BMI View: Japan is home to Asia's second-largest construction market, but growth prospects are mutedthrough our 10-year forecast period. While infrastructure projects and the 2020 Olympics will generatesome opportunities, the wider industry is weighed by tepid economic growth and an ageing population.
Forecast And Industry Developments
Tepid economic growth, an ageing population and a saturated infrastructure market will all continue toweigh on growth in Japan's construction industry over the next 10 years. While preparations for the 2020Olympics will provide support over the next four years, the long-term outlook for the industry is weak.
We maintain our forecast for Japan's construction industry to grow by 1.5% in real terms in 2017 and2018. Longer-term growth rates will slow to less than 1%, with certain transport, utility and nonresidentialsectors entering a period of contraction after 2021.
Bright spots in the developed market include the road and rail sector, where there are a number of highvaluegovernment-backed projects that will generate construction activity over the coming decades, aswell as the airports sector which is undergoing a wave of privatisations. This will be particularlyappealing to risk-averse institutional investors, given the low-risk nature of Japan's business and politicalenvironment.