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Global Construction Industry 2025–2031: Trends, Tech, and M&A Outlook

General Report July 24, 2025
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TABLE OF CONTENTS

  1. Executive Summary
  2. Introduction
  3. Industry Growth and Market Forecasts
  4. Technology and Sustainability Drivers
  5. Major Corporate Mergers and Competitive Landscape
  6. Risk Factors and Opportunities
  7. Conclusion

1. Executive Summary

  • The report titled 'Global Construction Industry 2025–2031: Trends, Tech, and M&A Outlook' provides an in-depth analysis of the construction sector's anticipated evolution over the next six years, projecting a total market output increase of $17.5 trillion from 2014 levels, reaching $212 trillion by 2030. This growth reflects a compound annual growth rate (CAGR) of 3.9%, driven by factors such as urbanization, increased infrastructure spending, and advancements in technology. Notably, segments like micro housing are expected to see significant increases, with a market value projected at approximately $1.52 billion by 2031, while the adoption of artificial intelligence in construction is projected to reach a remarkable USD 15 billion by 2035, with a CAGR of 32.66%.

  • In addition to these growth trajectories, the report examines the implications of major corporate mergers, as exemplified by HD Hyundai's significant consolidation move, which is set to reshape the competitive landscape. Despite the industry's promising outlook, various risks—including geopolitical uncertainties, regulatory changes, and material cost volatility—necessitate strategic adaptations by stakeholders to harness emerging opportunities while mitigating potential threats.

2. Introduction

  • As the world braces for an unprecedented wave of transformation, the global construction industry stands at a pivotal juncture. Heightened urbanization, evolving societal needs, and a pressing commitment to sustainability are not merely shaping the construction landscape; they are redefining its very essence. The industry, long viewed as a traditional sector, is rapidly evolving into a dynamic ecosystem where technology and innovation play foundational roles, necessitating a comprehensive understanding of current trends and projections.

  • The upcoming period from 2025 to 2031 presents both challenges and opportunities crucial for stakeholders across the spectrum, from corporate executives to policymakers. This report aims to elucidate the current trends within the construction industry, underpinned by a robust analysis of market forecasts, technological impacts, and significant mergers and acquisitions shaping the competitive landscape. With anticipated growth rates, especially in sectors like urban housing and infrastructure, it is imperative for industry players to navigate this complex environment successfully.

  • Structured around four main sections—Industry Growth and Market Forecasts, Technology and Sustainability Drivers, Major Corporate Mergers and Competitive Landscape, and Risk Factors and Opportunities—this report offers readers a multifaceted perspective. Its insights are intended to equip professionals with actionable intelligence on prevailing trends, potential disruptions, and strategic avenues for growth.

3. Industry Growth and Market Forecasts

  • The global construction industry stands on the brink of transformative evolution, propelled by rapid urbanization, technological advancements, and shifts in societal needs. The industry’s ability to adapt is not merely a requirement; it is an obligation for sustainability and growth in a post-pandemic world. The projections for 2025-2031 suggest a significant uptick in construction output, with the total value foreseen to reach a staggering $17.5 trillion increase from 2014 levels, reflecting a compound annual growth rate (CAGR) of 3.9%. Such growth underscores both the resilience and the evolving nature of this crucial sector.

  • As we delve into the intricacies of the construction market, it becomes evident that this sector is not monolithic; it is composed of diverse segments that exhibit distinctive growth trajectories. The dynamic interplay between urban housing, infrastructure development, and emergent micro housing solutions presents a complex tapestry of opportunities and challenges. In a context where global efforts are intensifying around sustainability, technology, and efficient resource utilization, understanding these segments becomes imperative for stakeholders looking to navigate the nuances of this evolving landscape.

  • 3-1. Global construction market size projection to 2030/2031

  • The global construction market is projected to witness substantial growth by 2030. According to recent forecasts, the total output of the industry is expected to soar to $212 trillion between 2016 and 2030, with an incremental increase of $17.5 trillion from 2014 figures. By 2031, the overall market is poised to reach a valuation reflective of robust infrastructure spending and increasing urbanization trends. Furthermore, governments worldwide are investing significantly in infrastructure projects, spurred by economic recovery initiatives in the wake of the COVID-19 pandemic. This infusion of capital, combined with an increase in public and private sector collaborations, forms the bedrock for this optimistic growth forecast.

