Asian Tiger Cubs—Indonesia, Malaysia, the Philippines, Thailand and Vietnam—are expected to lead the race to build, build, build in a region-wide construction boom that’s expect to last through the next 10 years, a report by Oxford Economics says.
These economies are recovering from the 2007 global financial crisis, overtaking the growth rates of the mature Asian Tigers of Hong Kong, Singapore, South Korea and Taiwan, and even China, as its growth moderates.
With reviving growth, these Tiger Cub countries will be investing heavily in infrastructure—such as transportation and utilities like power generation and distribution, water, and sewage networks—which will meet increased demand for better living standards as well as stimulate economic expansion.
Even with rising incomes, the region’s growth is also being buoyed by its evolution as a key regional and global manufacturing hub, supported by its large supply of still relatively cheap labour. This attracts a strong flow of inward business investment from both local and multi-national manufacturers. In turn, the demand for commercial and industrial buildings and improved transport connectivity increases.
With all ASEAN member countries (except already heavily-developed Singapore) still undergoing rapid urbanisation, there are huge requirements for new built structures (beside infrastructure construction) to accommodate the increasing demand.
Across the region, there is a large under-supply of housing, on top of the need for commercial real estate and infrastructure. Oxford Economics expect the region’s construction sector to remain on a strongly upward growth path over the next five years. Annual construction growth in the region is forecast to strengthen to mostly double digits, based on forecasts from the BIS Oxford Economics Asia Construction Service.
Over the next five years, construction investment in Asia is expected to average USD1.61 trillion per year, versus an expected USD697 billion in the United States, and USD890 billion in the EU.
Fueled by OBOR and India
China’s ambitious One Belt One Road initiative (OBOR)—which will link China to Europe through Central Asia, South-east Asia, South Asia and Africa—is expected to fuel the Asia-wide construction boom.
The South-East Asian region is a pivotal element in the OBOR initiative, and China has the financial muscle to develop these projects aggressively in what looks set to be a win-win for all in the region.
Although some initial project implementation has been slow, several OBOR-related projects that are underway include the Yunnan–Laos high-speed rail link, a China–Thailand high-speed rail link, Jakarta–Bandung high-speed rail, and the East Coast Rail link in Malaysia.
Over the next five years, India’s annual construction investment is also expected to jump by almost a third, averaging USD170 billion per year, which will add more impetus to Asia’s building boom. — Construction+ Online