced areas will are likely to be targeted for development and the longer-term real growth is expected to be generally high.

[edit] Sources

Penton Media

aveng.co.za

Canadian Press

abs.gov

[edit] Next Steps

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