CONSTRUCTION

The global construction sector is going through significant growth and transformation. Demand for construction is on the rise, driven by factors such as urbanization, demographics and increased public and private investment in infrastructure. Global construction output is expected to grow to USD15.5trn by 2030, with three countries (China, the US and India) leading the way, accounting for about 60% of all global growth.

On average, the EBIT margin for the industry was around 5% in 2022 but there are large discrepancies from one region to another. Liquidity in the construction sector is a critical factor as firms get paid in instalments and need to finance inputs and labor out of pocket upfront. Although many construction firms faced liquidity issues during theCovid-19 pandemic, the situation has improved, despite working capital requirements remaining high.

In terms of segments, infrastructure is expected to witness significant growth due to increased public spending on infrastructure projects worldwide amid the green transition and development of emerging economies. However, the residential construction segment may face challenges, mostly due to rising interest rates and high valuations in the property market.