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Taiwan Construction Market Size, Trends and Forecast by Sector – Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional and Residential Construction, 2020-2025

The construction market output in Taiwan was valued at $65.1 billion in 2020 and is forecast to record growth of more than 3% during the period 2021-2025. The industry is expected to retain its growth momentum in the final quarter of 2021, supported by the relatively low COVID-19 infections, coupled with progress in the country’s vaccination drive. Residential construction represented the largest sector in Taiwan’s construction market in 2020, followed by infrastructure, energy and utilities, industrial, commercial and institutional.

GlobalData expects the construction market to register an annual average growth of more than 3% between 2022-2025. This will be supported by investment in manufacturing, transport and renewable energy projects. In August 2021, the cabinet approved the central government’s budget for 2022, which includes annual spending of TWD2.3 trillion ($81.6 billion) next year. To strengthen key infrastructure projects, the government increased its allocation toward public infrastructure by 2%, going from TWD227.7 billion ($7.7 billion) in 2021 to TWD232.3 billion ($8.4 billion) in 2022.

Overview of the construction market in Taiwan

Overview of the construction market in Taiwan

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What are the construction market dynamics in Taiwan?

Taiwan’s response to the Coronavirus (COVID-19) pandemic has been largely successful, with the country being one of only five nations in the Asia-Pacific region to record economic growth in 2020. To offset the disruption caused by the pandemic, the government has increased spending on infrastructure and public works, to underpin employment and bolster the economy. As a result of the government’s expansionary fiscal policy and strong demand for industrial capacity, the Taiwanese construction industry registered strong growth in the first three quarters of 2021. According to the Directorate General of Budget, Accounting and Statistics (DGBAS), the construction industry’s value add rose by more than 8% year on year (YoY) in the first three quarters of this year. The industry is expected to retain its growth momentum in the final quarter of this year, supported by the relatively low COVID-19 infections, coupled with progress in the country’s vaccination drive.

Construction market in North-East Asia, construction output (% change), 2020

Construction market in North-East Asia, construction output (% change), 2020

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Forecast-period growth in the construction industry will also be supported by investments as part of the Forward-Looking Infrastructure Development Program (FLIDP). The FLIDP covers a wide range of public infrastructure projects, including sectors such as transport, green energy, digital infrastructure and water environments. Funding for the initial four-year phase (2017-2020) totaled TWD420 billion ($15.1 billion). Previously, in September 2020, the government earmarked TWD510 billion ($17.2 billion) for the second phase of the program (2021-2024), which will focus on 5G infrastructure and digital transformation. Of the total budget for the second phase, the government allocated TWD49 billion ($1.8 billion) for 5G digital transformation and TWD46.4 billion ($1.4 billion) for digital infrastructure construction.

According to the Ministry of Interior (MoI), the total floor area on which construction commenced grew by 16.4% YoY in October 2021 (the latest data available at the time of writing) – up from Y-o-Y declines of 31.5% in September and 17.3% in August 2021. In cumulative terms, however, the floor area of construction commencement fell by 3.3% in the first nine months of this year, declining from 25.7 million m2 between January and October 2020, to reach 24.9 million m2 between January and October 2021. In 2020, the total floor area of construction commenced grew by 16.4%.

What are the sector classifications in Taiwan’s construction market?

Commercial construction market in Taiwan: The commercial construction sector is expected to register an annual growth of 6.1% in real terms in 2021, before registering an average annual growth of more than 2% between 2022 and 2025. Investments in the commercial sector over the short term will be affected by the prolonged weakness in the tourism sector. Over the remainder of the forecast period, the commercial sector’s output will be supported by improving wholesale and retail trade activity, coupled with the government’s focus on reviving the economy and the tourism sector.

Industrial construction market in Taiwan: In 2021, the industrial construction sector is expected to register strong growth in 2021, before registering a moderate average annual growth between 2022 and 2025. The sector’s output over the forecast period will be supported by investments on manufacturing plants amid rising demand for semiconductors and electronics, Taiwan’s main export. The industrial sector’s output over the forecast period will also be supported by the government’s focus on attracting foreign direct investment. In early December 2021, the National Development Council (NDC) announced that the government promotion program to attract investors to Taiwan – which was originally scheduled to end in 2022 – is likely to be extended by up to three years. The program grants loan and land rental benefits to encourage investors, mostly Taiwanese investors who have moved to China.

