We all can agree that COVID-19 has hit every country, every region, and every industry worldwide. Slowdowns and lockdowns have been the norm for months. However, everyone has slowly been trying to return to some normalcy and returning to business, if not business as usual. In the Asia-Pacific region, Frost & Sullivan has found signs of a building boom coming, based on infrastructure projects and increasing urbanization, and increased interest in technology implementation and business model remodeling.
The Frost & Sullivan survey Business Model Innovations in the Building Construction Industry, 2020, finds that the construction value chain will shift from sequential (conventional value chain) to innovative business models with increased penetration of building construction technology. Indeed, innovative business models such as vertical integration, XaaS (anything-as-a-service), and off-site construction will be impacting traditional building construction business in the region.
With rapid urbanization and suburban development in APAC (Asia-Pacific), the construction market in the region is expected to reach $14 trillion by 2021, up from $10 trillion in 2017. However, the market has obviously been impacted by COVID-19 to the extent that, in a conservative scenario, there will be a long delay in the completion of projects in the commercial segment. In a rosier, aspirational scenario, there would be only a short delay in the completion of ongoing projects until the COVID-19 pandemic subsides.
Advanced technologies such as AR/VR (augmented reality/virtual reality), 3D printing, automation, and robotics are expected to play a major role in combatting industry challenges such as declined productivity, workforce scarcity, and site safety issues. The move to a more modern and digital environment will also play a positive role in addressing the gap of skilled workers.
According to Frost & Sullivan, sustainability trends such as prefabrication construction, sustainable construction, and green building technology are likely to revolutionize the conventional way business is done in the construction sector. This will reduce carbon emission and gain new revenue streams from the conventional value chain.
To tap into the growth opportunities exposed by the innovative building construction industry, market participants should focus on investing in teaching employees how to operate advanced construction machinery and IT software, encourage the greater use of digital technologies such as cloud platforms, IoT (Internet of Things), and BIM (building information modeling) throughout the stages of the project lifecycle. Vertical integration fusing large companies, SMEs (small and medium-sized enterprises), and start-up businesses offers the possibility of a one-stop construction service.
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