Global investment


The worldwide new-build investment in construction comprises 56.5% for dwellings, 2.3% for other buildings and 41.2% for infrastructure, giving a new-build investment in buildings of USD 4.8 trillion.

The analysis opens the door to more accurate estimates of the investment in dwellings in over 90 countries. It is also helping to support the upgrading of the Sustainable Development Goals indicator SDG11c.1 that largely concerns newly built buildings, especially dwellings.


Estimating infrastructure investment presents many difficulties. A variety of top-down and bottom-up approaches have been used for most of the recent projections of investment needs (for a recent review, see OECD 2017).

Since consulting engineering services are supplied throughout the economy to most sectors of economic activity, the FIDIC-EFCA Survey uses Gross Fixed Capital Formation (GFCF) as the proxy for investment as opposed to say top-down estimates of macro-statistics, notably capital spending (see the Appendix for a discussion of the advantages of using GFCF instead of capital spending).

By focussing on GFCF, many of the recent and very detailed projections of investment needs based on historical or estimated spending (OECD 2017) cannot be used by the FIDIC-EFCA Survey. The main exceptions are the projections based on the stock of fixed assets which can be related to GFCF.

Moreover, given the difficulty for many government to produce a complete set of national accounts to international standards, specifically the SNA08 System of National Accounts, GFCF estimates are missing for many less-developed countries. This has important ramifications for the Sustainable Development Goals indicator SDG11.c.1, which is the only SDG indicator that directly concerns financial spects of the construction industry and the quantitisation of the investment in buildings and infrastructure.

Finnaly, to understand better the global demand for consulting engineering services, the survey must constantly review the situation regarding the national accounts’ Construction GFCF - GFCF(C) - that is used to estimate the demand for consulting engineering services in the construction sector.

Construction sectors

One of the main reasons for seeking accurate estimates of GFCF for all buildings and for structures is to be able to estimate the investment in repairs and maintenance that should be added to new build investment since it is this total investment that creates the demand for consulting engineering services. The GFCF for the maintenance of buildings is different to that for structures so estimates of repairs and maintenance GFCF cannot be calculated in the same way for both buildings and structures. For example, the investment in the repair and maintenance of residential buildings in the European Union is 20% of the GFCF for new-build dwellings () whereas the equivalent for transport infrastructure is equivalent to a much larger percentage of new-build GFCF for transport.

New-build GFCF(C) from national accounts is split between GFCF for Buildings (Dwellings) - CONS(BD) - and for Other Buildings and Structures which is split into Other Buildings - CONS(BO) - and Structures CONS(S). CONS(S) includes mainly Structures (civil engineering infrastructure) - CONS(SC) - and some Structures (non-infrastructure) - CONS(SN) - such as mines and industrial plants, mining construction, other construction for manufacturing, outdoor sport and recreation facilities, and other civil engineering works such as satellite launching sites and defence (ADB 2016).

Also included in GFCF(SN) is the GFCF corresponding to capital spending for the primary energy supply chain which includes investments in oil upstream, refining and downstream infrastructure, gas upstream and downstream infrastructure (OECD 2017).

GFCF(CE) corresponds to “core” infrastructure which forms the basis for most of the recent forecasts of infrastructure spending needs (OECD 2017).

In summary, Construction GFCF is given by the investment in four construction sectors:


Sector spending/GFCF shares

A recent report (McKinsey 2017) noted that worldwide in 2015, the capital spending for the building or “real-estate” sector, namely (CONS(BD) + CONS(BO), which includes residential buildings and non-commercial buildings such as commercial real estate as well as social infrastructure like schools, stadiums, and hospitals, accounts for 62% of all construction output. CONS(SC) investment accounts for 25% of spending and CONS(SN) for the remaining 13%.

Assuming that new-build GFCF(C) is split in the same proportions as McKinsey’s spending estimates, Table 1 summarises the values for the construction components of GFCF(C) worldwide.

Scaling GFCF from national accounts in proportion to spending or similar output measures is a common practice within a specific construction sector such as core infrastructure (Gruneberg. In our case however, spending covers two different GFCF values, namely Dwellings and Other Buildings and Infrastructure. The Appendix suggests that the ratio of spending to GFCF is about 0.8 for buildings and about 0.7 for core infrastructure - a difference of about 14%. Making this adjustment, the percentage of GFCF(BD) + GFCF(BO) is 58.8% of GFCF(C) and GFCF(SC) + GFCF(SN) is 41.2% GFCF(C) split in the proportion 13% to 25% (giving 14.1% and 27.1% of GFCF(C), as in Table 1).

Component Designation Year % spending %GFCF(C)s %GFCF(C) %total GFCF % GDP Source
GFCF(BD) GFCF(BO) Buildings (Dwellings + Other) 62 58.8 McKinsey 2017
GFCF(DB) Buildings (Dwellings) 2005 56.5 Dasgupta 2014
GFCF(SC) Structures (Core infrastructure) 25 27.1 McKinsey 2017
Structures (Core infrastructure) 2011 14.8 3.4 ICP 2015
Structures (Core infrastructure) 2011 3.2 GIO 2017
Structures (Core infrastructure) 2015 3.3 Bhattacharya 2016
GFCF(SN) Structures (Non-infrastructure) 13 14.1 McKinsey 2017

Table 1 - The components of the Gross Fixed Capital Formation for Construction, GFCF(C). %GFCF(C)s are derived from the share of spending by assuming that the ratio of GFCF to spending for Structures is 14% higher than for Buildings. The GFCF(SC) in 2015 is an upper estimate. The sections below give details of the calculation of GFCF(SC) and GFCF(BD) for the indicated years.


