According to the latest market research report by Technavio, the construction spending market in BRIC countries is expected to grow at a CAGR of close to 13% until 2020.

In this report, Technavio covers the present scenario and growth prospects of the construction spending market in BRIC for 2016-2020. The market size has been estimated based on the contribution of the construction industry to the GDP. In this report, our researchers have focused on construction spending taking place in the infrastructure and residential construction sector in BRIC countries.

“Rapid urbanization and economic growth have resulted in increased construction of skyscrapers in many large and medium-sized cities in the BRIC countries. However, it is China in particular which is likely to dominate the high-rise building market during the forecast period, accounting for close to 72% of the total number of high-rise office buildings worldwide and more than 50% of these buildings emerging in two-tier cities,” said Soumya Mutsuddi, Technavio’s industry analyst for construction and a subject matter expert.

“The BRIC region grapples with a weak legal and regulatory framework in the infrastructure sector, which results in project delays. Therefore, vendors will be required to abide by stringent rules and regulations laid down by the governments of BRIC countries to get the necessary approvals. These factors are anticipated to increase project costs across BRIC countries,” added Soumya.

China: largest BRIC region for the construction spending market

Construction spending in China was valued at close to USD 1,130 billion in 2015. The infrastructure construction market in China will continue to boom because of increased investments across the country. The government of China is taking multiple initiatives to develop its infrastructure. For instance, in January 2015, central, local, state-owned firms and the private sector companies invested close to USD 1.1 trillion towards 300 infrastructure projects related to gas pipelines, health, energy, transportation, and mining in China.

Growing population and rapid urbanization have increased the demand for construction spending in the residential sector as well. In 2014, more than USD 1,046 billion worth of investments were made in residential building constructions in China, with close to 5.15 billion square meters of residential buildings under construction.

India: the second largest BRIC region for the construction spending market

The government of India is focusing on the implementation of smart cities to improve the quality of life in urban areas. Many people are migrating from rural to urban areas, prompting the government to invest heavily in the construction and development of smart cities, while renovating existing cities.

In 2015, the government unveiled its plan for the development of 100 smart cities and 500 Atal Mission for Rejuvenation and Urban Transformation (AMRUT) cities over the next five years to enhance urban life. The cabinet has also announced a package of around USD 7.48 billion for the development of these AMRUT cities and close to USD 7.79 billion toward the construction of smart cities. Our researchers believe, this move will significantly boost the construction spending market in India until 2020.

Construction spending market in Brazil

With the success of the 2014 FIFA World Cup, the Brazilian government is currently fulfilling the infrastructure requirements presented by the upcoming Olympic Games in 2016. Spending on sports infrastructure in the country is expected to reach around USD 22 billion by 2016, accounting for almost 30% of total infrastructure spending in this period. Large-scale construction projects are also on the rise in the country, including highways, subways, integrated sports complexes, sports stadiums, and airports.

However, Brazil remains one of the most heavily taxed countries. Its taxes comprise almost 37% of its GDP. This tax burden on its population has drastically affected the fortunes of the construction market in the country. The Brazilian construction sector used only 61% of its total production capacity during the first half of 2015, compared to 70% in 2014. Such a trend can predictably hamper construction spending in this region during the forecast period.

Construction spending market in Russia

The construction spending market in Russia is set to grow at a CAGR of close to 7.6% over the next four years. The Russian government is currently focused on fulfilling the infrastructure requirements for the upcoming FIFA World Cup, which is due for 2018. It is slated to take place in 12 world class stadiums spread across 11 host cities: Moscow, St. Petersburg, Nizhny Novgorod, Kaliningrad, Kazan, Samara, Saransk, Volgograd, Rostov-on-Don, Sochi, and Ekaterinburg.

The event is expected to boost the demand for hotel construction and tourist inflow into the country. The Russian government plans to exempt hotel operators from tax for a year in order to gain profit from infrastructure investments in hotel rooms. This development is expected to provide robust growth for construction spending in the hospitality sector of the country.

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