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CONSTRUCTION
OUTLOOK 2014
CONSTRUCTION
OUTLOOK
About AECOM
AECOM is a global provider of professional technical and management support
services to a broad range of markets, including transportation, facilities,
environmental, energy, water and government. With approximately 45,000 employees
around the world, AECOM is a leader in all of the key markets that it serves.
AECOM provides a blend of global reach, local knowledge, innovation and technical
excellence in delivering solutions that create, enhance and sustain the worlds built,
natural and social environments. A Fortune 500 company, AECOM serves clients in
more than 150 countries and has annual revenue in excess of $8.0 billion.
More information on AECOM and its services can be found at www.aecom.com.
Foreword
Welcome to the second edition of Asia Construction Outlook,
following the successful launch of this publication in August 2013 by
AECOM and Davis Langdon KPK, an AECOM company.
This edition is based on a market sentiment survey across the Asia
region in countries where AECOM is involved in various kinds of
projects to create, enhance and sustain the worlds built, natural
and social environments. We engaged our Asia construction experts
to share their understanding of the markets. The results provide
very valuable information on the most important future trends in
construction activities over the near, medium and long-term.
The survey was conducted in January 2014 based on 68
respondents from nine countries. It suggests that respondents
remain convinced Asia as one of the worlds leading construction
markets although sentiment was slightly less optimistic about
the near-term future compared to the results from our first survey
conducted in May 2013.
Therefore, as markets change pressures mount on project financial
viability due to higher costs and lower margins, innovation in
procurement such as the Integrated Project Delivery process
should be considered. This coupled with the principles of Lean
construction would seek to deliver maximum value to the owner,
reduce waste and maximize efficiency through all phases of design
and construction.
I hope you find this edition of Asia Construction Outlook as
interesting and informative as our inaugural publication and I would
welcome your feedback to allow us to continually improve this
thought leadership publication.
Dato Sri Kandan
Chairman
Davis Langdon KPK, an AECOM Company
Executive Summary
Introduction
Asia Overview
12
14
14
18
20
Asia Outlook 22
Executive Summary
For most developed cities in China (Beijing,
Shanghai, Hong Kong, etc.), the competition
between construction firms is quite intense
and therefore, potential profitability has
been reduced in these locations.
Introduction
This paper provides an overview of the construction
market in Asia at the beginning of 2014. It reviews
industry activity levels in 2013 and provides nearand longer-term forecasts for construction activity
by region, country and city. The findings are based
on analysis of sector statistics combined with the
results of an in-house market sentiment survey.
All data throughout this document are expressed in
US dollars ($)
- Market size US $billion at constant 2010 prices
- Market growth Percent per annum (average
annual growth rates)
AECOM and Davis Langdon KPK, an AECOM
company, undertake a construction market
sentiment survey in Asia twice a year. We send
questionnaires to our construction experts across
the region and the results provide very valuable
information on the most important future trends in
construction activity over the short, medium and
longer term.
Opinion surveys offer essential insights into
economic activity and when repeated regularly,
they can provide an in-depth understanding of the
direction in which markets are moving.
Here, we look at the results of our January 2014
survey, based on 68 respondents from nine
Asian countries.
Asia Overview
During 2013, numerous economic indicators
suggested signs of a global recovery. At the same
time, Asia which was not greatly affected by the
recession started to move toward a more consumerdriven economy, and away from the export-driven
that facilitated the rapid economic growth of the
previous two decades.
Construction
Market Overview
During 2013, the global construction market
showed signs of a recovery for the first time
since the financial crisis began. As in 2012, global
construction spending growth was driven by the
Asian market which outperformed every other
region, although growth rates in 2013 were slightly
reduced when compared with 2012.
