How do home buyers influence construction equipment sales in China?
On August 31st, a normally peaceful Beijing suburban neighbourhood, became host to over 500 angry home buyers—all looking to get their hands on one of only 200 units in a new Shanyucheng apartment complex. According to China Real Estate Index System, home prices nationwide have increased by 8.6 percent since last August which is both frustrating and concerning for potential homebuyers.
Construction in China was hit especially hard during the global economic downturn of 2008-2009 as construction project across the country came to a halt due to lack of funds. This in turn had a negative impact on the Construction Equipment Market in China which experienced a steep decline in sales revenue. Since then, China has come to have one of the fastest growing construction equipment markets in the world due to the rapidly expanding Infrastructure industry in the country which is a huge reason contributing to the market’s projected CAGR of 24.23 percent for the 2012-2016 period.
China’s infrastructure is in the middle of a huge overhaul and this is impacting construction equipment sales. Below are just a few examples of how China plans to improve upon their current infrastructure.
- The Chinese government will invest US$ 100 billion to build 50 more airports by 2015.
- A planned expansion of the National Trunk Highway System from around 74,000 km to 83,000 km by 2015.
- The State Council of China has set a target to complete 40,000 km of high-speed rail track and a total of 120,000 km of rail track by 2015 to free track capacity for freight logistics.
- Construction investment is expected to increase by US$ 770 billion by 2016.
- Investment in real estate is expected to increase by US$ 2.63 trillion 2016.
Assuming China can make good on these plans and the infrastructure expands as anticipated, then construction equipment will see a high increase in demand as new projects break ground across the country. When it comes down to it, we at TechNavio are confident that the tremendous need for development of new communities, especially in suburban areas will maintain a steady stream of profit for the construction equipment market in China in the years to come.
For more information, view our 2012-2016 report on the Construction Equipment Market in China.
