Global Focus on the Construction Industry

Publish Time: 2025-01-20 Origin: Site

I. European Construction Industry: Expected Mild Recovery in 2025

(I) Forecast at the EUROCONSTRUCT Annual Meeting

The 98th EUROCONSTRUCT Annual Meeting was held in Milan, Italy, on December 3, 2024. The meeting predicted that the European construction market is going through a challenging period, affected not only by ongoing external factors such as the war in Ukraine, but also by new potential factors like possible changes in US policies. Meanwhile, internal factors, including high interest rates, high energy costs, and rising labor costs, continue to put pressure on the financial environment, hindering construction activities and investment plans. After the first decline in 2023, 2024 will be the most difficult year for the industry since 2020. However, forecasts indicate that a positive turning point will arrive starting from 2025.

(II) Market Overview

According to the latest estimates, construction activities in the 19 EUROCONSTRUCT member states are expected to decline by 2.4% in 2024, followed by a slight recovery of 0.6% in 2025, with growth accelerating gradually in the next two years. Compared with previous forecasts, the decline in 2024 has been slightly adjusted upward by 0.3 percentage points, the growth rate in 2025 is slightly weaker than initially expected, while the slight growth trend in 2026 remains unchanged.

(III) Situation in Sub - sectors

Residential Construction
In 2024, the significant decline in new residential construction, which continued the trend of 2023, is the main challenge in the European construction market. High housing prices, still relatively high interest rates (despite a decline), and high construction costs are the main obstacles. However, this sector is expected to stabilize in 2025 and accelerate growth in the following years. The residential renovation market is also in a contraction state, with a mild decline this year and a further reduction next year. Starting from 2026, driven by demographic factors, economic conditions, and more favorable housing renovation subsidy policies, the housing sector is expected to improve.
Non - residential Construction
The non - residential construction sector faces challenges, having experienced a slight decline last year. This downward trend is expected to continue this year, mainly due to the pressure on new non - residential construction projects. Nevertheless, growth is expected to resume from 2025, with new construction projects and renovation activities having a positive impact on the overall development of the non - residential construction sector. Market areas mainly supported by public funds will show a relatively optimistic investment outlook, and incentives and structural policies for "green goals" will provide a continuous driving force for renovation activities in the entire sector.
Civil Engineering
Civil engineering remains a bright spot, driven by the urgent need to upgrade transportation networks and energy infrastructure. Investments in these areas are crucial for meeting new demands and achieving political goals. After being relatively weak in 2024, new civil engineering projects are expected to grow significantly in the next two years, while renovation projects show a relatively stable and moderate development trend. Renovation work has been solid this year but is expected to gradually slow down towards the end of the forecast period.

(IV) Conclusion

Despite the current challenges, the European construction market is expected to recover and grow in the coming years. Extensive support for renovation projects and large - scale investments in infrastructure will be the key driving forces behind this positive trend.

II. Construction Activities in Saudi Arabia: Heat and the Question of Sustainability

(I) Report by the US - Saudi Business Council

The US - Saudi Business Council (USSBC), a bilateral non - profit international trade and development organization dedicated to promoting investment between the US and Saudi Arabia, recently released an analysis report on Saudi Arabia's (KSA) construction contracts in the second quarter. Although construction activities are currently booming, questions about their sustainability have emerged.