  • In the realm of residential construction, elevated demand for housing is predicted to continue, albeit moderated by higher mortgage rates. Reports indicate that countries experiencing rapid urbanization, such as those in the Asia-Pacific region, will spearhead this growth. Additionally, factors such as affordability concerns and demographic shifts will play pivotal roles in shaping future housing developments, creating a market that emphasizes innovative, sustainable housing solutions.

  • 3-2. Segment growth rates (urban housing, infrastructure, micro housing)

  • Segment analysis reveals that urban housing will continue to dominate the construction landscape, yet the micro housing sector is emerging as a strong contender due to its viability in addressing housing affordability issues, particularly in metropolitan areas. The global micro housing market, estimated at approximately $1 billion in 2024, is anticipated to expand to around $1.52 billion by 2031, demonstrating a CAGR of 6.2%. Factors such as minimal land usage requirements and sustainability appeal are fueling this segment's growth.

  • Infrastructure construction, underpinned by governmental stimulus packages and infrastructural rejuvenation plans, remains resilient. Infrastructure projects are projected to benefit significantly from the overarching trend of digitalization and smart technology integration, paving the way for innovative construction methodologies. Given the rising complexities in project execution and delivery, the demand for advanced construction management tools and techniques will also see upward momentum, enhancing productivity and efficiency.

  • 3-3. Regional performance comparisons (Americas, APAC, Europe)

  • Regional analysis indicates marked variations in growth patterns and market dynamics across the Americas, Asia-Pacific (APAC), and Europe. The Americas, particularly the United States and Canada, are primed for a rebound in the construction sector, with projected growth of 3.6% in output for 2025, catalyzed by federal infrastructure acts and increased private investments. Canada is particularly interesting; it is poised for recovery in residential construction after struggles with high mortgage rates in prior years.

  • In contrast, the APAC region is expected to maintain its status as a construction powerhouse, driven by urbanization trends and a burgeoning middle class. Countries like China and India will play pivotal roles, with infrastructure spending anticipated to surge in alignment with government initiatives to boost their respective economies. However, China's current real estate challenges pose a temporary counterbalance to overall growth in the region. Meanwhile, Europe is witnessing more modest growth, grappling with inflationary pressures and high interest rates affecting demand. Nevertheless, innovative construction practices and a pivot towards sustainability are giving the region a competitive edge as it navigates these shifting economic landscapes.

4. Technology and Sustainability Drivers

  • In an age marked by rapid technological evolution, the construction industry stands at the crossroads of innovation and sustainability. Technology is no longer just a support function; it is the driving force behind the industry’s transformation, influencing every aspect from design to execution. Within this context, the interplay between technology and sustainability emerges as a critical focus, showcasing how the construction sector is adapting to meet both market demands and environmental responsibilities.

  • The convergence of digital tools and green initiatives not only heralds a new era of efficiency and effectiveness but reflects a profound shift in organizational philosophy across the construction landscape. As firms grapple with the pressing imperatives of climate change and limited resources, the strategies they adopt today will shape the environmental and economic footprint of the future.

  • 4-1. AI adoption trends, projected market value by 2035

  • The integration of Artificial Intelligence (AI) into the construction industry signifies a watershed moment in operational efficiency and strategic foresight. As of July 2025, the AI in construction market is projected to reach USD 15 billion by 2035, showcasing a staggering compound annual growth rate (CAGR) of 32.66% from 2025 to 2035. This exponential growth trajectory is driven by increasing urbanization, a key factor propelling AI adoption across the industry.

  • Employing AI technologies such as machine learning, computer vision, and natural language processing, construction firms are no longer just building structures; they are crafting smarter, more adaptable environments. AI is reconfiguring project management through shifts in predictive analytics, resource allocation, and risk assessment, leading to a more seamless workflow. For instance, predictive analytics powered by AI enable construction managers to anticipate project delays based on historical data and current conditions, ultimately leading to more proactive management strategies.

  • Additionally, labor shortages have fueled the urgency for adopting AI solutions to automate repetitive tasks. This not only enhances productivity but also mitigates risks associated with human errors. With AI-driven development tools, construction firms can streamline design processes and enhance collaboration across multidisciplinary teams. As a result, the role of AI is transforming from a mere technological enhancement to becoming a cornerstone of strategic decision-making within the industry.

