IBT Partners has specialised knowledge in the construction sector and provides financial, business and technical consultancy services.

The construction sector has specific challenges that need appropriate expertise. Our know-how helps you achieve your international business and trade development goals.

We offer you sector-specific knowledge, as well as our contacts and opportunities for networking.

Our services and solutions are tailored to the needs of each of our customers, please see Government and Corporate for more detailed information.

Read more about the construction sector:

• Background
• Current challenges
• Opportunities

Construction background information

The construction industry is very diverse and includes construction of heavy and civil engineering such as highways, bridges, railway tracks and airports, as well as residential and commercial real estate, and all construction related products such as tools, equipment, and electrical connections. These subsectors are dependent on each other only to a certain extent, and we often observe various rates of growth. For example, the demand for construction equipment increases, while heavy construction stagnates after governments of numerous countries used all available funds designated to stimulate employment during the economic downturn. The construction industry is very important for the economy, as it secures employment for 7% of workforce, and contributes by approximately 10% towards the GDP of many countries¹.

Speaking globally, industry experts foresee growth in construction outpacing world GDP over the next 10 years. This will be driven by growth in Asian powerhouses and a cyclical rebound in the USA. Global construction is expected to grow by nearly 70% from $7.2 trillion today to $12 trillion by 2020. China, USA and India will generate over half of the $4.8 trillion growth².

Current challenges in the construction sector

The construction industry was hit hard by the economic crisis and still struggles to quickly recover especially in the western countries. However, after a 24% drop in 2009, even a small level of growth now is considered a success. The situation remains quite difficult in Europe, where the growth of rate fluctuates around 2%. European small and medium sized enterprises are therefore encouraged to profit from fast growing emerging markets, which is the key to overcome the crisis. Currently, only 13% of these companies participate in international business outside the EU. The European Commission therefore aims to provide support to these enterprises by creating a program called “Small Business, Big World – a new partnership to help SMEs seize global opportunities”. The European Commission has recently launched a plan which will fund €50 billion worth of investment to improve Europe's transport, energy and digital networks³.

The European construction market led by Germany and France is not uniform, which can be demonstrated by an example of Poland and Spain. Poland represents half of the Eastern European construction market, and it even managed to grow in 2009 despite a housing and commercial property fall. Moreover, it is expected to continue to grow substantially in the future. The development in Poland contrasts the situation in Spain, with a 50% decrease in the housing sector, where growth is not anticipated in the near future⁴. The situation is not ideal in the UK either, where house builders and big construction firms suffered a downturn in business in the third quarter of 2011 as the current economic situation stopped both real estate and infrastructure projects⁵. The government responded to the situation by introducing a £400m initiative to build up to 16000 new homes, including taxpayer-backed 95% mortgages, in order to boost the economy, create more jobs, and reduce the housing shortage⁶. 

Numerous companies have focused on repositioning their businesses in order to survive the economic crisis. They have developed sustainable models better suited to manage risk and expand into new markets and services, and as a result these companies became leaner and stronger. At the time of shrinking margins, efficiency is crucial. By improvements in planning, estimating, design processes, monitoring team performance, and managing the whole supply chain, companies avoid errors and keep their margins⁷. 

Opportunities in the construction sector

In order to keep pace with developments in the construction sector, it is important to have access to current, accurate and complete information and in-depth expertise. We will help you to address all important issues, including trends, key success factors, advances and innovations, supply and demand development, operational and financial risks, benchmarking, as well as regulations and opportunities for funds and grants.

Some of the key opportunities and trends include:

•   Architectural innovations
  

  → Architects have no borders to their imagination, and they are not only innovative in design of buildings themselves, but also in the way they set their buildings in the environment. For example, Songjiang hotel is highly innovative design of a 400-bed, five-star resort hotel set in a lush deep, water-filled quarry in China⁸.  
  