(II) Contract Data Situation

Overall Trend
The speed of contract approval has not slowed down but is growing at a record pace. "The oil and gas, real estate, and water sectors in the second quarter will continue the growth momentum of the first quarter," said Albara’a Alwazir, Director of the Economic Research Department of the USSBC, when analyzing the second - quarter data. Compared with the 11 - year high set in the first quarter of 2024, the total value of contracts in the second quarter decreased from $32 billion to $18 billion. As in the first quarter, oil and gas contracts still dominate, accounting for more than 40% of the total workload, while real - estate contracts account for a quarter of the total. Water contracts decreased by 9% month - on - month, while the workload of power and utility projects increased by approximately 5% month - on - month. By mid - year, the total value of construction contracts is estimated to be slightly less than $50 billion. In the first half of 2024 alone, this figure is close to the total amount for the whole of 2022, with a difference of only a few billion dollars, and approximately $22 billion different from the total amount in 2023.
Regional Distribution
Most of the projects (59% or $10 billion) are concentrated in the Eastern Province, driven by the expansion project of Saudi Aramco's Fadhili gas plant. The Riyadh region (including the capital) accounts for 15% of the US - Saudi contracts in the quarter. "Among the 35 contracts approved in Riyadh, the real - estate sector accounts for the largest share, with 25 projects worth a total of $1.5 billion, accounting for 56% of the total. In addition, a $600 - million contract in the education sector is for the construction of King Salman University at Diriyah Gate," pointed out the USSBC's second - quarter report. The Tabuk Province (where the $1.5 - trillion Neom super - project is located) accounts for 13% of the US - Saudi contracts in Saudi Arabia. There are 8 contracts in the Tabuk Province, with projects in multiple fields led by Neom. Neom has approved 4 contracts with a total value of $1.5 billion, and Red Sea Global has 3 contracts with a total value of $664 million.

(III) Discussion on Development Sustainability

Questioning Voices
Although oil and gas projects dominate the contracts in the second quarter, under the Saudi Arabian "Vision 2030" plan, which aims to diversify the economy and attract global tourists to special economic zones such as Neom, non - oil and gas sector contracts also account for an important share. Saudi Arabia's Public Investment Fund (PIF), valued at nearly $1 trillion, is investing billions of dollars in multiple projects, such as the 170 - kilometer - long linear city "The Line" and the mountain tourism destination Trojena. In addition, to host the 2034 World Cup, the PIF is building new stadiums and sports facilities, including King Salman Stadium in Riyadh. Some people question whether even a wealthy and oil - rich country like Saudi Arabia can afford so many giant projects that may not generate any form of return in the coming years. Some suggest that Saudi Arabia may need to scale back its plans. For example, a Bloomberg report pointed out that the "The Line" project may be scaled back and built in phases at a slower pace. The first - phase plan is to build only 2.4 kilometers, which can accommodate 300,000 people instead of the 9 million people expected when fully completed. Andrew Leber, a researcher at Tulane University in Louisiana, USA, who focuses on Middle East political economy research, told CNBC that the current spending rate is unsustainable: "The number of these 'we invest first and expect economic returns in the future' giant projects currently underway is unsustainable, and eventually some projects will be quietly shelved to bring fiscal spending back to a more sustainable level."
Confidence of Saudi Officials
Mohammed Al - Jadaan, the Saudi Minister of Finance, is confident in the sustainability of Saudi Arabia's investment level. In October 2024, Saudi Arabia downgraded its economic growth forecast and increased its budget deficit expectations for the 2024 - 2026 fiscal years due to expected increased spending and decreased oil revenues. According to data from the Ministry of Finance, the growth expectation of real GDP this year has been significantly downgraded from 4.4% to 0.8%. The Saudi economy experienced a shift from a surplus of $27.7 billion in 2022 to a deficit of $21.6 billion in 2023, mainly due to increased public spending and reduced oil production under the OPEC + agreement. The government expects a budget deficit of $21.1 billion in 2024, with revenues expected to be $312.5 billion and expenditures of $333.5 billion. Saudi authorities expect the budget to remain in deficit in the coming years but say they are well - prepared. "Our non - oil revenues have increased significantly and now cover approximately 37% of expenditures. This is an important diversification that allows us to maintain stability and flexibility even in the face of oil price fluctuations," Mohammed Al - Jadaan said in an interview with CNBC in October.