1.78
427
$17bn
Taiwan
$42bn
742
billion
3.5%
.4%
6
Bangladesh
7%
The Philippines
$25 bn
2.4%
Japan
%
Strongly
Agree
2.7
Disagree
Agree
Not Sure
Strongly Disagree
2.6%
Taiwan
.8%
3%
Vietnam
4.2%
Malaysia
The Philippines
2.9%
Singapore
3.8%
Indonesia
Korea
Hong Kong
Thailand
India
Singapore
Indonesia
5.2%
Source: IHS Global Insight (2013)
Pakistan
4.5%
$267bn
10
2013
China
$16 bn
Malaysia
$ 24bn
Vietnam
billion
37%
154 bn
Hong Kong
$33bn
34%
Infrastructure
Korea
Thailand
$32bn
Residential
Pakistan
India
Asia
.3%
Japan
$ 24 bn
29%
trillion
China
Bangladesh
Non-residential
$8.4 bn
11
12
46
46%
34%
34%
2013
Increasing
Increasing
Figure 5.4
Strongly Agree
.2 Near-term Outlook for Asia
Agree
Figure 5.2
2014
2013
Unchanged
2013
2014
2014
%
22%
Decreasing 38
%
%
12
5 Increasing
5% 12 %
Unchanged
50% 2014
Unchanged
Decreasing
%
%
22
38
22
38%
5%% 12 %
Decreasing
Figure 5.2
2013
73%
2014
2014
Strongly Disagree
Increasingthat respondents
The survey results suggest
Figure
5.3
Increasing
Unchanged
%
50%%to the %
73
future for%construction
in Asia, compared
%
22
38
73
results from our sentiment survey conducted50
in
2013
2014
2014
Decreasing
May 2013. Our respondents
opinion suggests that
Increasing
the growth prospects, profitability, openness and
%
%
Figure
5.3
% over
attractiveness
%
Figure
5.3 of construction markets in Asia
the next 12 months are slightly more negative when
Unchanged
compared to the results from nine months ago.
2013
2014
%
Decreasing
2013 %
2014
20
73
2013
46
20 50
58
Figure
5.3 The profitability of Decreasing
Figure 5.3:
the construction market
20 Increasing
20
20%
20%
2013
2014
21%
34% Unchanged
Decreasing
Unchanged
%
46% 20
% 58
%%
20
58%
Figure 5.4 46
in Asia
2013
2013
2013
Strongly Agree
Agree
Disagree
Strongly Disagree
Not Sure
Strongly Agree
Agree
Not Sure
Strongly Agree
Agree
Not Sure
Disagree
Strongly Disagree
Disagree
Strongly Disagree
Strongly Agree
Agree
Disagree
Strongly Disagree
Not Sure
Increasing
Unchanged
Increasing
21
%
34
46
21%582014
34% Decreasing
%
Figure 5.4
2%
2Increasing
Figure 5.4 %
%
34
Unchanged 21
%
%
2013
2013
49
2013
Figure
5.4
2013 49%
49%
Figure 5.5
14
49%
49
49 49%
%%
2013
2014
%
62
Decreasing
Decreasing
%
%Increasing
2014
2% %
2 2 % 2014
Unchanged
36
Decreasing
Unchanged
62% %
2% 2%
62
Increasing
Unchanged
Increasing
36
Increasing
Decreasing
62
36
2014
%
%
Figure 5.10
2013
76%
76%
Figure 5.6:
Figure
5.6 The size of the construction market by country,
January 2014 Figure 5.12
2013
China
Decreasing
2014
%
2%
2Decreasing
%
2%
2Unchanged
2014
Unchanged
62
49%
Figure 5.10
%
62%
15% 49 22 % Increasing
Figure 5.10
Increasing
Structures
49%
36%
2013
2014
Residential
%
2013
2014
%
36%
12% 493Residential
Figure 5.10
15%Infrastructure
22 % %
%
155.5:
22
Figure
Figure
5.5 The attractiveness of the construction market
Structures
%
in Asia to foreign suppliers
%
2013
2014
75
Structures
73
Residential
% 5.5 %
Figure
122013 3
2014
3%% Decreasing
15% 12% 22
Infrastructure
2013
2014
%
%
Decreasing
Infrastructure
Structures
10
8
Figure
5.11
%
75
73% %
8% 75%
73 12% 3% 10%Unchanged
2013
2014
Infrastructure
42%
37% Unchanged
Residential
%%
%
%
Figure
42%
Increasing
37
75
73%5.11
17
15
Figure 5.11
Increasing
Structures
49%
53%
2013
2014
%53%%
49%
2013
2014
7Residential
3Residential
Figure 5.11
For the immediate
% future of the construction market
17by%Infrastructure
15experts
country,
% our
17
15%forecast the following shortterm
trends.
