Asia 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.

ASIACONSTRUCTION OUTLOOK 2014

ForewordWelcome 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

ChairmanDavis Langdon KPK, an AECOM Company

Executive Summary 2

Introduction 4

Asia Overview 6

Construction Market Overview 8

Our Experts View 12

5.1 Long-term Outlook for Asia 14

5.2 Near-term Outlook for Asia 14

5.3 Sub-sector Performance 18

5.4 Medium-term Outlook for Asia 20

Asia Outlook 22

Cover: Second Penang Bridge, Malaysia

2 Asia Construction Outlook

China, India, Vietnam and Indonesia through to the end of the decade, while the near-term focus is on Indonesia and China. In addition, special mention should be made of the growth potential in the Philippines, where re-construction efforts following the typhoon in 2013 are gathering pace, and Myanmar where, according to our experts, future prospects look bright.

However, there is an increasing downside risk shown in our forecasts based on the level of credit availability in the region. In China, particularly, debt levels are unprecedented and the risk of a serious downturn due to credit withdrawal is growing. If growth in China was to stall, there would likely be serious implications for both the regional and global economies.

Overall, our review suggests that the growth prospects, profitability, openness and attractiveness of construction markets in Asia are slightly less optimistic when compared to the results from our previous publication in May 2013. Although, despite this, the future prospects still appear broadly positive in most locations.

In this second edition of the Asia Construction Outlook, we highlight the key opportunities, trends and challenges in the Asia construction market.

Our most recent review shows a slowing but still strong Asian construction market. During 2013, construction spending in the larger economies grew approximately six percent on average, marginally less than 2012.

The double-digit growth rates of the recent past appear to be a distant memory, although when compared to construction growth rates achieved in the rest of the world, Asian growth continues to be impressive. Furthermore, as Asian countries continue to develop and more built assets are in place, it is to be expected that construction growth rates will start to diminish. However, some governments in Asia are implementing further stimulus packages in an effort to boost construction spending going forward, in particular infrastructure spending.

Our review highlights that, over the longer term, the strongest construction spending growth will be in

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.

Executive Summary

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 near- and 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.

Infrastructure development in India is mostly in the hands of the federal government and since elections are proposed to be held by May/June 2014 and the new government will take some time to settle, there is likely to be slow progress on major infrastructure developments until well into 2015.

Hyderabad Metro, India


This change of focus coupled with growing doubts regarding credit availability is becoming a deterrent to foreign direct investment in the region.

Economic growth in Asia has slowed down as a result of the growing consumer spending. The ability to manage the restructuring process toward a consumer-driven economy will be a crucial determinant for the future success of many Asian economies. There is also increasing competition from other emerging regions, (Africa, Latin America and the Middle East) which are all expected to grow at healthy rates over the next few years.Asia Overview

Overall, while Asias pace of economic growth is expected to stabilize in the medium term, the region is likely to maintain its position as global growth leader for some time. To accommodate the shift in emphasis toward domestic demand, construction spending in Asia is expected to increase in both residential and infrastructure sectors going forward. In the sections that follow, we examine the outlook for the construction market in the region.

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 consumer-driven economy, and away from the export-driven that facilitated the rapid economic growth of the previous two decades.


Construction Market OverviewDuring 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.

Asia Construction Outlook Construction Market Overview 11 10 Asia Construction Outlook Construction Market Overview

Construction spending in Asia accounted for 44 percent of total global construction spending in 2013, an increase of four percent from 2012. Examining construction spending in individual countries (Figure 4.1) shows that China was the largest market followed by Japan, India, Indonesia and Korea. Construction spending in China was almost US$1.8 trillion in 2013, making it the largest market in the world and more than US$1 trillion larger than the markets in both the United States and Japan. Since our last publication, construction spending in Indonesia has overtaken Korea, making it the fourth largest construction market in Asia in 2013.

Despite the slowdown, future growth prospects are still promising (Figure 4.2). Construction spending is forecast to grow at rates above the regional average of 4.4 percent in China, India, Vietnam, Bangladesh, Indonesia and Thailand over the next five years. China, India and Indonesia all stand out based on market size combined with future growth prospects.

