China, India and Brazil are likely to enjoy the highest real estate growth over the next decade, say surveyors.
During 2013 India, China, Asia Pacific, South and Central America, Middle East and Africa and parts of East Europe are also set to see the most dynamic growth for construction, according to the Royal Institution of Chartered Surveyors (RICS).
“In these countries, the opportunities for infrastructure development and construction will be driven by increasing purchasing power, labour mobility, demands for higher living standards and major upgrades in transport systems, utilities and buildings,” says its latest insight report.
“China will be the world’s leading construction market by 2018. However, the construction growth rate will be higher in India. It is expected to touch the double digit in both the residential and non-residential markets on the short term basis.”
This is happening because emerging markets are expected to grow by 110% to a total of $7trillion, representing 17.2% of Gross Domestic Product (GDP) by 2020.
Developed countries will grow by 35% from $4.2 trillion today to an estimated $5.7 trillion market by 2020, the report estimates.
Fiscal deficits in developed countries have reduced government spending and austerity measures, rising raw material prices, a lack of availability of finance and weak consumer spending will keep them in the doldrums.
But RICS says that signs of recovery give reasons to be optimistic. “Increased availability of capital and resurgence in manufacturing has already led to recovery in the commercial realty market worldwide. Investments in transportation, education facilities, highways, healthcare facilities, hotels and hospitality, government offices will further accentuate the construction growth.
“But, fiscal deficits and reduced government spending will continue to hold back construction growth in some of the developed countries.”
RICS also points out that India is set to become the world’s fastest growing economy and is likely to be the world’s third largest economy by 2030. India is home to 17% of the global population, but covers only 2.4% of the world’s geographical area.
Age is on the side of India, as half of its population is below 25 years old now, and the median age by 2030 will be 31, far below China’s 42 and Japan’s 52. A four-fold increase is expected in per capita income in India by 2030.
Indian cities will generate 70% of the net new jobs created by 2030 and produce more than 70% of the country’s GDP. Three of the world’s top 10 outsourcing companies are from India and 56 Indian companies are on the Fortune 2,000 list.
India also ranks third in terms of attractiveness as a destination for Foreign Development Investment and investment of US$ 1.2 trillion is required over next 20 years to modernise urban infrastructure in India.