Sink or swim?

At the start of our last Global Outlook, we commented that the only sure thing was more uncertainty, and it’s a similar picture as we begin the new year. How does this impact construction and what is to come in 2024? We surveyed office leads and country directors from our 80 offices to find the view across six continents.

There is evident wider nervousness influencing the construction industry. Economists forecast a deceleration in global growth, partly due to monetary tightening policies. Geopolitical uncertainty also impacts as devastating conflicts continue, and a record-breaking number of national elections worldwide will be held in 2024.

Our country leads are 20% less confident about the year ahead for the construction industry compared to the same point in 2023. Attempts to reduce inflation saw banks raise interest rates to unprecedented levels, impacting project starts and investment. Election uncertainty will also slow projects in some countries.

A positive against this backdrop is that forecasts show that global inflation is falling, although it will take time for the easing to work through fully. That said, the significant escalation in materials and product costs seen in 2022 has since slowed. As a result, a quarter of our country leads saw tender price increases of more than 10% in 2023, compared to six in 10 respondents for the year before.

Last year was the warmest on record, with shattering wildfires and droughts felt worldwide — the final COP28 agreement called for a transition away from fossil fuels along with a trebling of renewables. Despite financial pressures, governments are under scrutiny to minimise greenhouse gas emissions. As a result, energy, infrastructure and climate resilience projects will fuel construction industries around the globe for the years ahead.

Other sectors seeing strong activity include hospitality, leisure, and commercial offices, responding to customer expectations and market drivers where higher-quality and more sustainable space is vastly outperforming its poorer counterparts. The growth in artificial intelligence is boosting data centre construction. Logistics and warehouses are performing strongly thanks to urbanisation and population growth. Due to nearshoring and reshoring trends to manage supply chain risk following recent disruptions, industrial and manufacturing also see an uptick.

So, while it remains challenging, opportunities remain for construction. Understanding the local landscape is vital in navigating the changing environment. We hope this report helps to support you with project planning, and we invite you to delve deeper into the outlook for your local construction market. Please reach out to any of our team for further insight.