  • 4-2. Green materials and carbon-reduction commitments

  • The shift towards sustainability is underscored by a growing commitment to reducing carbon footprints through the adoption of green materials in construction. Recent governmental pledges, such as Canada's commitment to achieving a 40% greenhouse gas reduction from 2005 levels by 2030, exemplify this trend. The transformation of traditional materials into low-carbon alternatives is not merely a regulatory response; it encapsulates a strategic vision that intertwines economic viability with environmental stewardship.

  • Research indicates that the construction sector accounts for approximately 11% of global greenhouse gas emissions, notably from materials such as concrete and steel. By fostering innovation in material science, stakeholders are exploring alternatives like bio-based composites, recycled aggregates, and advanced modular construction techniques that significantly diminish emissions. Governments and organizations are not only incentivizing such shifts through regulations but are also leading by example through their procurement policies.

  • For instance, Canada's Buy Clean Strategy aims to prioritize low-carbon materials in federally funded infrastructure projects, reflecting a comprehensive approach to procurement that champions environmental integrity. The balance of sustainability and performance is becoming pivotal for developers, with significant investments being directed toward research and development in carbon-reducing technologies. As construction executives navigate this evolving landscape, the integration of green materials into supply chains presents opportunities not just for compliance but also for competitive advantage in a market increasingly driven by environmental, social, and governance (ESG) criteria.

  • 4-3. Impact of labor shortages on automation uptake

  • Labor shortages have emerged as a central challenge impacting construction in 2025, exacerbated by evolving workforce dynamics and increasing skill gaps. As traditional labor pools dwindle, construction firms are compelled to turn toward automation as a viable solution. The uptick in automation not only alleviates immediate labor shortages but also positions firms to improve long-term operational resilience.

  • According to data, construction firms increasingly invest in automation technologies, ranging from robotics for repetitive tasks to AI-driven platforms for project management. In an industry where precision and time management are paramount, technologies such as drones for site surveys and robotic arms for bricklaying reduce the dependency on manual labor while ensuring higher standards of safety and efficiency. Such technologies are enhancing overall productivity, allowing for quicker project turnaround and reduced overhead costs.

  • However, the transition to automation is not without its challenges. Companies must navigate capital expenditures associated with technology acquisition and ongoing maintenance costs. They must also address the skills gap by investing in workforce training and development to ensure workers are equipped to engage with advanced technologies. The future of construction relies not just on the technologies implemented but also on the strategic integration of human capabilities with automated systems, fostering a hybrid approach that leverages the strengths of both.

5. Major Corporate Mergers and Competitive Landscape

  • In an era defined by rapid globalization and technological advancement, the construction industry stands at a pivotal crossroads marked by significant mergers. The recent consolidation within corporations like HD Hyundai exemplifies a strategic approach to navigate contemporary market challenges, emphasizing agility and innovation. As the competitive landscape transforms, understanding these dynamics is essential for stakeholders aiming to adapt and thrive amidst increased pressures and opportunities created by such corporate strategies.

  • Mergers in the construction sector, particularly those involving major players, not only reshape the competitive landscape but also reflect broader trends affecting the industry. The integration of resources, technology, and market reach can lead to enhanced operational efficiencies, expanded product lines, and improved responsiveness to customer needs. As entities like HD Hyundai undertake transformative mergers, the implications extend beyond their balance sheets, resonating across global markets and influencing competitive strategies.

  • 5-1. HD Hyundai group’s construction entity merger details, timeline, and strategic rationale

  • On July 1, 2025, HD Hyundai announced a landmark merger between its construction entities: HD Hyundai Construction Equipment and HD Hyundai Infracore. The newly formed entity, tentatively named HD Construction Equipment, is set to commence operations on January 1, 2026, with a combined revenue projection of approximately KRW 8 trillion (USD 6.15 billion). This strategic merger aims to enhance competitive agility in an increasingly complex and unpredictable global market environment, reflecting a concerted effort to streamline operations and capitalize on synergies inherent in both legacy organizations.

  • The merger’s significance is underscored by its timing amidst global economic uncertainties and intensified competition in the construction sector. HD Hyundai's strategic rationale centers on fostering technological advancements and expanding its market share both domestically and internationally. By merging, the new entity will leverage the strengths of both companies, allowing it to operate under dual brands—HYUNDAI and DEVELON—while focusing its core operations on construction equipment. This creation of a unified decision-making structure is poised to drive efficiency, agility, and innovation.