(IV) Prospect of Construction Contract Approval

Short - term Impact
Large - scale infrastructure investments have created a solid foundation for employment in the construction and industrial sectors in the short term and have also driven high demand for construction materials such as cement.
Medium - term Opportunities
In the medium term, by strengthening cooperation between the public and private sectors, especially in major infrastructure projects like Neom, more opportunities can be created. In these projects, private investors and international companies, including those from the US, are becoming key players. Alwazir said, "By continuously improving the regulatory environment and providing incentives for foreign direct investment (FDI), Saudi Arabia can attract a more diverse range of global enterprises, promoting the transfer of innovation and knowledge to the local market. The real - estate sector has already obtained numerous projects in both residential and commercial spaces, is expected to continue to attract the interest of domestic and foreign investors, and provides expansion opportunities in affordable housing, retail, and mixed - use developments to meet the needs of the growing urban population. In addition, the government's investment in advanced water infrastructure, including desalination and sewage treatment, will support urban growth and industrial construction in water - scarce areas." He even said that Saudi Arabia may become a model of effective cooperation in the delivery of large - scale infrastructure projects through public - private partnerships, which depends on a stronger legislative framework to support more private - sector participation and foreign investment. "Saudi Arabia's surge in investment in infrastructure and economic diversification is not only a response to current economic needs but also a well - planned step towards a sustainable and globally integrated future. By promoting private - sector growth, attracting international investment, and developing a resilient infrastructure backbone, Saudi Arabia is positioning itself as a diversified economic powerhouse," Alwazir concluded.

III. US Construction Industry: Job Vacancies Down 40% Year - on - Year

(I) Data Situation

According to an analysis of the "Job Openings and Labor Turnover Survey" (JOLTS) by the US Bureau of Labor Statistics (BLS), the Associated Builders and Contractors (ABC) in the US, a trade organization representing more than 22,000 US contracting and construction companies, said that job vacancies in the US construction industry have decreased by 40% year - on - year. Data shows that as of the end of October, there were 249,000 job vacancies in the US construction industry. The number of job vacancies decreased by 9,000 in that month, and by 164,000 compared to the same period last year. JOLTS defines job vacancies as positions for which employers are actively recruiting but have not yet filled.

(II) Expert's View

Anirban Basu, Chief Economist of ABC, said, "Although JOLTS data may fluctuate from month to month, especially at the industry level, the reduction in construction jobs in the past few quarters is undeniable. In the past six months, only an average of 3.4% of construction jobs have been vacant, the lowest level since 2020." However, US contractors expect regulatory relaxation and potentially more job opportunities next year, which may mean "an increase in construction job vacancies by the beginning of 2025."

IV. Hitachi: Expansion in India with the Establishment of a R & D Center

(I) Plan Details

Hitachi Construction Machinery, a Japanese - based construction machinery manufacturer known for excavators, wheeled loaders, and compactors, announced plans to establish a new research and development center in India. The institution, named "Hitachi Construction Machinery R & D Center India," will be a wholly - owned subsidiary of Hitachi, responsible for developing and designing construction machinery for the Indian market. The center plans to recruit talents from the IT and mechanical engineering fields in India, and is expected to gradually expand to 200 engineers and designers by 2027.

(II) Operational Arrangements

The center will be located in Hubballi, Karnataka, approximately 570 kilometers from Mumbai, India's largest city. It is expected to be fully operational in April 2026. Takahiro Kobayashi will serve as the managing director of the center, and Diplab Hore as the deputy director.

(III) R & D Role

The center is also expected to play a role in the global development of Hitachi products, such as hydraulic excavators and wheeled loaders. It will develop various basic technologies related to construction machinery cabs, structures, etc. In addition, it will use computer - aided engineering for technical calculations, simulations, and analyses, as well as analyze the strength of structures, heat conduction of machines, and noise and vibration.

