Market Insight

Commercial Building Floor Space in India and China to Grow 65 Percent Over the Next 10 Years

January 28, 2015

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IHS forecasts that the total number of commercial buildings in China and India will grow by almost 65 percent, over the next decade, while the number of residential buildings is expected to increase by only 16 percent.

But what is driving this growth?

China lately has been heavily focused on industry and manufacturing, becoming the world’s largest producer of consumer goods. With the Chinese economy still growing strongly (albeit slower than it has in previous years), the industrial and manufacturing sector will naturally see a large increase in the number of buildings. Other sectors also benefit from growth in Chinese manufacturing, such as the warehouse and storage sector, which is heavily dependent on this sector.

But the expansion of manufacturing industries is just the beginning of a country’s development. The increase in manufacturing brings in large amounts of wealth to the country, particularly to the middle classes. Along with this newfound wealth comes a large number of Western retail brands attempting to expand their influence in these countries, and the opening of new retail stores by these brands is leading  to an increase in retail sector building construction.

In India the number of office buildings, in particular, will see the largest growth. American and European businesses are increasingly outsourcing their business processes to India, largely because of a large population of English-speaking youth in the country, and the comparatively low cost of running businesses there. The industrial and manufacturing sector will also experience strong growth, because of the progressive nature of the recent Bharatiya Janata Party (BJP) government, which is taking steps to motivate foreign manufacturers to set up their manufacturing plants in India, leading to a corresponding increase in the warehouse and storage sector.

These forecasts are, however, heavily dependent on the continued growth of business and manufacturing in these countries. A small change in the political climate of a major country can have a huge effect on the long-term outlook for a market, particularly when these countries are on the cusp of becoming true first-world superpowers. 

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