Frost & Sullivan: The Global Building Construction Market

According to Frost & Sullivan’s new report ‘Building Construction Market, Global, 2025–2030’, many advanced building projects now integrate renewable energy sources and adopt comprehensive sustainable strategies, including the use of green insulation and environmentally responsible materials within their designs. Additionally, green building certifications encourage the adoption of innovative technologies, while smart building platforms facilitate improved energy management and control systems.

However, geopolitical tensions between the United States and China constitute a significant challenge, as ongoing trade disputes pose risks of supply chain disruptions that may elevate costs and affect project development timelines. In response, emerging start-ups are introducing digital solutions that enhance the efficiency and sustainability of project execution, contributing to reduced durations and overall costs. These digital innovations enable construction firms to optimise their operations by integrating design, procurement, and construction processes. Furthermore, advanced data analytics tools support companies in managing material consumption more effectively, underpinning corporate efforts to minimise their carbon footprint.

The Frost & Sullivan report provides a thorough analysis of the factors driving change in the global building construction market. It offers insight into growth trends and constraints, presents relevant market data and forecasts, and identifies opportunities arising from these transformations for industry participants and stakeholders. The base year referenced is 2024, with projections extending from 2025 through 2030.

Market Overview and Key Growth Drivers

Frost & Sullivan defines the building construction market as services for erecting or retrofitting structures, both permanent and temporary. The report covers residential and non-residential construction, excluding small renovations, unorganized contracts, demolition, supply of materials and equipment, and non-building projects like roads or utilities. Competition market shares are not included due to the market's fragmentation and involvement of various stakeholders.

The report discusses the following three strategic imperatives on the global building construction industry:

• Transformative Megatrends: Sustainability and green building practices are reshaping the planning, construction, and use of buildings, with an ongoing focus on reducing environmental impacts and increasing energy efficiency.
• Geopolitical Chaos: Political tensions and trade conflicts are likely to disrupt supply chains and raise prices, impacting the building construction industry.
• Competitive Intensity: Value chain compression is driving the industry to improve efficiency and sustainability, reduce costs, and shorten project completion times by streamlining or merging construction processes.

The report explains the most important growth and growth restraints:

Growth Drivers

• Urbanization and population growth are increasing the demand for residential and commercial real estate.
• Sustainable construction practices and green buildings are becoming increasingly important.
• Digital transformation through technologies such as IoT and Building Information Modeling (BIM) is enhancing efficiency and productivity across the industry.

Growth Restraints

• Material shortages and a lack of skilled personnel pose significant challenges.
• High inflation rates and interest rates may negatively impact investments and project financing.
• The costs associated with environmentally friendly materials and designs can make projects more expensive.

According to the report, the global building construction market is expected to reach USD 11,456.50 billion by 2030. The compound annual growth rate (CAGR) for the period 2024–2030 is projected at 4.4%. The market remains highly fragmented, with more than 16,000 active competitors.

The building sectors

The residential building sector is set to grow due to urbanisation, aging populations in developed countries, and a rising middle class in emerging markets. There is increased demand for affordable and multi-generational housing, alongside smart home technologies like connected appliances and energy management systems, which boost convenience and efficiency.

Non-residential buildings are adopting more sustainable practices and green certifications as energy-efficient designs and eco-friendly materials become standard. Key facilities—including hospitals, schools, and government buildings—are expected to see more investment, while public infrastructure projects in emerging economies will drive sector expansion.

Regional Analysis

North America

The North American building construction sector is driven by rising housing market demands and smart building advancement. This growth is supported by the development of IoT applications and regulatory initiatives. New housing and commercial facilities experience high demand due to urban development and rising population numbers. The market revenue in North America is expected to reach USD 2,359.00 billion in 2024, with a CAGR of 4.3%. There is a high demand for housing and smart buildings in this region.

Europe

The European building construction industry shows steady growth driven by decarbonization and AI-powered developments (for example, BIM, automation, robotics, IoT), urban redevelopment, and new housing demand. Nonetheless, the market is challenged by elevated interest rates and energy costs, which lead to high project costs. Furthermore, the ongoing Russo-Ukrainian war is causing material cost uncertainties and disrupting supply networks. Europe’s market revenue is estimated at USD 1,539.97 billion in 2024, with a CAGR of 2.8%. The region faces challenges from high energy costs and ongoing geopolitical tensions.

Asia-Pacific (APAC)

The construction industry faces in APAC hurdles due to economic uncertainties and increasing labor costs stemming from minimum wage rises and elaborate regulations in Malaysia, Vietnam, the Philippines, and Indonesia. As such, small and medium enterprises encounter substantial budget constraints, which affect the overall progress of construction projects. However, leading market participants in the APAC building construction market are increasingly using robotic automation with BIM technology to boost efficiency while reducing manual labor reliance. The Asia-Pacific region is projected to generate USD 4,202.93 billion in revenue by 2024, with a CAGR of 4.8%. China remains the largest market, followed by India and Indonesia.

Middle East and Africa (MEA)

The UAE demonstrates positive economic prospects until 2030 due to its national plans, such as Abu Dhabi Economic Vision 2030 and Dubai Industrial Strategy 2030. Tourism and renewable energy sectors will have strong growth due to the country's commitment to infrastructure development and economic expansion.

Building construction will gain momentum from this strong economic prospect. Key developments in the country include smart cities, transportation infrastructure, and sustainable buildings. Strong inclination towards sustainability and smart technologies will accelerate the implementation of prefabricated and modular construction, which can improve environmental impact. The market revenue for the Middle East and Africa is forecasted at USD 462.58 billion in 2024, with a CAGR of 5.2%. Significant investments are being made in infrastructure and housing.

Latin America (LATAM)

Building construction throughout LATAM will see rapid expansion due to urbanization, spurring demand for housing, business properties, and township developments. Building construction in the region is also supported by the development of public infrastructure, transportation networks, energy systems, and utility services. Challenges in LATAM include project delays caused by regulatory issues, financial constraints, and environmental concerns. In Latin America, the market is expected to reach USD 296.65 billion in 2024, with a CAGR of 5.8%. Urbanization is driving strong demand for residential and commercial properties.

Growth Opportunities

The use of drones and robotics is increasing efficiency in construction projects. Frost & Sullivan believes that the building construction market will increasingly adopt drones and robotics for large-scale projects, with a strong focus on achieving better work quality and reducing labor costs.

The development of smart cities is enhancing quality of life and sustainability. Smart city development has been underway for decades, but stakeholders will focus on 3 main areas, namely, ICT convergence, device-based data collection, and sustainability. Frost & Sullivan predicts that energy-efficient buildings along with sustainable infrastructure, renewable energy sources, and efficient transport systems will be key elements for smart cities to achieve environmental sustainability services for patient care and smart building technology systems. 

Investment is rising in specialized facilities like data centers and sustainable hospitals. Data center construction is increasing to meet the demand from growing cloud, AI, and ML adoption across industries. To minimize environmental impact, the data center sector is adopting renewable energy and efficient cooling systems. Long-haul connectivity between centers is also expanding to support AI workloads.

The full Building Construction Market, Global, 2025–2030 report by Frost & Sullivan can be accessed directly via the Frost & Sullivan website.