Turner & Townsend.
Global construction markets are mirroring a turbulent economy, with elevated costs casting a shadow over the sectors outlook, exacerbated by long-term challenges over the availability of skilled resource. However, there remain pockets of strong opportunity, especially in the context of resilient infrastructure, public policy stimulus and new markets that are opening up.
High inflation continues to affect most economies, which has prompted the tightening of monetary policy through interest rate hikes. Rising borrowing costs and ongoing challenges with labour and material availability are just some other factors adding to immensely challenging construction market conditions.
This comes at a time when the outlook for future demand is becoming increasingly uncertain. Many investors are revaluating whether to green-light projects now or delay.
This is being reflected in softening in private sector demand in a number of sectors, but with strong appetite still seen in high-growth industries associated with environmental and societal transition, including data centres, advanced manufacturing facilities and corporate office fit-out.
On balance, the expectation is that these pockets of both public and private spending will not entirely offset increasing caution from investors and that markets are likely to shift down a gear. Against a backdrop of high inflation, that could provide an opportunity for supply chains to rebalance, construction markets to recalibrate and cost escalation to settle.