Figure 4.3 highlights the importance of the infrastructure sector, which accounted for 37 percent of total construction spending in Asia in 2013. Of most interest here is the relative share of residential construction spending which has increased from 31 percent in 2012 to 34 percent in 2013, largely at the expense of spending on non-residential structures.

Figure 4.3: Share of construction spending by sector 2013 (%)

Non-residential

29%

Residential

34% Infrastructure 37%

Asia 2014

2013

Strongly Agree Agree Not Sure

Disagree Strongly Disagree

Decreasing20142013

Figure 5.2

Unchanged

12%

50%

5%Residential

20142013

Figure 5.10

Structures

Infrastructure

22%

3%

75%

15%

12%

73%

Decreasing20142013

Figure 5.3

Increasing

20%

58%

21%

20%

34%

Decreasing20142013

Figure 5.4

Unchanged

Increasing

2%

62%

36%

2%

49%

49%

Decreasing20142013

Figure 5.5

Unchanged

Increasing

8%

42%

49%

10%

37%

53%

Residential20142013

Figure 5.11

Structures

Infrastructure

15%

3%

17%

7%

Residential20142013

Figure 5.12

Structures

Infrastructure

19%

9%

10%

17%

73% 72%

73%

22% 38%Increasing

Unchanged

46%

82%76%

Source: IHS Global Insight (2013)

Source: IHS Global Insight (2013)Source: IHS Global Insight (2013)

Figure 4.1: Construction spending by country 2013 (US$) Figure 4.2: Construction spending growth 2014-19 (%per annum)

$1.78trillion

$742billion

$427billion

ChinaJapanPakistan

$8.4bn Bangladesh$24bn

Korea$154bn

Hong Kong$17bn

Taiwan$42bn

Vietnam$16bn

The Philippines$25bn

Thailand$33bn

$32bn Malaysia

Singapore$24bn Indonesia

$267bn

India

Pakistan3.5%

Bangladesh

Korea2.4%

Hong Kong2.6%

Taiwan3%

Vietnam

The Philippines2.9%

Thailand4.5%

4.2%Malaysia

Singapore3.8% Indonesia

5.2%

India7%

6.4%

6.8%

ChinaJapan2.7%

7.3%

Malaysia continues to see strong growth especially in infrastructure as the projects related to the governments economic transformation program are implemented. Indonesia continues to have huge potential although there may well be a short-term slowdown due to the forthcoming presidential elections. More uncertainties exist in other Southeast Asian countries although there could be significant opportunities in Myanmar as the country continues to become more open.

Our Experts View


Below we examine the outlook for construction in Asia based on the results of our most recent opinion survey. We start by briefly assessing broad long-term trends for the region and then we consider any changes in sentiment regarding short-term trends before focusing on medium-term trends by country and metropolitan area.

Asia Construction Outlook Our Experts View 15 14 Asia Construction Outlook Our Experts View

.1 Long-term Outlook for AsiaThe survey respondents generally support the view that looking ahead by around ten years, the prospects for both the size and growth of the Asian construction market are positive, with 92 percent in agreement. However, when compared to the last time the survey was conducted, respondents have become slightly more pessimistic (97 percent were in agreement in May 2013).

For the immediate future of the construction market by country, our experts forecast the following short-term trends.

Market growth The survey results suggest that the Philippines, Indonesia and Malaysia are at the forefront of respondents views regarding market growth in the region over the next 12 months. However, if we compare current results with the outcome of the previous survey, respondents have become more pessimistic regarding near-term market growth prospects in: India Singapore Thailand

Figure 5.1: The Asian construction market will remain large and it will continue growing at a healthy rate

Figure 5.2: The size of the construction market in Asia

Figure 5.3: The profitability of the construction market in Asia

Figure 5.4: The openness of the construction market in Asia to foreign suppliers of construction services

Figure 5.5: The attractiveness of the construction market in Asia to foreign suppliers

Figure 5.6: The size of the construction market by country, January 2014

.2 Near-term Outlook for AsiaOur experts highlighted a number of construction trends they expect to see in the next 12 months.

The survey results suggest that respondents are slightly less optimistic about the near-term future for construction in Asia, compared to the results from our sentiment survey conducted in May 2013. Our respondents opinion suggests that the growth prospects, profitability, openness and attractiveness of construction markets in Asia over the next 12 months are slightly more negative when compared to the results from nine months ago.

