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Press release

4 NOV 2021

Pace of new construction work slows across Asia-Pacific region

  • New workloads led by new infrastructure projects
  • Private residential and commercial projects fall, but expectations are upbeat for year ahead
  • Financial constraints and cost of materials remain top two issues holding back the market

ASIA-PACIFIC RICS Global Construction Monitor – Q3 2021

The rate of new construction projects slowed slightly in the third quarter of 2021, with new infrastructure works making up falls in new residential and commercial projects – this according to a survey of experts and professionals working in the construction sector across the Asia-Pacific region by the Royal Institution of Chartered Surveyors (RICS).

While the pace of total new activity fell from +21% in Q2 to +3% in Q3, infrastructure was the only sector to remain in positive territory (+13% in Q3 from +39% in Q2) – with energy, ICT and social revealing the strongest outputs. Both private commercial (such as office and retail developments) and residential saw small falls in activity over the quarter, down by a net balance of -16% and -13% respectively.

Over the next twelve months respondents reported more upbeat expectations across the three primary sectors, with private residential, commercial and infrastructure works all expected to grow by double digit figures (net balances +12%, +15% and +50% respectively).

Similar to many regions around the world, the most significant factors holding the construction sector back in APAC, according to respondents, remained the high cost of materials (78%), financial constraints (72%) and insufficient demand (68%). In addition, the costs relating to construction, materials and skilled labour are expected to increase by 6%, 7% and 6% respectively – showing that the cost of delivering projects in the region are expected to rise.

Reflecting a challenging quarter for the sector, new business enquiries fell in Q3, down by a net balance of -10% while profits are expected to remain flat at +1% over the next year.

With the COP-26 conference currently underway in Glasgow UK, respondents reported a reluctance amongst investors to adopt green building designs or carbon neutral construction practices. Around 18% said they’d seen no shift in support and nearly 41% saying only niche investors had shown an interest in building more sustainably.

In addition to this, 20% of respondents confirmed that biodiversity was not taken into account for any of the schemes on their books while 39% said under half of the projects accounted for it – painting a challenging picture that the construction sector is playing catch-up* with wider concerns around sustainability and the impact of the planet.

Simon Rubinsohn, RICS Chief Economist, said:

“Although the growth in activity in the construction sector moderated over the summer, this looks to be largely a result of temporary factors. Expectations for workloads remain strongly positive with infrastructure spend, on the back of post-covid stimulus programmes in many cases, continuing to be a key driver of the uplift in output across much of the region.

“A recurring theme however is the challenge presented by supply chain issues which have manifested themselves in difficulties in accessing key building materials and, even more significantly, rising costs. This is being compounded in some parts of the region by additional challenges in sourcing skilled labour.

“Against this backdrop, it is perhaps unsurprising that the anticipated recovery in profitability of the sector is proving at an aggregate level to be a little more drawn out than might have been hoped according to respondents to the survey.”

-ENDS-

NOTES TO EDITORS

The full report from the RICS Economics team can be found here: INSERT LINK.

*RICS is working as part of an international coalition of organisations and professional bodies to publish the world’s first carbon accounting framework – known as ICMS3 – which will set out how the sector can move towards more sustainable practice. This framework will be published in the coming months.

About RICS

We are RICS. Everything we do is designed to effect positive change in the built and natural environments. Through our respected global standards, leading professional progression and our trusted data and insight, we promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.

Our work with others provides a foundation for confident markets, pioneers better places to live and work and is a force for positive social impact.

FOR MORE INFORMATION

John Bayliss, Media Relations Officer: jbayliss@rics.org or 0207 695 1540

We are RICS

Everything we do is designed to effect positive change in the built and natural environments.

Through our respected global standards, leading professional progression and our trusted data and insight, we promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.

Our work with others provides a foundation for confident markets, pioneers better places to live and work and is a force for positive social impact.

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