John Butler Managing Director - APAC and GCC
APAC and GCC construction markets are showing resilience with growth being driven by mission critical sectors such as data centres, life sciences and high-tech industrial. This growth will require access to reliable power and renewable energy sources to reach sustainability goals.
Construction output continues to show resilient growth in both the GCC and South Asia, with the regional powerhouse of India leading the way.
However, the wider economic outlook for APAC has weakened slightly, with GDP growth for 2025 set to slow to 3.9%, from 4.6% in 2024, amid uncertainty over trade tariffs. The GCC countries are expected to prove more resilient, with GDP set to rise steadily over the next two years in both the KSA and the UAE.
Most construction sectors across both regions will experience growth of between 2.0% and 6.0% in 2025. The outlier is South Korea, which is forecast to contract by 1.2% as the residential sector continues to struggle.
Construction inflation is expected to remain broadly in line with 2024 levels, although trade restrictions make future cost scenarios uncertain. Skilled labour shortages will also continue to place significant upward pressure on costs in both regions.
The Middle East economies continue to diversify from oil to tourism and energy infrastructure, with mega projects such as Vision 2030 driving annual growth of 5.2% in the KSA and 4.0% in the UAE. Within both countries there is enhanced focus on AI initiatives and subsequently data centres, with capacity set to triple over the next five years.
The APAC markets are also investing heavily in data centres, with India alone nurturing a significant share of the project pipeline. Semiconductor plants and gigafactories are another key focus, particularly in Japan, South Korea and Taiwan.
Both regions are consolidating their positions as life sciences hubs. India, South Korea and Japan all boast healthy biopharmaceutical pipelines, while Abu Dhabi is emerging as a centre for biotechnology innovation.
The growth of such energy-intensive sectors poses a range of challenges to the power grid infrastructure. Emerging markets suffer from reliability gaps amid rapidly expanding demand, and are still reliant on fossil fuels, while advanced economies such as Japan and Australia have ageing networks that require modernisation.
While demand in mission critical sectors continues to grow, developers are facing increasingly unpredictable cost environments due to possible trade restrictions and tariff uncertainties. These challenges, compounded by variability in the energy market, are intensifying volatility in cost forecasting and procurement strategies. Strong scenario planning across the supply chain can help mitigate some of the risk the current situation presents.
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