Non-residential

29%

Residential


Asia 2014

2013



Decreasing20142013

Figure 5.2

Unchanged

12%

50%

5%Residential

20142013

Figure 5.10

Structures

Infrastructure

22%

3%

75%

15%

12%

73%

Decreasing20142013

Figure 5.3

Increasing

20%

58%

21%

20%

34%

Decreasing20142013

Figure 5.4

Unchanged

Increasing

2%

62%

36%

2%

49%

49%

Decreasing20142013

Figure 5.5

Unchanged

Increasing

8%

42%

49%

10%

37%

53%

Residential20142013

Figure 5.11

Structures

Infrastructure

15%

3%

17%

7%

Residential20142013

Figure 5.12

Structures

Infrastructure

19%

9%

10%

17%

73% 72%

73%

22% 38%Increasing

Unchanged

46%

82%76%

Non-residential

29%

Residential


Asia 2014

2013



Decreasing20142013

Figure 5.2

Unchanged

12%

50%

5%Residential

20142013

Figure 5.10

Structures

Infrastructure

22%

3%

75%

15%

12%

73%

Decreasing20142013

Figure 5.3

Increasing

20%

58%

21%

20%

34%

Decreasing20142013

Figure 5.4

Unchanged

Increasing

2%

62%

36%

2%

49%

49%

Decreasing20142013

Figure 5.5

Unchanged

Increasing

8%

42%

49%

10%

37%

53%

Residential20142013

Figure 5.11

Structures

Infrastructure

15%

3%

17%

7%

Residential20142013

Figure 5.12

Structures

Infrastructure

19%

9%

10%

17%

73% 72%

73%

22% 38%Increasing

Unchanged

46%

82%76%

Non-residential

29%

Residential


Asia 2014

2013



Decreasing20142013

Figure 5.2

Unchanged

12%

50%

5%Residential

20142013

Figure 5.10

Structures

Infrastructure

22%

3%

75%

15%

12%

73%

Decreasing20142013

Figure 5.3

Increasing

20%

58%

21%

20%

34%

Decreasing20142013

Figure 5.4

Unchanged

Increasing

2%

62%

36%

2%

49%

49%

Decreasing20142013

Figure 5.5

Unchanged

Increasing

8%

42%

49%

10%

37%

53%

Residential20142013

Figure 5.11

Structures

Infrastructure

15%

3%

17%

7%

Residential20142013

Figure 5.12

Structures

Infrastructure

19%

9%

10%

17%

73% 72%

73%

22% 38%Increasing

Unchanged

46%

82%76%

Non-residential

29%

Residential


Asia 2014

2013



Decreasing20142013

Figure 5.2

Unchanged

12%

50%

5%Residential

20142013

Figure 5.10

Structures

Infrastructure

22%

3%

75%

15%

12%

73%

Decreasing20142013

Figure 5.3

Increasing

20%

58%

21%

20%

34%

Decreasing20142013

Figure 5.4

Unchanged

Increasing

2%

62%

36%

2%

49%

49%

Decreasing20142013

Figure 5.5

Unchanged

Increasing

8%

42%

49%

10%

37%

53%

Residential20142013

Figure 5.11

Structures

Infrastructure

15%

3%

17%

7%

Residential20142013

Figure 5.12

Structures

Infrastructure

19%

9%

10%

17%

73% 72%

73%

22% 38%Increasing

Unchanged

46%

82%76%

Non-residential

29%

Residential


Asia 2014

2013



Decreasing20142013

Figure 5.2

Unchanged

12%

50%

5%Residential

20142013

Figure 5.10

Structures

Infrastructure

22%

3%

75%

15%

12%

73%

Decreasing20142013

Figure 5.3

Increasing

20%

58%

21%

20%

34%

Decreasing20142013

Figure 5.4

Unchanged

Increasing

2%

62%

36%

2%

49%

49%

Decreasing20142013

Figure 5.5

Unchanged

Increasing

8%

42%

49%

10%

37%

53%

Residential20142013

Figure 5.11

Structures

Infrastructure

15%

3%

17%

7%

Residential20142013

Figure 5.12

Structures

Infrastructure

19%

9%

10%

17%

73% 72%

73%

22% 38%Increasing

Unchanged

46%

82%76%

Figure 5.6 Figure 5.7 Figure 5.8

China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam

Increasing Unchanged Decreasing

China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


Non-residential

29%

Residential


Asia 2014

2013



Decreasing20142013

Figure 5.2

Unchanged

12%

50%

5%Residential

20142013

Figure 5.10

Structures

Infrastructure

22%

3%

75%

15%

12%

73%

Decreasing20142013

Figure 5.3

Increasing

20%

58%

21%

20%

34%

