Across Asia, the construction industry is navigating a landscape shaped by public investment, industrial expansion, and structural challenges that vary widely between markets. China, the region’s powerhouse, is experiencing a surge fueled by billions in new infrastructure, energy, and high-tech manufacturing projects. Meanwhile, Taiwan’s growth is anchored by offshore wind, transport upgrades, and semiconductor-linked construction. Japan and Hong Kong are seeing steadier, government-led progress, while South Korea grapples with a severe contraction driven by weak residential markets, political uncertainty, and high construction costs.
In China, the construction industry is projected to grow by 3.2% in 2025, with infrastructure, energy, and utilities sectors leading the charge. Major new project launches and surging investment mark this surge, with 182 major projects commenced in Q1 2025 totaling CNY340 billion ($47.4 billion), a 39.1% increase year-on-year compared to 2024. Notable among these are high-speed rail and expressway projects, as well as major investments in high-tech manufacturing facilities and AI science parks. Infrastructure development has been key to growth, with investments in roads, bridges, railways, water conservancy, and urban transit. The energy and utilities sectors have been bolstered by renewable and traditional energy projects, with the government’s commitment visible in expansive funding rounds.
However, challenges persist. Weakness in the residential construction sector, with investment falling by over 10% year-on-year in early 2024, has led the government to announce a CNY300 billion affordable housing loan to stabilize the sector. Persistent drag from the residential and real estate sector, along with increased domestic and international competition, potential cost overruns, and regulatory changes, pose risks in the short to medium term. To mitigate these risks, the government’s strategy is to leverage special bonds, digitization, and large-scale policy tools to support further growth and innovation.
In Japan, the construction industry is expected to grow by 1.6% in real terms in 2025, bolstered by government and private sector investment, especially for the 2025 World Exposition in Osaka. Private investment in non-residential buildings grew 4.9% year-on-year in 2024, but the residential sector experienced a decline of 2.6% during the same period. Commercial construction has been one of the main growth engines, driven by investment in retail, offices, logistics, tourism, and data centers. Transport infrastructure and regional connectivity are high government priorities, with output in this sector likely to reach $156.0 billion in 2028.
Yet, Japan faces persistent challenges, notably a severe shortage of skilled labor, which contributed to a drop in construction starts of 8.1% year-on-year in early 2024. Rising construction costs and project delays further pressure margins and delivery timelines. Export slowdown and fluctuations in demand for industrial buildings may weigh on short-term sector growth.
South Korea’s construction industry is facing significant headwinds, with a forecasted contraction of 6.2% in real terms in 2025. Contractions in 2024 and 2025 are attributed to falling building permits, political uncertainty, rising construction costs, high household debt, and a sluggish housing market. In Q1 2025, construction production fell by 20.7% year-on-year, marking the fourth straight quarterly decline and the sharpest fall since the 1998 financial crisis. Weak residential demand and tighter housing markets are blamed as major drags on the industry, with the commercial and industrial sectors similarly affected by a reduction in new building orders and external demand.
Despite these challenges, infrastructure remains a rare bright spot in South Korea, with the sector expected to grow by 7.6% in real terms in 2024. Key infrastructure projects, such as the Daejeodaegyo Bridge, are moving forward with government backing, and transport infrastructure remains a priority.
As these markets evolve, the intersection of sustainability and construction becomes increasingly critical. The integration of green energy, smart cities, and technological innovation is reshaping the industry, driving growth, and fostering resilience. However, the path forward is not without its hurdles. Labor shortages, rising costs, and regulatory changes demand strategic responses from industry leaders and policymakers alike. The future of construction in Asia hinges on the ability to navigate these challenges while seizing the opportunities presented by a rapidly changing world.