• Green buildings 

  → Passive housing is a current trend that is quickly becoming a norm for most new house builds, as people are increasingly interested in sustainable and resource efficient living. Moreover, some of the previously optional features are considered mandatory today. Both residential and commercial buildings are built in a way to isolate the interior from outside heat or cold, and to minimise energy consumption. Sustainability efforts are also driven by the need to comply with legislation, manage corporate reputation, cost savings and operational efficiency.
  → The concept of healthy homes focuses on HVAC systems that improve indoor air quality and low-VAC paints and finishes⁹.
  → Now there is a move towards solar paneled roofs to produce enough electric energy to run a home. These new solar paneled roofs are more discreet than regular solar panels and can be fitted to new builds and renovations.
  → The green buildings concept was taken one step ahead in Toronto, where a project of a SkyFarm was proposed. The 58-storey building would grow crops in the city centre, offering 2.7 million square feet of human-habitable floor space and cover a massive 8 million square feet of arable farm space that could provide enough food for 35,000 people every day⁸.  

• Information technologies in construction projects
  

  → One of the most significant construction trends is increased use of the latest information technologies for coordinating and planning work. Cutting edge technologies are mainly used to raise the efficiency level of engineering and designing of construction industry. Example is the Building Information Model (BIM), which helps to coordinate a project in a collaborative and concerted way, to leverage productivity and minimise costs, by allowing communication across all vertical and hierarchical levels¹.
  

• New retail layouts
  

  → The layout of Apple stores has inspired many retailers, as they copy the magic shopping experience of this leading brand¹⁰. In many countries, retailers are expected to renovate their stores to offer more engaging venue and prolong the time customers spend inside. These rebuilds will necessitate creativity in arranging the floorplan and using the space efficiently.  

• Popular materials
  

  → The world is becoming increasingly eco-conscious. Flax is becoming an increasingly popular choice of material for insulating houses and can be used for both thermal and acoustic insulation. The difference between this insulation and its predecessors and alternatives is that it is completely natural, safe and non-irritant. Flax is also beneficial because it has the ability to absorb large amounts of moisture, preventing deterioration of the building fabric and reducing the risk of timber rotting or being attacked by damp or mould. Eco materials are very prevalent in the French market. France accounts for 80% of the total European production of flax and 52% of global production.
  → The increase in aluminium’s popularity is due in part to its properties – light, durable, corrosion resistant. Aluminium is also environmentally friendly because it is easily recyclable and aluminium scraps only require 5% of energy originally used to restore it.

• Exterior insulation
  

  → There is a popular trend towards using insulation on the outside of houses rather than the inside. A house which has exterior insulation will save on average 10% more energy than a house which is insulated on the inside. Other advantages of exterior insulation include, reduced temperature variation and heat is stored in the insulation during the day and keeps the house warm at night. Exterior insulation also helps to keep houses airtight which is essential for a low energy building.
  

• Real estate trends
  

  → Read more about opportunities in the real estate sector
  

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1) Economy Watch. 2010. Construction Industry Trends. Online at http://www.economywatch.com/world-industries/construction/trends.html
2) Global Construction Perspectives & Oxford Economics. 2011. Global Construction 2020.
3) European Commission. 2011. Construction - News. Online at http://ec.europa.eu/enterprise/sectors/construction/index_en.htm
4) Reuters. 2010. Europe's Construction Sector seen shrinking report. Online at http://uk.reuters.com/article/2010/07/08/europe-construction-idUKLDE6662B020100708 
5) Inman, P. 2011. Construction sector slowdown adds to coalition's woes. The Guardian. Online at http://www.guardian.co.uk/business/2011/nov/11/construction-sector-downturn-bad-news-for-government
6) Watt, N. 2011. David Cameron and Nick Clegg to unveil £400 homes plan. The Guardian. Online at http://www.guardian.co.uk/politics/2011/nov/21/cameron-clegg-homes-plan
7) KPMG. 2010.Global Construction Survey - Adpating to an uncertain environment.
8) Global Construction Watch. 2011. Online at http://www.globalconstructionwatch.com/
9) Heuer Group. 2011. 2011 Construction Trends. Online at http://theheuergroup.com/2011/01/2011-construction-trends/
10) Ecobuilder today. 2010. Five predictions for commercial constructions trends 2011. Online at http://ecobuildertoday.com/blog/posts/Five-Predictions-for-Commercial-Constructions-Trends-2011/  

Contact us

If you would like to know more about our construction sector expertise, please contact us at
client@ibtpartners.com
for additional information.