Structures
2013 76%
82% 2014
Residential
Structures
Market
growth
7%%survey
3%%results
17The
153%%suggest that the Philippines,
7
Indonesia and Malaysia are at the forefront of
%
Infrastructure
76
2013
Structures
respondents
views regarding market growth in
Infrastructure
%months. However, if we
the %
region over
the next 12
%
%
compare
current results with the%outcome of the
previous survey, respondents have become more
Infrastructure
2014market growth
pessimistic regarding near-term
Residential
prospects in:
%
%
%
India
76 7
76%
82%
82%
Infrastructure
Residential
Figure 5.12 %
7%Structures
3%
%
7Infrastructure
3%
21%
21%
Figure
5.4 The openness of the construction market in
Figure 5.4:
Not Sure
Agree
Strongly Disagree
Not Sure
12
58
58%
Unchanged
82
Figure 5.12
10
Figure 5.12 Singapore
19
82
Figure 5.12
2013
2013
Hong Kong
India
201
10%Residential 19%
10%Structures 19%
17% Structures9%
9%
17%Infrastructure
73%
73%
Indonesia
201
Residential
72%
72%
Infrastructure
Malaysia
The Philippines
Singapore
Thailand
Vietnam
0%
20%
Increasing
40%
Unchanged
60%
80%
100%
Decreasing
82
Structures
2013
Figure2013
5.12
2013
73%
Thailand
%
%
Residential
9
17
Residential
%
10%Infrastructure
% 19
10
19%
Structures
Residential
Structures
%
%%
%
1710
% 9 19 %
9
17
Infrastructure
Structures
Infrastructure
2014
2014
%
2014
72
Asia Construction Outlook Our Experts View
15
Market profitability
The results of our survey indicate that the
Philippines stands out as a market expected to
experience increasing profitability in the region
over the next 12 months, most likely linked to
the predicted demand increase. If we compare
the results from the 2014 survey with those from
the 2013 survey, respondents have become more
pessimistic regarding profitability prospects in:
Indonesia
Singapore
Market attractiveness
The survey results indicate that Indonesia,
Thailand and Malaysia stand out as countries
which respondents expect to become increasingly
attractive to foreign suppliers of construction
services in the next 12 months. However, comparing
Figure
5.8:
The openness
of Figure
the construction
market by
Figure
5.8
Figure
5.8
5.8
country, January 2014
China
China
China
China
Hong Kong
Thailand
India
China
China
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
India
India
India
India
India
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
MalaysiaMalaysia
Malaysia
MalaysiaMalaysia
Malaysia
MalaysiaMalaysia
Malaysia
The Philippines
The Philippines
The Philippines
The Philippines
The Philippines
The Philippines
The Philippines
The Philippines
The Philippines
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
ThailandThailand
Thailand
ThailandThailand
Thailand
ThailandThailand
Thailand
Vietnam Vietnam
Vietnam
Vietnam Vietnam
Vietnam
Vietnam Vietnam
Vietnam
Hong Kong
Hong Kong
India
0%
80%
India
100%
0%20%
40% 0% 40%
60% 20%60%80% 40%80%
100%60%100%
20%
Increasing
Increasing
Increasing
Unchanged
Unchanged
Unchanged
Decreasing
Decreasing
16
Decreasing
0%
80%
China
India
100%
0%20%
40% 0% 40%
60% 20%60%80% 40%80%
100%60%100%
20%
Increasing
Increasing
Increasing
Unchanged
Unchanged
Unchanged
Decreasing
Decreasing
Decreasing
0%
80%
China
China
India
100%
0%20%
40% 0% 40%
60% 20%60%80% 40%80%
100%60%100%
20%
Increasing
Increasing
Increasing
Unchanged
Unchanged
Unchanged
Decreasing
Decreasing
80%
100%
Decreasing
17
ure 5.3
Figure 5.11
13
2014
Decreasing
20%
2013
20%
17%
Unchanged
.3 Sub-sector Performance
58
46
%
%Regarding sub-sector performance
over the next
12 months, respondents expectations are broadly
similar toIncreasing
results from the previous survey. The
infrastructure
sector in%Asia is expected to be the
%
fastest growing, most profitable and most open to
foreign suppliers over the near-term, although the
relative position of the residential sector
has improved.