Decreasing20142013

Figure 5.4

Unchanged

Increasing

2%

62%

36%

2%

49%

49%

Decreasing20142013

Figure 5.5

Unchanged

Increasing

8%

42%

49%

10%

37%

53%

Residential20142013

Figure 5.11

Structures

Infrastructure

15%

3%

17%

7%

Residential20142013

Figure 5.12

Structures

Infrastructure

19%

9%

10%

17%

73% 72%

73%

22% 38%Increasing

Unchanged

46%

82%76%


Market profitabilityThe 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 Thailand

Market openness to foreign suppliersIt is suggested that Vietnam and Indonesia are expected to exhibit increasing market openness over the next 12 months. Comparison of the 2014 survey results with those from the 2013 survey indicate that respondents views have become more pessimistic regarding near-term market openness in: India Singapore

And more optimistic regarding near-term market openness in: China

Market attractivenessThe 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 5.7: The profitability of the construction market by country, January 2014 The construction market

in Indonesia is facing uncertainty in 2014 due to the presidential election. Some developments will be held back until the election is over when there is more certainty. There is also concern with the unfavourable economic situation due to high inflation and weakening of the Rupiah. This will continue to push up construction costs. There are also potential capacity issues which may force the postponement of some projects.


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam



China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam



China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


China

Hong Kong

India

Indonesia

Malaysia

The Philippines

Singapore

Thailand

0% 20% 40% 60% 80% 100%

Vietnam


the 2014 survey results with those from the 2013 survey indicate that respondents views have become more pessimistic regarding near-term market attractiveness in: India Singapore

A finding which supports the results related to market openness and the more general negative sentiment regarding future prospects in India.

Figure 5.9: The attractiveness of the construction market to foreign suppliers by country, January 2014

Figure 5.8: The openness of the construction market by country, January 2014


.3 Sub-sector PerformanceRegarding sub-sector performance over the next 12 months, respondents expectations are broadly similar to 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.

In terms of market growth and openness, respondents are more optimistic regarding future prospects in the residential sector in Asia when compared to the previous survey results.

Figure 5.10: The fastest growing sub-sector in Asia

Figure 5.11: The most profitable sub-sector in Asia

Figure 5.12: The most open sub-sector in Asia to foreign suppliers

Sports Hub, Singapore

Thailand has several large infrastructure projects in the pipeline. However, the current political situation has put a dampener on the works. Even with the forming of a new government, this is not expected to completely resolve the situation in the near-term and this is likely to impact investor confidence going forward. The residential market has cooled somewhat due to rising prices and the supply of good quality contractors and services remains tight and has caused prices to increase significantly.

In terms of changes at the country level, our experts suggest that sub-sector growth prospects have shifted in: The Philippines from residential to infrastructure China from structures to residential Hong Kong from infrastructure to residential

However, respondents views regarding sub-sector profitability and openness by country remain largely unchanged from the previous survey.

