BACKDROP

Harnessing intelligence to navigate a volatile era

⏱ 4 min read

INSIGHT

The scale of insight

markets

countries

data points

CHALLENGE

The construction industry has a vital role to play in solving the world’s most pressing challenges.

As digital and AI advance, population demographics change, climate impacts shift and existing infrastructure ages, new demands must be met. Our industry needs to think differently and pioneer new approaches to improve our performance and make a positive contribution to society.

This year has been characterised by shifting opportunities, priorities and challenges across the globe. In part, this has been accelerated by change in political direction following 2024’s ‘super election’ year – with 1.5 billion people voting across 64 countries. We are seeing increased polarisation impacting how and where investment flows.

Uncertainty caused by trade disruption and tariffs has reduced confidence in some areas, while others are benefitting from new opportunities and high growth markets like data centres, advanced manufacturing and defence.

Faced with instability, economic fragility and shifting supply chains, it is the right time to evolve our flagship international real estate cost publication. Our global construction market intelligence report brings new dimensions and wider market coverage, allowing our clients to understand how our industry is performing and to prepare better for what’s ahead.

INSIGHT Broadly stabilising construction cost inflation – averaging 3-4 percent globally, is closer to the rates seen pre-2020, indicating a more stable environment overall.

We continue to see skills shortages as the most reported issue from our survey, with labour becoming less mobile. With more barriers to migration being put up, countries are increasingly relying on local solutions to provide the skills they need.

In this changing world, agility and vigilance are vital. Despite the volatility, our report shows a strong, relatively stable global construction industry, better prepared to take on the challenges than even just a few years ago.

Construction cost inflation is generally stabilising with rates in many markets slowing to those seen pre-pandemic. More than anything, we see markets and clients benefiting from the resilience built following the global shocks of the early 2020s. Conflict in Europe and the Middle East, following swiftly on the heels of pandemic, have required many companies and project teams to build a more proactive approach to risk management and business continuity.

Across the construction industry, we are now better prepared to take on challenges – and to focus on driving growth, improvement and positive outcomes.

Data centres, life sciences and advanced manufacturing are still set to be dominant sectors for growth in the years to come. Demographic shifts, lower interest rates and the changing face of the city will also see strong public and private investment in housing, urban regeneration and retrofitting of ageing stock.

Having realised the benefits of building a more resilient industry – now is the time to capitalise upon these gains. There remain many opportunities, and problems that need to be solved. Insolvencies are still too high; productivity is still too low; and construction is slow to embrace the full potential of the digital and AI age.

Harnessing the data and insights from this report, every organisation should challenge itself to try something new over the next 12 months. Pilot a new AI tool. Integrate digital solutions across the lifecycle of a project. Explore modern methods of construction. Start working with suppliers that are challenging the status quo.

Once upon a time, innovation was about curiosity; now organisations need to think of this as a necessity in order to navigate and succeed through a new era of uncertainty.