The World Bank’s International Comparison Programme (ICP 2015) gives GFCF(C) in 2011 as 54.50% of total GFCF or 12.56% of GDP. Assuming that GFCF(C) is split in the same way as the GFCFs for McKinsey’s spending estimates, GFCF(CE) is 14.8% of total GFCF or 3.4% of GDP in 2011. This agrees with the historical estimate of about 15% of GFCF for core infrastructure [Morgan Stanley 2008].

GIO 2017

A Gobal Infrastructure Outlook report (GIO 2017), which for some countries also uses GFCF investment data taken from national accounts, estimated that the worldwide investment in core infrastructure including equipment, was 3.2% of GDP in 2011. It is assumed that this estimate used wherever possible industry sector GFCF taken from national accounts as was done by the European Commission (EC 2014, EC 2016). This approach overestimates investment because it included for some countries all fixed capital formation, including equipment, in the various construction sectors.

Since central government is the main investor in civil infrastructure, a more accurate approach would have been to use central government GFCF(CE) given by the Classification of the Functions of Government (COFOG) database (Wagenvoort 2010, Revoltella 2017). Investments in mining and housing are added in some cases (Biatour 2017).

Nonetheless, it is assumed that the GIO estimates of GFCF for core infrastructure correspond reasonably well to GFCF(CE). It should be noted that the report is also fairly approximate since the estimated investment in each 50 countries (which in some cases is not based on GFCF) was scaled up to the regional level and the regional amounts were summed to give the global estimate of 3.2% of GDP in 2011.

Bhattacharya 2016

McKinsey 2017 estimated that owner expenses and capital equipment installed in structures of all types (buildings, industry and infrastructure) represented 26.3% of construction-related spending in 2015. A recent estimate [Bhattacharya 2016] of CS(core), the capital spending on core infrastructure and excluding operation and maintenance, is therefore reduced by 26.3% to give an upper estimate of GFCF(CE) of 3.3% GDP which agrees with the other estimates in Table 1 of GFCF(CE).

Dasgupta 2015

For Dwellings, the World Bank has reported (Dasgupta 2014) the average GFCF(BD) as a percentage of GDP over the period 2001-2010 for 90 countries. GFCF(BD) amounts to 30.8% of total GFCF or 56.5% of GFCF(C) for the 30 countries for which GFCF(D) and GFCF(C) data are available.


The estimates of core infrastrucrue investment GFCF(CE) agrees reasonably well with other reported estimates, so the construction sector shares as a percentage of Construction GFCF are:

  • Dwellings GFCF (BD): 56.5%
  • Other buildings GFCF(BO): 2.3%
  • Structures GFCF (SN + SC): 41.2%

For the national accounts sectors, Dwellings GFCF is 56.5% and Other Buildings and Structures GFCF is 43.5%.

For the recent estimates (Table 1) of the investment in infrastructure in the range 3.2 to 3.4% GDP, the investment in all types of buildings was 5.2 to 5.3% GDP for a total construction investment of USD 8.3 to 8.5 trillion in 2016 of which some USD 4.8 trillion was for dwellings.

The next step will be to break down this global new-build investment in dwellings into the investment in each country. These amounts can then be compared with the amounts coming from external sources such as overseas development aid to give the basis for Sustainable Development Goals’ indicators, notably SDG11.c.1. This indicator is the only SDG indicator that addresses directly the construction sector (more specifically the external investment in the sustainable construction of buildings).


Construction GFCF is a broad measure of investment beyond that of simply the purchase or renovation of fixed assets. It includes the improvement of existing fixed assets and the acquisition of new and existing fixed assets, including own-account capital formation which is an important aspect of engineering design. It also has an expanded asset boundary that includes estimates of investment in research and development and weapons systems which are important areas of activity for the consulting engineering industry.

GFCF includes all costs associated with an investment, such as costs of ownership transfer, installation costs and taxes less subsidies on products (ONS 2017a). GFCF does not include training costs, advertising and promotion, relocation and reorganisation expenditures, and investments in financial assets and land (ONS2017b; ONS 2017c), none of which are of interest in calculating the demand for consulting engineering services.

Output on the other hand is a measure of construction activity that does not include any of these extra costs related to investment. Nor does it include a) construction work done by non-construction firms for their own use; b) spending on new dwellings and improvements that are not carried out by the construction industry such as self-building and DIY improvements (ONS 2013).

Further differences arise because investment by government sponsored agencies (GSEs) that are market-based infrastructure service operators is classified as GFCF investment in a construction infrastructure sector and not as government investment (Orange 2015). National accounts also include in GFCF the investment in intangibles such as research and development (ONS2017b).

Regarding investment grants to GSEs which can be significant for infrastructure, these are are excluded from spending and under SNA08 guidelines for government GFCF they are also excluded from GFCF (Corrado 2014).

Thus while Construction GFCF is not directly comparable with construction output, GFCF generally mirrors output. Construction GFCF is typcally larger than construction output:

  • new-build dwellings (UK; 2010-5): construction output was approximately 80% of Dwellings GFCF ()
  • core telecom infrastructure (USA;2010-7): capital spending was approximately 70% of GFCF (Orange 2017).