Construction

Building materials made of copper had some of the highest price growth rates in the U.S. in November 2024 in comparison to the previous year. The growth rate of the cost of many construction materials was much lower than in 2023. It is important to note, though, that the figures provided are Producer Price Indices, which cover production within the United States, but do not include imports or tariffs. This might matter for lumber, as Canada's wood production is normally large enough that the U.S. can import it from its neighboring country.

Similarly to the inflation trends in the U.S. at that time, the price growth rate of construction materials in the UK were generally lower 2023 than in 2022. Nevertheless, the cost of some construction materials in the UK still soared that year, with several of those items reaching price growth rates of over 10 or even of over 14 percent. Considering that those materials make up a very big share of the costs incurred for a construction project, those developments may also have affected the average construction output price in the UK.

During the first years of the COVID-19 pandemic, there often were supply problems and material shortages, which created instability in the construction market. According to a survey among construction contractors, the construction materials most affected by shortages in the U.S. during most of 2021 were steel and lumber. This was also a problem on the other side of the Atlantic: The share of building construction companies experiencing shortages in Germany soared between March and June 2021, staying at high levels for over a year. Meanwhile, the shortage of material or equipment was one of the main factors limiting the building activity in France in June 2022.

In the first quarter of 2024, San Francisco, New York, and Honolulu were some of the U.S. cities with the highest housing construction costs. Meanwhile, Phoenix had one of the lowest construction costs for multifamily homes at 218 U.S. dollars per square foot and Las Vegas and Portland for single-family homes between 180 and 275 U.S. dollars per square foot.

Construction cost disparities As seen here, the construction cost for a high-end multi-family home in San Francisco in the first quarter of 2024 was more than twice expensive than in Phoenix. Meanwhile, there were also great differences in the cost of building a single-family house in New York and in Portland or Seattle. Some factors that may cause these disparities are the construction materials, installation, and composite costs, differing land values, wages, etc. For example, although the price of construction materials in the U.S. was rising at a slower level than in 2022 and 2023, several materials that are essential in most construction projects had growth rates of over five percent. Other challenges affect the industry overall, such as construction material shortages, which were very important in 2021 and 2022.

Growing industry revenue Despite the economic uncertainty and other challenges, the size of the private construction market in the U.S. rose during the last years. It is important to consider that supply and demand for housing influence the revenue of this segment of the construction market. On the supply side, single-family home construction fell in 2022 and it is expected to also decrease in 2023. On the demand side, some of the U.S. metropolitan areas with the highest sale prices of single-family homes were located in California, with San Jose-Sunnyvale-Santa Clara at the top of the ranking.

In 2023, the construction industry in China generated an output of over 31 trillion yuan, representing an increase of almost 100 percent from a decade ago.

Stimulus from the real estate sector and government-funded projects With the liberalization of the housing market in the late 1990s, China's real estate industry enjoyed a 20-year boom since the early 2000s. Amidst the surge in housing prices, local governments across China received considerable non-tax revenue from land leases and in turn, invested the funds in infrastructure development projects. This led to the continuous prosperity of the country’s construction industry.

A vital segment of China’s economy Thanks to the stimulus from housing developments and infrastructure projects, the construction industry is now one of the pillar industries of China's economy, accounting for around seven percent of the country's GDP. However, with the recent difficulties experienced by many major real estate enterprises, and the stagnation in infrastructure construction owing to local governments' debt situation, China's construction sector faces a somewhat uncertain future.

The Swiss cities of Geneva and Zurich had some of the highest construction costs in Europe, with a price of well over 5,000 U.S. dollars per square meter built as of 2024. London was the third city at 4,473 U.S. dollars per square meter, closely followed by Munich and Dublin. When it comes to the construction cost of education buildings in the UK, Glasgow was more expensive than London. However, this is an exception, as generally, London is the most expensive city to build in the UK.

Several of the largest new residential construction projects in the United Kingdom with a construction start date in 2024 were found in London. Planned Internal and External Refurbishment Works Programme in London was valued at 340 million British pounds.

London is one of the best-known cities in the world. It is an important financial and economic centre, accounting for the highest share of GDP out of all the regions in the UK. It is also home to the West-End and the British Museum, and it boasts a vibrant cultural life. The economic importance and popularity of the city are some of the factors fostering a high demand for housing construction in London. In addition to the 14,270 housing starts in London in 2023/24, there was also a similar volume of housing completions. In comparison, the number of private housing starts in the UK as was estimated to be 150,000 in 2023.

