BMI View: Taiwan's construction sector is unlikely to see a significant pick up despite the decline in house prices, which should be positive for sales. Instead, still-high prices will continue to weigh on the sector's outlook. However, expansionary government policies, particularly in the transport sector, will lend a degree of support.
Latest Updates & Industry Developments
We maintain our forecast for Taiwan's construction industry to grow by 1.8% y-o-y in 2016 as the lifting of housing restrictions by the central bank has a gradual impact on house prices.
However, housing transaction volumes are unlikely to pick up significantly despite the lower prices as the economy continues to feel the impact of the ongoing economic slowdown in China while prices remain considerably elevated.
We maintain our stable growth forecast for the transport infrastructure sector to average a stable growth of 3.3% over the next decade. Continued government investment in the sector will also see the sector grow by 5% in 2016 as the government maintains its commitment to develop the transport system.
We maintain our expectations for the government to increase its investment in renewable energy and strengthen investment in coal and gas plants as the country continues to face periodic electricity shortages from conventional sources. Furthermore, efforts to phase out nuclear by 2025 will face headwinds as this will require increasing the country's energy efficiency as well as developing alternative sources of energy.
We expect growth to average 3.7% over the next decade, marking a steady longer-term growth rate. However, headwinds from the residential and non-residential sectors will see the industry continue to grow at a slow pace in 2016.
|e/f = BMI estimate/forecast. Source: National Statistics Bureau, BMI|
|Construction industry value, TWDbn||419.95||428.35||443.74||459.53||476.45||499.31||525.75||556.16||587.78||620.66||654.88|
|Construction Industry Value, Real Growth, % y-o-y||-1.03||1.82||1.79||1.56||1.68||2.80||3.30||3.78||3.68||3.60||3.51|
|Construction Industry Value, % of GDP||2.5||2.5||2.5||2.5||2.5||2.4||2.4||2.4||2.4||2.4||2.4|
Taiwan maintains its 12th position in our latest Asia Pacific Risk/Reward Index as a weak housing market continues to weigh.
Persistent export headwinds and cooler cross-Strait ties present downside risks to the country's industry reward score.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
|e/f = BMI estimate/forecast. Source: National sources, BMI|
The Taiwan Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Taiwan Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Taiwanese infrastructure and construction industry.
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BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
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*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.