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Emergence of Smart Cities to Boost Global Construction Machinery Market

December 27, 2016, 07:00 AM
Filed Under: Construction

Technavio research analysts forecast the global construction machinery market to grow at a CAGR of close to 12% during the forecast period, according to their latest report.

The study covers the present scenario and growth prospects of the global construction machinery market for 2016-2020. The report also segments the market into four different types of construction machinery, which are earthmoving machinery, material handling machinery, concrete and road construction machinery, and other construction machinery, of which earthmoving machinery accounted for the largest market share of over 44%.

According to Navin Rajendra, an industry expert at Technavio for engineering tools research, “With the growth of the global economy, countries worldwide are investing in the development of high-quality infrastructure, especially in the construction of airports and mass transit systems, which will boost the construction machinery market.

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Technavio heavy industry analysts highlight the following four drivers that are contributing to the growth of the global construction machinery market:

  • Vertical growth in the global construction market
  • Rapid urbanization 
  • Emergence of smart cities 
  • Increased investment in real estate

Vertical growth in the global construction market

Skyscrapers, along with many ultra-high-rise buildings (more than 300 meters), are increasingly being built in many large and medium-sized cities across the world due to rapid urbanization and economic growth. These buildings act as local landmarks and attract popular domestic and foreign enterprises. Therefore, such large-scale construction of high-rise projects will propel the demand for construction machinery globally.

The number of high-rise buildings under construction is rising in many European countries. For instance, the number of high-rise buildings under construction in London, UK, grew by 56%, from 46 towers in 2014 to 71 in 2015. Hence, the rise in building construction projects worldwide will result in the increased demand for construction machinery.

Rapid urbanization

Many people are shifting from rural to urban areas in search of better employment opportunities, as many multinational corporations are setting up offices in metropolitan cities across the world. In 2015, the urban population accounted for 54% of the total population, which is likely to increase significantly in various countries such as Latin America and the Caribbean, Asia, and Africa by 2050. Urbanization has led to increased demand for infrastructural development, including roads, sewage facilities, transit systems, and megacities.

“Hence, increased infrastructural development in urban areas and the rise in construction activities are expected to boost the demand for construction machinery,” says Navin.

Emergence of smart cities

Governments of various countries such as Saudi Arabia, India, and Qatar are investing heavily in the development of smart cities. Smart cities provide better transportation facilities, smart grids, improved healthcare facilities, advanced technologies, and enhanced traffic management system.

The growing emergence of smart cities will lead to an increase in infrastructure development, boosting the demand for construction machinery during the forecast period.

Increased investment in real estate

Real-estate investments are increasing in most regions, especially in APAC. This is due to low interest rates, coupled with the recovery of the global macro-economic environment. Real-estate spending is high in Europe as well, especially in Tier-2 cities like Berlin, Dublin, and Hamburg. In the Americas, the presence of rapidly growing venture-capital-funded companies is encouraging investors to spend more money on real estate. Dallas and Austin are the fastest growing metropolitan cities in Texas, US. Most investors increased their property acquisitions in North America in 2015 because of the competitive investment environment. Thus, increased investments in the real estate sector augur well for the growth of the construction machinery market during the forecast period.

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