Housing repair and maintenance was one of the segments with the highest market shares in the UK construction industry. Meanwhile, new private housing construction represented 19 percent of the construction market in the country in 2023. Two of the largest repair and maintenance projects in 2023 were in London and in the county of Tyne and Wear (the county were Newcastle is located). The revenue of housing repair and maintenance in Great Britain has been increasing at a fast pace in the past years.

In 2023, the construction of non-building projects increased by nearly 49 billion U.S. dollars. This segment refers to power facilities, highways, sewage, water supply, and conservation work. The market size of the non-building segment was significantly smaller than that of residential and non-residential construction. New residential construction in the United States increased considerably in the past years.

India's construction industry was valued at over 3.5 trillion Indian rupees in fourth quarter of 2023. This was a significant increase compared to previous years, when the value shrank due to the coronavirus (COVID-19) pandemic. The country’s construction and manufacturing industries were among the worst hit at the time. However, the industry seemed to recover quickly and returned to pre-crisis level again. 

Developments in other producing industries The coronavirus (COVID-19) pandemic and the national lockdown from March to May 2020 had a differing impact on the producing sectors of the Indian economy. Similar to the construction industry, manufacturing reportedly shrunk in the second quarter of 2020. The agriculture sector did not witness a significant change, even showing higher employment numbers as a result of migrant workers returning to their homes. The utilities industry showed fluctuating values with a peak in the fourth quarter of 2021.

Impact of the construction industry Infrastructure construction had been at the core of economic development in India in recent years. Between financial year 2016 to 2020, the manufacturing industry attracted the highest value of investments. The inflow of foreign direct investments into the infrastructure industries fluctuated over the last five years and amounted for around eight billion U.S. dollars in financial year 2021.  

The first six entries in the ranking of the 100 largest construction firms worldwide in 2023 had their headquarters in China. The combined revenue of the Chinese companies included in the list was higher than that of all other firms combined. CSCEC - China State Construction Engineering Corporation Ltd. - generated 320 billion U.S. dollars worth of revenue in 2023. When construction companies were compared based on market capitalization, however, France's Vinci dominated the construction market in the past years.

There are many types of construction sectors that are considered part of the industry. Building, engineering, specialty construction and planning and development are a few sectors that comprise this booming industry. A large construction company like Vinci generated over half of its revenue from its energy segment, which is focused on the design, construction, operation, and maintenance of infrastructure, as well as on providing other related services. In general, China and Europe were the regions with the largest construction contractors by revenue.

One of the most important aspects of construction is the workers and laborers that manage the industry on-the-ground. Hourly labor costs for construction industry workers are highest in the United States and Japan. In the U.S., weekly earnings of construction workers have increased dramatically since 1965, indicating their value to society and the industry.

In 2023, the South African construction sector contributed with an added value of approximately 109.5 billion rand (roughly 5.79 billion U.S. dollars) to the country's gross domestic product (GDP). This represents a increase of in comparison to the previous year, when the sector's added value to the country's GDP added up to approximately 108.9 billion rand.

In 2022, based on revenue, China’s leading construction company was China State Construction Engineering with an annual turnover of more than 2.05 trillion yuan. Since 2012, the enterprise had increased its revenue by more than 350 percent. Similar to many corporations represented in the ranking, China State Construction Engineering is a publicly-traded company with close ties to the Chinese government.

State-owned enterprises State-owned enterprises (SOEs) play a crucial role in many sectors in the Chinese economy and the construction sector is no exception. For the government, SOEs are a very practical tool because they can act as adjustment screws for the economy and serve as useful vehicles to carry out economic policy. Even though SOEs only account for a small share of the total number of companies in the construction industry, their sizes are significantly bigger.

China Railway Group According to the Forbes ranking, China Railway Group was the second-largest construction company based on revenue. The enterprise is in many ways a good example of a quasi state-owned entity in the construction sector. It underwent structural reform and was able to increase its revenue in recent years. Part of the reform was that China Railway Group became a publicly-traded company on the stock exchange in Hong Kong and Shanghai. However, the company’s major shareholder is the state-owned China Railway Engineering Corporation.