Global Construction Market Trends

There’s a multitude of reasons for construction demands in international markets but they are mainly due to a rise in GDP in the wealthier nations and high fertility rates in the poorer nations. For this post, let’s just focus on the first world for now. All you need to know for the poor nations is that it’s pretty much a bunch of basic concrete blocks (if they’re lucky), half of them probably without A/C and definitely without rooftop pools. Can you imagine? Yah, me either. Wealthy countries demand higher standards so building costs will rise as a result, leaving us with architecturally significant buildings even worth writing about.
Lets start simple explaining different reasons for why people would want to invest in a growing construction market. One obvious one that many Americans probably wouldn’t even think about is political stability. You’re not exactly going to invest your life savings into the Congo or Russia not knowing where your money would go because of all the corruption and lack of protection laws. No shit. You’ll probably sleep better at night investing your money into a stable market like Western Europe or Canada even.
Another reason would be migration. Especially recently with globalization and modernization, many people are migrating to different countries for work and it drives up construction drastically. Often times, these construction projects are fully funded by governments or investment authorities which allows projects to be finished much more rapidly and on a much larger scale. This is mainly occurring now in the gulf Arab States like United Arab Emirates, Qatar, Kuwait and Saudi Arabia. That’s where all your gas money is going. On top of it, labor is extremely cheap there, it’s borderline slavery but they choose to go there for work so not really. Still there’s no ‘minimum wage’ and they work longer hours equals productivity. Dubai built its state-of-the-art metro in about a year while Los Angeles will probably have its high speed rail ready when I’m ready to retire and I’ll be in Cannes by then.
Back to the migration point. People usually migrate to other countries nowadays for economic opportunities in hope of gaining a higher income than they would in their home country. However, most of these people plan to go to these countries and work, get rich, then go back home. In turn, the money they are making is not being put into the local market and economy but back to their home countries to probably family members or a retirement home. Therefore, unless people will continue to migrate and work at the same rate, it can cause major inflation rates because the more people come the higher demand will be for accommodation. So if people stop coming, the local population suffers and there will be major inflation and completely deteriorate an economy and its construction market.
This is of particular interest with these gulf arab states, especially Dubai, which have more foreign workers in the country than the local population. Dubai currently has only 20% Emirati nationals and the rest are expatriate workers. Ratio of male to woman is 1 to 6 which is pretty shocking but it just further strengthens my point that people are there temporarily and are there to work, get rich, then leave. This has already caused damage to its market in 2008 with construction markets and prices with a 50% decrease at the snap of a finger. I hope you understood all that. I’ll explain more reasons next time.