2019 Global M&A Construction Monitor

Global construction industry: significant trends

We are pleased to present the first Global M&A Construction Monitor (GCM) in which we discuss the most noticeable trends and developments in the Global and regional construction industries. This report is based on publicly available data regarding M&A and market outlooks and opinions from our local construction experts.

The M&A developments and shaping trends are analyzed per global region – North America, Latin America, Europe, Africa & the Middle East and Asia & the Pacific. Despite the regional differences in market characteristics, we observed two major global trends:

Growing focus on local markets

For the second year in a row the share of cross-border deals showed a decline. Spurred by widespread positive economic conditions we observe a trend in growing focus on local markets opportunities.

Boosting margins by diversification

Supply chain pressure, mainly due to strongly increased construction costs, is a major challenge for construction companies in multiple global regions. In search for better margins the construction industry focuses on diversification strategies. This trend is reflected in the increased number of diversification deals.

European Outlook

Part of the Global Construction Monitor is the European Outlook. The key findings in this outlook are:

• M&A activity stabilized at 197 deals in 2018, after consecutive years of growth.
• The share of cross-border deals dropped for the third year in a row, indicating an increasing focus on local markets.
• 2018 showed a significantly increase in PE activity in the construction sector, resulting in 58 PE driven deals, covering 29% of the total number of deals.
• Margins continue to be under pressure throughout Europe, driven by high costs for material and labor, the lack of skilled personnel and high levels of competition.
• Aiming to boost margins, European construction companies are increasingly focusing on diversification strategies, resulting in a continuing rise of total recorded diversification deals.
  

Zooming in on Greece

Looking specifically to the construction industry of Greece, we came to a view conclusions: 

• Greece’s construction sector is expected to recover over the 2018-2022 period, with an estimated compound annual growth rate (CAGR) set to accelerate to 4.7% from -2.4% in 2013-2017. 
• The housing market has stagnated during the recession period in Greece due to limited liquidity and a large offering of houses. 
• The local commercial real estate market showed solid signs of recovery during 2017 and 2018, mainly driven by renewed lease activity and investments in prime assets of higher specifications. 
• Greek REICs, international and national investment funds are actively involved in the acquisition of prime real estate assets (including hospitality, commercial, residential and development projects) in prime locations across the country. 
• The financial crisis may have delayed the development of the country’s infrastructure for several years, but this appears to be changing at a fast pace.