Infrastructure construction market in Taiwan: Infrastructure construction was the second-largest sector in the Taiwanese construction industry and is expected to project high growth in 2021 before registering a stable annual growth between 2022 and 2025. Taiwan’s FLIDP is expected to be the primary driver of infrastructure growth over the forecast period. Funding for the FLIDP running between 2021-2022 was approved earlier this year, with expenditure set at TWD229.8 billion (US$8.3 billion). Funding will prioritize projects expected to be completed by 2025 and will cover high-speed rail, the upgrade of conventional railways, rural infrastructure, and flood control and prevention. The sector’s forecast-period growth will also be supported by investments in upgrading port infrastructure in the country. In August 2021, the NDC approved a plan to invest TWD38.2 billion (US$1.4 billion) in upgrading seven commercial ports over the next five years.

Energy and utilities construction market in Taiwan: The energy and utilities construction sector was the third-largest sector in the Taiwanese construction industry in 2020. The sector is expected to register stable annual growth in real terms in 2021, before recording a moderate annual average growth between 2022 and 2025. The sector’s output over the forecast period will be supported by public and private sector investment in renewable energy projects. In October 2021, Solarvest (Taiwan) Corporate Limited – the local subsidiary of Malaysia-based clean energy specialist, Solarvest Holdings Berhad – signed a Memorandum of Understanding (MoU) with the Taiwan-based Hsinjing Holding Corporate Limited to develop 500MW solar projects in Taiwan by 2025.

Institutional construction market in Taiwan: The institutional construction sector is expected to show steady growth in real terms in 2021, before recording a moderate annual average growth between 2022 and 2025. The sector’s output over the forecast period will be supported by investments in health and education projects. The government allocated 12.2% of the total 2022 budget to both the Ministry of Education (MoE), and the Ministry of Health and Welfare (MoHW). The institutional sector’s output over the forecast period will also be supported by investments in the construction and expansion of healthcare buildings, in line with Taiwan’s aging population. According to the United Nations Department of Economic and Social Affairs (UNDESA), the percentage of the population aged over 65 years rose from 12.5% in 2015 to 15.9% in 2020.

Residential construction market in Taiwan: Residential construction was the largest sector in the Taiwanese construction industry in 2020. The sector is expected to register high annual growth in real terms in 2021, before recording a moderate annual average growth between 2022 and 2025. Rising labor costs and the global increase in building materials prices have resulted in an appreciable increase in house prices this year, further exacerbated by ample liquidity, low-interest rates, and intense pent-up demand due to postponed purchases amid the COVID-19 outbreak. The sector’s output over the forecast period will also be supported by a rise in residential licenses. According to the Ministry of Interior (MoI), the total floor space of residential licenses issued rose by 6.3% YoY in the first 10 months of 2020.

The construction market in Taiwan, by sectorThe construction market in Taiwan, by sector

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Which are the major projects in Taiwan’s construction market?

The total construction project pipeline in Taiwan – as tracked by GlobalData and including all mega projects with a value above $25 million – stands at $199.8 billion. The pipeline, which includes all projects from pre-planning to execution, is skewed towards late-stage projects, with projects in the execution stage accounting for more than 50% of the total pipeline value as of December 2021.

Energy and utilities projects account for close to half of the total construction project pipeline, followed by industrial, infrastructure, commercial, institutional and residential. The largest project in the pipeline is the US$16.4 billion Southern Taiwan Science Park Microchip Fabrication Plant project, which is in the execution stage, and involves the construction of a microchip fabrication plant, including the construction of a warehouse, loading and unloading facilities, an administrative facility, parking, and related infrastructure. Another notable project in the pipeline is the US$13 billion 2,420MW Greater Changhua Offshore Wind Farm project, which involves the construction of four wind farms with a total generating capacity of 2,420MW, substations and powerhouses, the installation of wind turbines, generators and transformers, and the laying of transmission lines.

The leading construction project by value is the Southern Taiwan Science Park Microchip Fabrication Plant followed by Greater Changhua Offshore Wind Farm 2,420MW, New Taipei 12-inch Silicon Wafer Fabrication Plant, Miaoli County New Chip Testing and Assembly Plant, and Haiding Formosa 3 Offshore Wind Farm 2GW.