21
34
ure 5.4
13
Figure
2013 5.10
2014
Unchanged
49
Residential
Figure 5.10: The fastest growing
sub-sector in Asia
%
15 Residential6222 %
%
2013
Increasing
49
73%
Infrastructure
Figure 5.12
2013
Figure 5.11
75%
10
75%
2014
Figure 5.11:
% The most
%profitable sub-sector in Asia
Figure
2013 5.11
Unchanged
2014
Residential
42%15%
17% Residential
%
372013
Increasing
2014
Structures
17% % %%15%
49
7 Structures
3
53
Infrastructure
76%
7% 3%
Infrastructure
82%
82%
76%
Figure 5.12
Figure
2013 5.12
2013
18
2014
Residential
10%Residential 19%
10
17%
Structures
19
2014
Residential
10%
19%
Structures
9%
Infrastructure
Infrastructure
Decreasing
82
76
17%
3%
73%
13
2014
Infrastructure
ure 5.5
Structures
12%
15%
15%% % % 22 %
36 3
12 Structures
2014
Residential
73%
72%
2014
Asia Construction Outlook Our Experts View
19
Figure 5.13: The country with the fastest growing construction market in Asia
Figure 5.15: The city or metropolitan region with the fastest growing construction market in Asia
Rank: 1
4Rank:
5 1 6 2 7 3
Rank: 1
4Rank:
5 1 6 2 7 3
Rank: 1
4Rank:
5 1 6 2 7 3
Rank: 1
4Rank:
5 1 6 2 7 3
2
2
2
2
3
India
3
India
1
1
Indonesia
1
1
2
2
=
Indonesia
2
2
Yangoon
1
1
Yangoon
1
1
Kuala Lumpur
Kuala=Lumpur
Kuala Lumpur
Kuala=Lumpur
=
Jakarta
Jakarta
Jakarta
Indonesia
Mumbai
3
3
Mumbai
2
2
Shanghai
Shanghai
3
Delhi
3 3 Shanghai 3 Shanghai
Delhi
Kong
Hong Kong
3 3 Delhi Hong
3
3 Yangoon
3
MumbaiYangoon Hong
Kong
Hong Kong
33
3
Mumbai
China
4 China
4 China
3 Myanmar
Myanmar
India
4
4
4
34
Myanmar
Myanmar
Vietnam
Vietnam
India
4
4
Vietnam
Vietnam
3
3
Malaysia
Malaysia
3
3
5 Malaysia
5 =Malaysia
Singapore
Singapore
5
5=
Indonesia
Singapore
Singapore
3
Delhi
3
China
2
2
Jakarta
Figure
in Asia
Change
since last survey:
Change
Increase
since last survey:
No change
Increase
No change = Decrease Rank: 1
4 profitable
5
6 7 construction market
Rank: 15.14:
2 The
3 country
4Rank:
5 1with
6 2 the
7 3 most
= Decrease
Figure
region with the
most
profitable
construction
in
Asia
Change
since
last survey:
Change
Increase
since lastmarket
survey:
No change
Increase
No change = Decrease
4Rank:
5 1 5.16:The
6 2 7 3 city
4 or5metropolitan
6 7
= Decrease
4Rank:
5 1 6 2 7 3
Rank: 1
4Rank:
5 1 6 2 7 3
1
15
India
China
2
2
Vietnam
Malaysia
3
3
Singapore
20
2
2
23
Indonesia
23
Indonesia
7
7
Saigon
Saigon
3
Kuala Lumpur
3
Johor Bahru
Kuala Lumpur
5
Johor Bahru
5
Vietnam
Malaysia
Delhi
Singapore
Delhi
6
Delhi
6
Malaysia
Malaysia
Singapore
Singapore
6
Delhi
6
China
4 China Myanmar
4 China
Myanmar
India
4
4
6
56
Myanmar
Myanmar
Vietnam
Vietnam
India
6
6
5
India
5
1
1
2
Indonesia
2
Indonesia
4
Hong Kong
4
4
Hong Kong
4
7
7
Saigon
Hong Kong
Saigon
Hong Kong
1 33 1
1 25 1 2
Kuala
Lumpur
Singapore
Johor Bahru
Singapore
Kuala
Lumpur Singapore
Singapore
Jakarta
Jakarta
Johor Bahru
Jakarta
25
Jakarta
21
Asia Outlook
This second edition of the publication shows a
slowing but still strong Asian construction market.
22
Acknowledgements
We are very grateful to the survey respondents who took the time to
complete the questionnaire that informed this review. This document
was produced with contributions from:
AECOM has compiled the information in this document from a number of sources. AECOM
has not verified that such information is correct, accurate or complete. While every care
has been taken in the preparation of this document, AECOM makes no representation or
warranty as to the accuracy or completeness of any statement in it, including, without
limitation, any forecasts. Historical trends are not necessarily a reliable indicator for
actual future performance. AECOM accepts no liability or responsibility to any party in
respect of this document. This document has been prepared for the purpose of providing
general information, without taking account of any particular persons objectives,
situation or needs. You should seek professional advice having regard to your own
objectives, situation and needs before taking any action.