Non-residential

29%

Residential


Asia 2014

2013



Decreasing20142013

Figure 5.2

Unchanged

12%

50%

5%Residential

20142013

Figure 5.10

Structures

Infrastructure

22%

3%

75%

15%

12%

73%

Decreasing20142013

Figure 5.3

Increasing

20%

58%

21%

20%

34%

Decreasing20142013

Figure 5.4

Unchanged

Increasing

2%

62%

36%

2%

49%

49%

Decreasing20142013

Figure 5.5

Unchanged

Increasing

8%

42%

49%

10%

37%

53%

Residential20142013

Figure 5.11

Structures

Infrastructure

15%

3%

17%

7%

Residential20142013

Figure 5.12

Structures

Infrastructure

19%

9%

10%

17%

73% 72%

73%

22% 38%Increasing

Unchanged

46%

82%76%

Non-residential

29%

Residential


Asia 2014

2013



Decreasing20142013

Figure 5.2

Unchanged

12%

50%

5%Residential

20142013

Figure 5.10

Structures

Infrastructure

22%

3%

75%

15%

12%

73%

Decreasing20142013

Figure 5.3

Increasing

20%

58%

21%

20%

34%

Decreasing20142013

Figure 5.4

Unchanged

Increasing

2%

62%

36%

2%

49%

49%

Decreasing20142013

Figure 5.5

Unchanged

Increasing

8%

42%

49%

10%

37%

53%

Residential20142013

Figure 5.11

Structures

Infrastructure

15%

3%

17%

7%

Residential20142013

Figure 5.12

Structures

Infrastructure

19%

9%

10%

17%

73% 72%

73%

22% 38%Increasing

Unchanged

46%

82%76%

Non-residential

29%

Residential


Asia 2014

2013



Decreasing20142013

Figure 5.2

Unchanged

12%

50%

5%Residential

20142013

Figure 5.10

Structures

Infrastructure

22%

3%

75%

15%

12%

73%

Decreasing20142013

Figure 5.3

Increasing

20%

58%

21%

20%

34%

Decreasing20142013

Figure 5.4

Unchanged

Increasing

2%

62%

36%

2%

49%

49%

Decreasing20142013

Figure 5.5

Unchanged

Increasing

8%

42%

49%

10%

37%

53%

Residential20142013

Figure 5.11

Structures

Infrastructure

15%

3%

17%

7%

Residential20142013

Figure 5.12

Structures

Infrastructure

19%

9%

10%

17%

73% 72%

73%

22% 38%Increasing

Unchanged

46%

82%76%


.4 Medium-term Outlook for AsiaFor the medium term, our experts highlighted a number of construction trends they expect to see in the next three years.

At the country level, Indonesia is the top rated country followed by China confirming the results from the previous survey. Indonesia scores particularly well in terms of market growth prospects over the next three years.

Regarding perceived profitability, China is still the top rated country, followed by Indonesia and Malaysia. When compared to the results from the previous survey, most countries exhibit a positive trend.

However, of particular note, this time around is the relative position of India, with respondents having become more pessimistic regarding both growth and profitability prospects in India over the medium-term.

At the city or metropolitan level, Jakarta is the top rated city in terms of market growth prospects (by a considerable distance), followed by Kuala Lumpur and Shanghai. In terms of perceived profitability, Singapore is the top rated city followed by Jakarta.

In summary, the latest survey results confirm and support the previous surveys findings with regard to the relative position of both Indonesia and more

specifically, Jakarta, with both being at the forefront of survey respondents opinions/sentiment in the medium-term. The relative position of India is also declining, in terms of respondents perceptions, both in growth and profitability expectations. The relative position of Myanmar is also worthy of note with respondents perceptions showing a broadly positive trend in terms of market growth and profitability expectations over the medium term.

Figure 5.13: The country with the fastest growing construction market in Asia

Figure 5.14: The country with the most profitable construction market in Asia

Figure 5.15: The city or metropolitan region with the fastest growing construction market in Asia

Figure 5.16:The city or metropolitan region with the most profitable construction market in Asia

