Construction Expenditures in China Expected to Increase Annually Through 2016

July 26th, 2012 by DWM Magazine

Construction expenditures in China will increase 8.8 percent per annum in real terms through 2016, according to the Freedonia Group, a Cleveland-based research firm which just released a new study, “Construction Outlook in China.” Although growth is expected to decelerate from the rapid 2006-2011 pace, the country will continue to outperform other major national construction markets, according to the report. Ongoing urbanization and industrialization, rebounding foreign investment funding, rising personal income levels and further population and household growth will all work to drive gains, says the study, adding that further growth will be prevented by a slowdown in the Chinese economy through the forecast period.

According to the Freedonia Group, construction expenditures in China are about equally split among the residential building, nonresidential building and nonbuilding construction segments, each of which accounted for around one-third of total construction spending in 2011.

Residential building construction is expected to advance at an 8.5-percent annual pace in real terms through 2016, primarily spurred by rising personal income levels, household growth and continuing urbanization. Government efforts to improve living conditions for low-income earners will also help drive gains in residential building construction spending, according to the report.

Nonresidential building construction expenditures are forecast to rise 8.3 percent annually in real terms through 2016. Advances will be driven by robust increases in consumer spending—both in China and abroad—for Chinese manufactured goods and services, reports the Freedonia Group. These increases will spur domestic and foreign direct investment in plants, warehouses, commercial buildings, and shopping complexes, according to the study.

 

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