Market report scope

Market size (Year – 2020) $65.1 billion
Growth rate CAGR of >3% from 2021 to 2025
Base year for estimation 2020
Segmentation by sector Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional, Residential

Scope

This report provides a comprehensive analysis of the construction market in Taiwan. It provides:

  • Historical (2016-2020) and forecast (2021-2025) valuations of the construction market in Taiwan, featuring details of key growth drivers.
  • Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector.
  • Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
  • Listings of major projects, in addition to details of leading contractors and consultants.

Reasons to Buy

  • Identify and evaluate market opportunities using GlobalData’s standardized valuation and forecasting methodologies.
  • Assess market growth potential at a micro-level with over 600 time-series data forecasts.
  • Understand the latest industry and market trends.
  • Formulate and validate strategy using GlobalData’s critical and actionable insight.
  • Assess business risks, including cost, regulatory and competitive pressures.
  • Evaluate competitive risk and success factors.

Table of Contents

Table of Contents

1 Construction Outlook

2 Construction Industry: At-a-Glance

3 Latest News and Developments

4 Project Analytics

5 Construction Market Data

6 Risk Profile

7 About GlobalData

7.1 Definitions

7.2 CRI Methodology

List of Tables

List of Tables

Table 1: Construction Industry Key Data

Table 2: Taiwan, Top Construction Projects by Value

Table 3: Taiwan, Construction Output Value (Real, US$ Million)

Table 4: Taiwan, Construction Output Value (Nominal, TWD Billion)

Table 5: GlobalData Construction Market Definitions

Table 6: Risk Dimensions

Table 7: Ratings, Scores and Definitions

List of Figures

List of Figures

Figure 1: Taiwan, Construction Output Value (Real, US$ Billion, 2017 Prices and Exchange Rate), 2016-2025

Figure 2: Taiwan, Construction Output Value, by Sector (Real, US$ Million), 2016-2025

Figure 3: North-East Asia, Construction Output (Real % Change), 2020 and 2021

Figure 4: Taiwan, Construction Projects Pipeline by Sector (US$ Million)

Figure 5: Taiwan, Construction Value Add, In Chained 2016 Prices, In TWD Million, % Change YoY

Figure 6: Taiwan, Total Floor Area of Construction Commencement, In Thousand m2, % Change YoY

Figure 7: Taiwan, Total Floor Area of Construction Licenses, In Thousand m2, % Change YoY

Figure 8: Taiwan, Construction Cost Index, 2016=100, % Change YoY

Figure 9: Taiwan, Gross Fixed Capital Formation in the Construction Industry, 2016 Chained Prices, In TWD Million, % Change YoY

Figure 10: Taiwan, Employment in the Construction Industry, In Thousands, % Change YoY

Figure 11: Taiwan, Visitor Arrivals, In Thousand

Figure 12: Taiwan, Hotel Occupancy Rate

Figure 13: Taiwan, Wholesale and Retail Trade Sales, % Change YoY

Figure 14: Taiwan, Sales of Food and Beverage Services, In TWD Billion, % Change YoY

Figure 15: Taiwan, Industrial and Manufacturing Production Indices, 2016=100, % Change YoY

Figure 16: Taiwan, Exports, In US$ Million, % Change YoY

Figure 17: Taiwan, Total Floor Area of Residential Construction Commencement, In Thousand m2, % Change YoY

Figure 18: Taiwan, Value Add of Real Estate Activities and Ownership of Dwellings, In Chained 2016 Prices, In TWD Million, % Change YoY

Figure 19: Taiwan, Total Floor Area of Residential Construction Licenses, In Thousand m2, % Change YoY

Figure 20: Taiwan, Construction Projects Pipeline, Value by Stage (US$ Million)

Figure 21: Taiwan, Risk Summary

Figure 22: Taiwan, Risk Regional Comparison

Frequently Asked Questions

The construction market size in Taiwan was valued at $65.1 billion in 2020.

The construction market in Taiwan is expected to grow at a compound annual growth rate of more than 3% during the period 2021-2025.

Key sectors in Taiwan’s construction market include commercial, industrial, infrastructure, energy and utilities, institutional and residential.

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