Construction industry
APAC and the GCC remain strong construction markets, supported by investment in digital infrastructure, energy, transport and major public programmes. The clearest theme is rising delivery risk, even as activity levels remain high.
The market is increasingly defined by execution constraints rather than demand.
Labour shortages, limited specialist capacity, and longer procurement timelines are placing pressure on cost certainty and programme performance. In Australia, these pressures are visible in subcontractor exposure, labour availability, and procurement outcomes. In the GCC, contractors are pricing more risk into bids, while clients are giving closer attention to scope, phasing, and delivery assumptions.
Power, utilities, and supporting infrastructure are also becoming increasingly important to project viability.
This is particularly visible in digital infrastructure, where governments are taking a more active role in managing new capacity and guiding expansion towards efficiency, resilience, and broader economic value. Singapore’s managed data centre allocation model is a clear example of this approach. Taiwan’s investment in sovereign AI and cloud infrastructure also reflects how digital growth is gradually becoming more closely aligned with national infrastructure planning.
Supply chain risk is becoming more geopolitical, especially in the GCC.
In the UAE and KSA, disruption linked to the regional conflict is affecting freight routes, lead times, cost visibility and investor confidence. This is contributing to a more disciplined approach to project planning and a shift towards programmes that are more deliverable under current market conditions.
Construction output and inflation
Click on a link to view construction industry overviews by country
Construction cost inflation across APAC and the GCC is expected to remain elevated through the first half of 2026. Conditions are likely to moderate gradually in the second half, provided the Middle East conflict settles.
Inflation fell in 2025 as commodity prices stabilised and price pressures eased. However, this has reversed in 2026. The Middle East conflict has driven up oil prices, disrupted supply chains, and increased freight and insurance costs, leading to higher material prices across the region.
Overall, inflation will depend on the duration and severity of current geopolitical tensions. While APAC entered 2026 from a position of relative strength, higher energy prices, commodity price shocks and labour shortages are driving up construction cost inflation across the region.
The below are interactive comparison charts for both construction output and inflation across select countries in APAC and the GCC.
Sector overviews
Data centre demand remains one of the strongest themes across APAC and the GCC.
India now leads the APAC region in data centre development. However, across the region growth is increasingly shaped by constraints around power, sustainability, resilience, and delivery capacity. In Australia, growing pressure on Sydney is driving interest in Melbourne and selected regional locations. Singapore is expanding selectively through DC-CFA2, with new capacity tied to strict efficiency and green energy requirements. Taiwan is scaling AI and cloud infrastructure as part of a broader national push in digital capability, while Japan is seeing attention shift beyond Tokyo towards Osaka, Kansai and Kyushu as land and power constraints intensify in core hubs. Malaysia is also benefiting from spillover demand from Singapore. Johor is the main growth market, with Cyberjaya, Kuala Lumpur and Negeri Sembilan gaining traction. In the GCC, large-scale AI and cloud ambitions remain strong, but recent conflict-related disruption has exposed how sensitive these programmes are to physical and geopolitical risk. However, the UAE and KSA are both pushing ahead with large-scale digital infrastructure plans, even as delivery risk has increased.1 2 3
High-tech industrial demand remains a key source of growth in APAC, with semiconductors the driving force.
Taiwan stands out as a regional outlier for scale, with new fabs and science park investments reinforcing demand for complex, high-specification construction. Japan is also seeing sustained semiconductor-related activity, particularly in regional manufacturing centres such as Kumamoto and Hiroshima, while Malaysia continues to benefit from electronics and semiconductor investment in Penang and Kulim, Kedah. India is also trying to deepen domestic capability through long-term policy support and approved semiconductor units. This is supporting continued activity in cleanrooms, specialist mechanical and electrical systems, and advanced manufacturing facilities.
Life sciences demand is more selective.
While not a uniform regional growth story, life sciences construction remains important in certain markets. Singapore continues to strengthen its position as a biopharma and next-generation therapeutics hub, supported by research capability, manufacturing depth and public-private collaboration. India is increasing support for domestic biopharma manufacturing, while China continues to invest in pharmaceutical and biotech capacity, supporting demand for more complex research and production facilities. In the GCC, UAE provides the clearest example of life sciences growth, with Abu Dhabi increasing its focus on healthcare, pharmaceutical innovation, and long-term research investment.4
Energy, utilities, and enabling infrastructure are becoming more closely linked to construction delivery across both regions.
APAC renewable capacity has expanded strongly over the past decade, driven by wind and solar growth from 2014 to 2024. China remains the largest contributor, but expansion is no longer concentrated in one market. And growth is spreading across the region.
In India, annual renewable capacity additions rose sharply in 2025, supported by record solar deployment of around 35 to 50 GW. The KSA also scaled quickly, with solar additions increasing fourfold to about 7 GW. China leads offshore wind, while Taiwan is seeing more projects reach commercial operations and increased refinancing activity.
Battery storage is also expanding rapidly to support the integration of variable renewables. China accounts for around 60% of global battery deployment. Growth is also evident in Australia and parts of the Middle East.
Momentum is building in grid infrastructure. Across APAC, cumulative grid investment is projected to reach about US$2.6tn over the next decade. A financing platform launched by the Asian Development Bank, World Bank and ASEAN will support cross-border grid expansion. Interconnection capacity is expected to more than double by 2040. Nuclear is also returning to support firm, low-carbon baseload supply in Japan and South Korea.
In the GCC, infrastructure and utilities investment remains central to wider market activity, particularly in Abu Dhabi and the KSA, where public programmes continue to support transport, social infrastructure, and large-scale development despite rising delivery pressure.5 6 7
Commercial construction is more mixed. In APAC, commercial demand remains selective.
India is seeing steady development driven by global capability centres, while Taiwan continues to see new office activity in Taipei and Kaohsiung, linked to technology firms and manufacturing-led services. Australia presents a mixed picture. Commercial office construction is softer overall, although Brisbane stands out due to Olympic-related infrastructure, energy projects and housing demand. In the GCC, commercial development remains closely linked to wider urban development and state-backed investment, but delivery pressure is increasing, especially where projects depend on imported materials, specialist systems, and vulnerable shipping routes.
© Linesight
© Linesight