5 key themes for global construction in 2025

That’s according to Oxford Economics, which has been examining the sector’s prospects for the year ahead.

They are:

1) Building construction activity outside China will grow.

A combination of strong demand for housing and a decline in interest rates is expected to drive growth in building construction activity. It noted that residential approvals are rebounding in the US and Canada, with Europe set to follow suit this year. But global building activity is still expected to decline because of the scale of the Chinese real estate downturn.

2) Infrastructure spending is transitioning from transportation to utilities.

Civil engineering has been the fastest growing segment of the construction industry since the pandemic but climate targets set in different countries around the world is likely to mean a shift towards more utilities work. The recent growth in data centre construction has also boosted electricity demand. Data centres are estimated to account for 1% of global electricity demand in 2023 but in some countries, such as Ireland, that figure could be as high as 20%, according to Oxford Economics, which also expects India, Indonesia and Malaysia to be some of the fastest-growing markets for data centres.

3) Outside of China, Asia will be the fastest-growing region of the world.

Oxford Economics said this would be driven by strong demographic trends, foreign investment, and government policy will drive growth in South East Asia. It forecast that the ‘construction tiger’ economies of Indonesia, the Philippines and Vietnam would maintain their positions as the fastest-growing markets in the region, supported by rapid growth in Singapore and Thailand.

4) Advanced economies will continue to be limited by labour shortages.

In the US, for example, the Associated General Contractors of America (AGC) found in its 2024 Workforce Survey, that 54% of respondents have experienced delays due to “shortages of workers”. Oxford Economics forecast that construction activity in advanced economies will grow by more than 3% over 2025, while the number of construction workers will grow by 1%.

5) Construction costs could rise amid increased uncertainty.

Oxford Economics warned that geopolitical risks could cause supply chain disruption and increased finance costs that could lead to the delay or cancellation of projects. It said that uncertainty over US government policy, following the victory of Donald Trump in the US presidential election, and the threat of tariffs and the risk of retaliatory action by other governments presents challenges for forward planning. Meanwhile, upcoming elections in Germany and political instability in France risk hindering EU policy making. At the same time, the Russia-Ukraine war continues and the outcome remains uncertain.

China’s real estate slowdown will drag global building construction activity lower, according to Oxford Economics.