Global construction markets faced headwinds in 2025, even as the components of recovery fell into place. In many markets, prospects were starting to improve following progressive interest rate cuts. However, multiple factors continued to dent investor confidence, even before the Gulf crisis broke out in February 2026.

Chief among those factors is affordability, which remains the most persistent barrier preventing the conversion of need into effective demand for new construction. This is true across many sectors, but particularly in housing and commercial markets, where land values, construction prices and the cost of finance have made it increasingly difficult to sustain a healthy flow of new projects. Rising prices were common in most regions, with deflation seen only in mainland China and Hong Kong. 

In such circumstances, public sector work often offers alternative opportunities for contractors. However, after a string of elections in 2024, many new administrations have taken longer than expected to put ambitious investment plans into action. In the UK, accelerated spending on hospitals and schools is still to feed through to significant output growth, and this is unlikely to happen for one to two more years. 

Delivery has remained strongest in the US, where recent data points to a pickup in publicly funded construction, particularly in utilities including power, sewage and waste disposal.

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