With the global economy shaking off past episodes of crisis, the construction sector looks set for a sustained phase of expansion.
Global Construction Sector Growing
According to the Global Construction 2025 report by Construction Perspectives and Oxford Economics, the volume of construction output will grow by more than 70 per cent to US$15 trillion worldwide by 2025.
This growth will be largely concentrated in the US – which is experiencing an economic resurgence of late – and the two largest emerging economies of China and India. Meanwhile, emerging markets look set to increase its share of the global construction market from 52 per cent now to 63 per cent in 2025.
On the domestic front, the Building and Construction Authority (BCA) has forecasted the construction industry in Singapore to remain steady at S$31 to 38 billion in 2014, as compared to last year's S$35.8 billion expenditures.
Material Gains
The resurgence in global construction demand will see the construction materials and building products market grow in tandem too. The range of materials and products in the market span a wide spectrum, which can be broadly categorised into basic construction materials, building products and green building materials.
Basic materials include sand, gravel, aggregates, cement, concrete and bricks, among others. According to research conducted by Research and Markets, the global construction materials market is expected to see brisk growth, achieving sales of US$889 billion by the end of 2015.
For key materials such as cement, it is simply not cost efficient to ship them across long distances. As such, their manufacturers mainly serve local markets. The Singapore cement market is served by both multinationals such as Holcim and LaFarge, as well as domestic SMEs, with plants that are within Singapore or nearby.
Beyond basic materials, there are also the building products. These are finished or semi-finished components that can be readily added to a building such as roofing, siding, windows, doors, piping, plumbing and flooring, among others.
One segment of the construction materials and building products market is that of green building materials. Typically, these green building materials are those that require less material to produce, consume less building energy and water, or are made with recycled product materials.
According to research conducted by Transparency Market Research, the global market for green building materials was valued at US$106.32 billion in 2012. This market is expected to see astonishing growth at a Compound Annual Growth Rate (CAGR) of 12.5 per cent between 2013 and 2019 to reach a market value of US$234.77 billion.
The same research noted that the main end-user applications of the green building materials market included public facilities, healthcare, residential, commercial, industrial and R&D centres. Whilst North America and Europe dominated more than half of the market share in 2012, the Asia Pacific region has the highest upside potential.
Trends and Impact
Specific to the Singapore market, there are several on-going trends that could have a significant impact on the current demand and future growth of the construction materials and building products sector.
One key trend is the greening of buildings in Singapore, which will have a positive impact on the growth of the green building materials market here. Since the launch of the Green Mark Scheme in 2005, the BCA has set about fulfilling the government’s vision of a greener built environment for Singapore.
Through three iterations of the Green Building Masterplan, the BCA has set out a wide range of programmes, guidelines, standards, research and legislation to bring about greener buildings in Singapore.
Critically, the Building Control Act was amended in 2008 so that all new buildings would need to achieve the Green Mark certified standard. The government also moved to mandate all larger new air-conditioned public sector buildings to achieve the Green Mark Platinum award. Existing public sector building will need to achieve the Green Mark Gold Plus standard by 2020 too.
Another major trend that will impact the construction materials and building products sector here is the government’s push for builders to adopt productive technologies, specifically cross-laminated timber (CLT) and Prefabricated Prefinished Volumetric Construction (PPVC) to increase productivity.
During the 2014 Budget debate, the Ministry of National Development (MND) announced that developers would have to adopt these two technologies for selected Government Land Sale (GLS) sites from the second half of the year.
For CLT, this advanced materials is manufactured from wood harvested from sustainably managed forests and through an industrial process. The advantage of CLT is that it is significantly than steel and concrete, making it much easier to hander.
For PPVC, complete flats or modules made of multiple units are manufactured in factories, before being transported on site for installation and piecing together. PPVC can help speed up the construction process, potentially achieving a productivity improvement of 30 to 50 per cent for manpower and time savings.
While the demand for CLT is definitely set to grow as a result of the new legislation, the exact impact of PPVC adoption on the construction materials and building products market is not quite so clear. Possibly, the PPVC process could result in less wastage of materials since components are manufactured in the controlled environment of a factory.
Poised for Growth
The outlook for the global construction materials and building materials market looks rosy, with global economic growth and emerging economies set to drive construction activity in the near horizon. Locally, the shift towards green buildings and productive technologies will also benefit the market.