  • 5-2. Synergies in equipment, engine business, aftermarket services

  • The merger creates extensive synergies across various business segments, particularly within equipment manufacturing, engine production, and aftermarket services. The integrated approach enables the new company to optimize its product portfolios and enhance value propositions to clients by combining resources in engineering, development, and distribution. This strategic alignment aims to foster growth in both traditional machinery sales and emerging growth areas, such as electrified and smart equipment.

  • Moreover, the merger underscores a commitment to expanding the aftermarket services sector, focusing on providing superior maintenance and parts replacement solutions, thereby ensuring customer satisfaction and loyalty. This strategic pivot is supported by the anticipated growth of the engine business, which represents a significant opportunity for revenue diversification. By leveraging integrated research and development capabilities, HD Construction Equipment aims to innovate and deliver comprehensive, cutting-edge solutions that can adapt to evolving market demands.

  • 5-3. Competitive response and market positioning implications

  • The competitive ramifications of HD Hyundai's merger extend far beyond its immediate corporate structure. Other players in the construction space must recalibrate their strategies in response to this significant consolidation. Competitors may feel pressured to pursue similar mergers or alliances to maintain their market positions, as the enhanced scale and operational efficiencies of the merged entity pose a formidable challenge.

  • As the landscape shifts, firms will need to reassess their market positioning and value propositions to differentiate themselves in a crowded marketplace. The merger positions HD Construction Equipment not only as a new powerhouse in construction but also as a potential leader in pioneering advanced construction technologies. As such, the ripple effects of this merger could catalyze further mergers and acquisitions, driving an era of consolidation that could redefine competitive dynamics across the global construction sector. Consequently, strategic measures will be imperative for existing firms to navigate this evolving environment effectively.

6. Risk Factors and Opportunities

  • The global construction industry, despite its remarkable capacity for resilience and adaptation in the face of significant challenges, is currently navigating a complex landscape fraught with risk factors. As of 2025, the construction sector must contend with regulatory, geopolitical, and supply-chain uncertainties while simultaneously reaping the rewards of emerging opportunities shaped by technological innovation and changing market dynamics. Understanding these risk factors alongside new avenues for growth is essential for stakeholders aiming to strategically position themselves in an increasingly competitive marketplace.

  • Within this volatile environment, the interplay of regulatory shifts, geopolitical tensions, and supply chains creates significant hurdles. However, the identification of opportunities, such as advancements in micro housing technologies, digital twin applications, and prefabricated structures, offers a pathway to not only weather the storm but to thrive amidst it.

  • 6-1. Regulatory, geopolitical, and supply-chain uncertainties

  • The construction industry's multifaceted landscape is significantly influenced by an array of regulatory, geopolitical, and supply-chain uncertainties. These complexities emerge from shifts in government policies, international trade relations, and the dynamics of global supply chains. For instance, the ongoing trade tensions between major economies have led to fluctuating tariffs and trade barriers, complicating access to essential materials and components vital for construction projects.

  • Moreover, the impacts of climatic events and natural disasters have heightened awareness and urgency surrounding regulatory compliance, particularly in terms of environmental sustainability. Governments worldwide are implementing stricter regulations aimed at reducing carbon footprints and promoting sustainable practices. Adhering to these mandates can impose additional costs on construction companies, necessitating investment in greener technologies and materials—an essential evolution facilitated not just by legal compliance but by an increasing market preference for environmentally responsible solutions.

  • The geopolitical landscape adds another layer of challenge, with conflicts disrupting supply networks and local market conditions, exemplified by the war in Ukraine, which has destabilized supply chains for key materials like steel and cement. Countries that heavily relied on imports from affected regions have been forced to seek alternative suppliers, often at higher costs or with longer lead times, further amplifying construction expenses and project timelines.

  • 6-2. Currency fluctuations and material cost volatility

  • Currency fluctuations present a formidable challenge to the construction industry, where the volatile forex environment can significantly affect project costs. With many raw materials sourced internationally, the impact of currency devaluation or appreciation can lead to cost escalations that test budgets and financial forecasts. The depreciation of the US dollar against other currencies over the past year has made imports more expensive, precipitating an increase in overall project costs across several regions, particularly in the Americas.

