September 23, 2021

The Construction Sector

According to figures provided by the construction employers’ association, the construction sector grew last 2017 by 0.3% over the previous year, to reach 4.3 billion euros.This is the first positive figure in the last four years, after a sharp contraction caused by the well-known real estate and financial crisis.

Specifically, this growth was due to an increase of no less than 45% in the private residential construction sector.

Such an increase managed to compensate for the already recurrent fall in the civil engineering sector, which resulted in a loss of 2.5 billion, equivalent to a 2% decline compared to the previous year.

Certainly, the good news of the sector’s recovery is not enough for a sector that is at levels equivalent to 1979 in terms of GDP.
Moreover, in comparison with the main European powers, suffers from a significant investment deficit that amounts to 63% with respect to the former.

Weaknesses of the construction sector

The golden age of construction in Spain reached its peak at the beginning of the century, with 2007 being the last notable year.

Since then, the sector has faced a period of continued contraction, so the country’s main construction companies have concentrated their efforts on international markets.

According to a CES report published in 2016, the main weaknesses of the sector are summarized in the following factors:

  • High level of unemployment, which mainly affects the low-skilled labor force.
  • Deficiency of investment in innovation, compared to other relevant productive sectors.
  • The atomization of the sector, aggravated as a consequence of the economic crisis.

Strengths of the construction sector

According to the half-yearly report published at the end of 2017, the national construction sector is set to experience growth of 3.5% from 2018 to 2020. However, the report warns that the political tension still exerts a strong negative influence on this.

As I mentioned at the beginning of this article, the residential sector is going to be the main contributor and driver of growth, resulting in a 6% increase in output.

On the other hand, non-residential construction is expected to grow at a rate of 4% over the aforementioned period.
Finally, the rehabilitation sector will also grow steadily at 2% per year, as well as 1.5% in the case of civil engineering.

Global trends in the construction sector to watch in 2018

The year 2018 is not only going to be characterized by the recovery and growth of the construction sector in the world, but it is going to star in a number of trends.

Incorporation of new technologies to compensate for labor shortages.

Both the domestic and global sectors are facing the progressive disappearance of the aging workforce without a replacement generation, declining quality and rising costs.

The sector will have to embrace integrated construction manufacturing policies, change the way it is built, and drive the use of new technologies.

Disappearance of traditional contractors

Precisely, the imminent modular construction and integrated manufacturing are going to have a drastic impact on the world, putting out of business a large part of the traditional contractors who are unable to adapt.

Multinationalization of projects

Today, local firms handle 95% of construction projects, which also includes the use of local materials.

However, we are witnessing the emergence of large-scale, customized components, which can be sourced from a global supply, thus breaking down the usual local barriers.

Check out Singapore construction contractors to get more important information.