China

Vietnam

Myanmar

Malaysia

India3

1=

2=4

4

3

5

IndonesiaSingapore

Change since last survey: Increase No change = DecreaseRank: 1 2 3 4 5 6 7

Rank: 1 2 3 4 5 6 7

Rank: 1 2 3 4 5 6 7

Kuala Lumpur

ShanghaiDelhi

Yangoon

Hong KongMumbai

1=3

3

33

Jakarta

Change since last survey: Increase No change = Decrease

China

Vietnam

Myanmar

Malaysia

India

3

1=

2

2

2

Rank: 1 2 3 4 5 6 7

Kuala Lumpur

Delhi

Hong Kong

Saigon

Johor Bahru

5

6

7

3

4

Jakarta

Singapore


22

456

IndonesiaSingapore


1

China

Vietnam

Myanmar

Malaysia

India3

1=

2=4

4

3

5

IndonesiaSingapore


Rank: 1 2 3 4 5 6 7

Rank: 1 2 3 4 5 6 7

Kuala Lumpur

ShanghaiDelhi

Yangoon

Hong KongMumbai

1=3

3

33

Jakarta


China

Vietnam

Myanmar

Malaysia

India

3

1=

2

2

2

Rank: 1 2 3 4 5 6 7

Kuala Lumpur

Delhi

Hong Kong

Saigon

Johor Bahru

5

6

7

3

4

Jakarta

Singapore


22

456

IndonesiaSingapore


1

China

Vietnam

Myanmar

Malaysia

India3

1=

2=4

4

3

5

IndonesiaSingapore


Rank: 1 2 3 4 5 6 7

Rank: 1 2 3 4 5 6 7

Kuala Lumpur

ShanghaiDelhi

Yangoon

Hong KongMumbai

1=3

3

33

Jakarta


China

Vietnam

Myanmar

Malaysia

India

3

1=

2

2

2

Rank: 1 2 3 4 5 6 7

Kuala Lumpur

Delhi

Hong Kong

Saigon

Johor Bahru

5

6

7

3

4

Jakarta

Singapore


22

456

IndonesiaSingapore


1

China

Vietnam

Myanmar

Malaysia

India3

1=

2=4

4

3

5

IndonesiaSingapore


Rank: 1 2 3 4 5 6 7

Rank: 1 2 3 4 5 6 7

Kuala Lumpur

ShanghaiDelhi

Yangoon

Hong KongMumbai

1=3

3

33

Jakarta


China

Vietnam

Myanmar

Malaysia

India

3

1=

2

2

2

Rank: 1 2 3 4 5 6 7

Kuala Lumpur

Delhi

Hong Kong

Saigon

Johor Bahru

5

6

7

3

4

Jakarta

Singapore


22

456

IndonesiaSingapore


1

Asia Outlook


During 2013, construction spending in the larger economies grew by about six percent on average, marginally less than the preceding year. However, for the smaller economies, the slowdown was significantly more marked. Over the longer term, the strongest construction spending growth will be in China, India, Vietnam and Indonesia through to the end of the decade.

Overall, the results of our most recent survey indicate that respondents are slightly less optimistic regarding the future prospects for construction in Asia compared to the results from May 2013. Our experts opinion suggests that the growth prospects, profitability, openness and attractiveness of construction markets in Asia are slightly more negative when compared to the results from nine months ago. Despite this, the future prospects still appear broadly positive in most locations.

Our review highlights that, over the near and medium term, the strongest construction spending growth will be in Indonesia and China. In addition, special mention should be made of the growth potential in the Philippines, where re-construction efforts following the typhoon in 2013 are gathering pace, and Myanmar where, according to our experts, future prospects look bright.

This second edition of the publication shows a slowing but still strong Asian construction market.

Highlights of our most recent review include:

Respondents are slightly less optimistic regarding the future prospects for construction in Asia

Indonesia is the top rated country in terms of potential construction spending growth in the medium-term

The Philippines (near term) and Myanmar (medium term) are identified as countries with potential for significant future growth in construction

Upcoming parliamentary elections in Indonesia and India are expected to have a negative impact on near-term construction prospects in both countries

A lack of investor confidence in Thailand is expected to affect construction spending in the near term

The residential sector in Asia appears to be gathering some momentum

Due to the reconstruction and rehabilitation efforts of the Philippines government in areas that have been affected by natural disasters, the construction market is expected to increase in the areas of infrastructure (roads, bridges, water supply, power supply), structures and residential buildings. In addition, both government and private sectors are investing in infrastructure projects (airports, ports). There are also private companies who are venturing into mining and power plants, which are also expected to increase construction demand providing favorable conditions for both local and foreign suppliers.

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:

Andy North, Kuala Lumpur

Clarence Tan, Bangkok

Daniel Shih, Shanghai

Dato Sri Kandan, Kuala Lumpur

David Crosthwaite, London

Didi Redoble, Manila

Eugenie Lip, Singapore

Gar Ti Wei, Kuala Lumpur

Jason Lau, Hong Kong

Meenakshi Sundaram Ramanathan, Chennai

Minda Xu, Shanghai

Phan Lay Eng, Singapore

Rebecca Yan, Hong Kong

Ronald Acio, Manila

Soh Chye Hian, Singapore

Tony Au, Singapore

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.

Asia Construction Outlook_2014

Documents

Transcript of Asia Construction Outlook_2014