  • Additionally, material cost volatility poses a recurring challenge that can disrupt budgeting and project planning. Prices for essential building materials, including timber, steel, and concrete, remain subject to unpredictable fluctuations driven by global demand, supply chain interruptions, and geopolitical tensions. For instance, timber prices have surged, largely due to supply shortages exacerbated by the COVID-19 pandemic and increased housing demand, subsequently leading to a ripple effect on new construction projects as budgets are stretched thin.

  • Stakeholders are advised to implement strategic procurement practices that emphasize flexibility and market responsiveness. Leveraging long-term contracts with suppliers, investing in futures contracts, or even exploring alternative materials may help buffer against these unpredictable variabilities, ensuring greater financial stability amid an increasingly volatile operating environment.

  • 6-3. Emerging opportunities in micro housing, digital twin, and prefabrication

  • In contrast to the myriad risks facing the construction industry, significant opportunities are emerging, particularly in the realms of micro housing, digital twin technology, and prefabrication. The micro housing market is gaining traction, driven by the dual pressures of urbanization and a growing population. As traditional housing solutions become increasingly unattainable for many, micro housing presents an innovative approach to affordability and efficiency, anticipated to reach a market value of approximately $1.52 billion by 2031, reflecting a compound annual growth rate of 6.2% from 2025 to 2031.

  • Digital twin technology is also poised to revolutionize construction practices, enabling stakeholders to create virtual replicas of physical structures for real-time monitoring and improved project management. This innovation not only enhances operational efficiency by streamlining maintenance processes but also facilitates better decision-making through predictive analytics, thus reducing costs and improving project outcomes.

  • Furthermore, the prefabrication movement continues to grow as a viable solution to combat labor shortages and material waste in construction. By manufacturing building components offsite, companies can leverage automation to expedite the construction process, reduce onsite labor costs, and optimize quality assurance. Initiatives promoting prefabrication can result in reduced project timelines and increased responsiveness to market demands. As industry players strategically position themselves to capitalize on these emerging opportunities, the focus should remain on integrating sustainable practices while leveraging technology to address broader market challenges.

7. Conclusion

  • The insights presented in this report converge to illuminate a construction industry poised for significant transformation over the next six years. As projected growth figures demonstrate, the sector's resilience is underpinned by technological advancements and a shift towards sustainable practices. However, navigating the multifaceted risk landscape comprising regulatory shifts, geopolitical tensions, and volatile costs remains imperative for stakeholders aiming to capitalize on new market opportunities.

  • The analysis of corporate mergers highlights the ongoing trend of consolidation, which is likely to redefine competitive dynamics globally. Companies that successfully adapt their strategies to include innovative technologies, while fostering sustainable practices, will be best positioned for future success. The report underscores that while the growth trajectory is promising, proactive measures must be taken to address emerging risks and seize opportunities, especially in areas such as micro housing and automation.

  • In conclusion, the future of the construction industry is intricately linked with its ability to embrace change—both technologically and environmentally. As the sector continues to evolve, stakeholders must remain vigilant, innovative, and agile to thrive in this rapidly shifting landscape, ultimately contributing to a more sustainable and technologically advanced built environment.

Glossary

  • Compound Annual Growth Rate (CAGR): A measure used to calculate the mean annual growth rate of an investment over a specified time period, assuming the investment grows at a steady rate.
  • Micro housing: Small-scale housing units designed to maximize space and affordability, often appealing to individuals in urban areas facing high living costs.
  • Artificial Intelligence (AI): The simulation of human intelligence in machines programmed to think and learn, increasingly applied in construction for automation and decision-making.
  • Digital twin technology: A digital replica of physical assets, systems, or processes that allows real-time monitoring and analysis for improved efficiency and management.
  • Sustainability: The responsible management of resources to ensure economic growth while minimizing environmental impact over the long term.
  • Mergers and Acquisitions (M&A): The process of consolidating companies or assets through various types of financial transactions, including mergers (joining) or acquisitions (buying).
  • Regulatory compliance: The process of ensuring that a company adheres to relevant laws, regulations, and guidelines that govern its operations.
  • Supply-chain uncertainties: Variabilities and risks associated with the flow of goods and services from suppliers to consumers, potentially affecting cost and availability of materials.
  • Green materials: Sustainable building materials designed to minimize environmental impact, often involving reduced carbon footprints or improved energy efficiency.
  • Automation: The use of technology to perform tasks without human intervention, increasingly utilized in construction to enhance efficiency and address labor shortages.

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