V. JCB: Launch of New Excavator Technology

(I) Features of the New Excavator

At a press conference at its UK headquarters, JCB announced the launch of a new short - tail excavator, the 145XR, and demonstrated an AI - based safety technology solution. The new 145XR excavator is the latest member of the JCB X - series excavators, with a rear - end swing that is 27% shorter than traditional models while still maintaining a full - size cab. Richard Brooks, JCB's Global Director of Product Innovation, emphasized the importance of the full - size cab for operator comfort and said that the new excavator offers "minimum swing with maximum space." This new model is particularly suitable for working in crowded urban environments, on both sides of roads and highways, and other areas with limited space. The new cab has been further improved, equipped with a 10 - inch touch - screen monitor with the JCB UX interface. The switch panel integrates customizable shortcut keys, allowing operators to personalize settings. Climate control, keyless start, and dual - camera enhanced visibility are all standard features. The JCB UX interface supports up to 25 user profiles, and operators can customize joystick settings according to their individual needs. The excavator weighs between 15 - 18 tons, depending on the specifications, and can be equipped with a single - arm boom or a two - section triple - acting (TAB) configuration.

(II) Demonstration of Safety Technology

At the press conference, JCB also demonstrated a new system that uses artificial intelligence technology to reduce the risk of worker injuries. The system, called JCB Intellisense, is integrated into JCB's Loadall telescopic handlers and aims to reduce the risk of collisions caused by material - handling machinery to workers on construction sites. The system uses four cameras, three of which are AI cameras (two side - mounted and one rear - facing), and one forward - facing standard camera to improve operator visibility and works in conjunction with an object - detection and visual - assistance system. The system is designed to detect pedestrians in the area around the machine. When the system detects a pedestrian in the area, an audible and visual warning is issued in the cockpit, and external warnings are also given to pedestrians and other site personnel. The system also provides an operator alarm button, allowing the operator to record a 10 - second data segment that is automatically sent and stored in the cloud.

VI. Dispute over the Development of a Bahamian Resort: Chinese Contractor Ordered to Pay $1.6 Billion in Compensation

(I) Background of the Dispute

A judge of the Supreme Court of the State of New York ordered a Chinese contractor to pay $1.6 billion to the developer due to a dispute over the development of a Bahamian resort. The dispute revolves around a multibillion - dollar Bahamian resort complex. China Construction America (CCA), China State Construction Engineering Corporation (Bahamas) (CSCECB), and CCA Bahamas (CCAB) served as the general contractor and construction manager of the project. Meanwhile, Sarkis Izmirlian is the chairman and CEO of the developer BML Properties.

(II) Course of the Incident

In 2011, BML, BMLP, and CSCECB signed an investor agreement, stipulating that BMLP would make an equity investment of $830 million, while CSCECB would invest 10 million pounds. When the original scheduled opening date of the resort in March 2015 was not met, BMLP made an additional equity investment of $15 million, bringing its total investment to $845 million. Due to the opening delay, the developer went bankrupt in 2015 and filed a lawsuit in 2017. After an 11 - day trial, Judge Andrew Borrok ruled that CCAB deliberately delayed the project progress, harming the best interests of BML Properties. During the project delay, Izmirlian was forced to pay $54 million for disputed change orders. The defense claimed that the money should be paid to the project's subcontractors. In fact, they used the money to purchase a competing project near the resort, the Hilton Hotel. These incidents, along with other factors, plunged BML Properties into a liquidity crisis. Judge Borrok found that the defense violated the obligation of best interests in the investor agreement at least six times and committed fraud at least four times. These actions led to BML Properties losing its entire $845 - million investment in the Bahamian resort development.

(III) Judgment Result

The judge rejected the defense's counter - claim, ruling that they were responsible for BMLP's $845 - million investment, with interest calculated from May 1, 2014, and the total liability amounting to approximately $1.6 billion. Sarkis Izmirlian, the chairman and CEO of BML Properties, stated in a press release issued by BML Properties that, "I first conceived the Bahamian resort over 20 years ago, only to have it taken away from me by CCA just before its opening." CCA is preparing to appeal the ruling.