The Covid-19 pandemic caused overall greenfield project numbers to decline by 17.5% in 2020. However, as the world reopened in 2021, investors reacted quickly and FDI levels rose by 18.1%, according to the .
Most sectors witnessed a rise in their number of projects, with companies keen to make up for lost time, yet the rise is not expected to be sustained, with investment levels likely fall again in 2022. has led to heightened geopolitical tensions, , slow economic growth and continued , all of which will claw back the resurgence FDI experienced in 2021.
Construction materials FDI was above pre-Covid levels in 2021
When it comes to greenfield construction materials, our FDI Projects Database shows there were 163 new FDI projects in 2021.
The figure represents an impressive 37% growth year on year and a healthy 13.2% growth if compared with 2019, when the sector saw 144 projects in total.
The positive result in 2021 is even better considering that 68% of all projects (111) were new ones, while expansion projects, which are generally less expensive and complex to carry out, numbered 52.
The sector’s FDI activity suffered a blow during the Covid-19 pandemic, with projects dropping by 17.4% to a total of 119 in 2020 from 144 in 2019.
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By GlobalDataWhere are the leading destinations for construction materials FDI?
Western Europe remained the preferred destination for construction materials FDI in 2021, attracting a total of 60 projects.
The region’s FDI levels kept steady throughout the Covid-19 pandemic as projects had a very mild drop of 2% in 2020, having gone from 48 in 2019 to 47 in 2020.
Western Europe saw a healthy 27.7% growth year on year in 2021, and a healthy 25% growth in the three-year period since 2019.
Central and eastern Europe and the Commonwealth of Independent States kept its second position in 2021, with a total of 34 projects. This is a strong 100% growth on 2020 and represents a good 30.8% growth compared with 2019.
Construction materials FDI also saw a positive trend in North America in 2021, when, after a stagnant year in 2020, projects totalled 23, a 43.8% year-on-year increase.
South America, the Middle East and North Africa (MENA) and sub-Saharan Africa suffered the worst in terms of construction materials FDI projects in 2021 when compared with 2019. South America saw a 60% drop, with projects going from five in 2019 to two in 2021. MENA followed with a 37.5% drop, having attracted eight projects in 2019 versus five in 2021.
At country level, Germany, France and the US where the leading destinations in 2021 with 24, 20 and 19 projects, respectively.
Among the three of them, France performed the best, with projects jumping by 150% since 2019, having gone from eight in 2019 to 20 in 2021.
The UK, which came fourth in 2021 with ten projects, when it only attracted five projects, half compared with 2019.
Albeit from a smaller base, Poland was the best performer in the top ten destinations for construction materials FDI in the three-year period since 2019, with projects jumping by 166.7%, having gone from three in 2019 to eight in 2021.
Again from a smaller base, Spain and Mexico saw the worst performance since 2019 with projects in the sector dropping by 60% and 33%, respectively.
What are the top construction materials FDI operations?
Construction materials FDI with a manufacturing function attracted the highest number of projects (108) in 2021. After a 27% drop year on year in 2020, when FDI with this function only attracted 69 projects, there was a healthy 56.5% recovery in 2021 for a compounded growth of 13.7% over the three-year period.
Like in other sectors during the pandemic, sales, administration and marketing was the best-performing operation for construction materials FDI in the three-year period between 2019 and 2021, with growth of 65.2%. Construction materials FDI with this function kept growing through the Covid-19 pandemic, going from 23 in 2019 to 33 in 2020 and 38 in 2021.
Headquarters, on the other hand, saw the biggest drop over the period (-61.5%), having gone from 13 in 2019 to five in 2021. Logistics and warehousing remained fairly steady, attracting seven projects in 2019, nine in 2020 and seven again in 2021.
What are the top subsectors for construction materials FDI?
Cement, lime, plaster, concrete and related articles remained the construction materials subsector to attract the highest number of FDI projects, with a total of 47 in 2021. This is a mild 9.3% increase compared with pre-pandemic levels.
Windows and doors was the best-performing subsector since 2019, with projects growing exponentially during the three-year period. This subsector went from attracting six projects in 2019 to 11 in 2020 and 20 in 2021.
The trend is perhaps justified by the fact that during prolonged lockdown periods, people focused on home refurbishment activities more than they had done in previous years. This theory seems to be confirmed by ceramic insulators and insulating fittings coming fourth in 2021 with 17 projects, a strong 325% year-on-year growth and a healthy compounded 21.4% growth over the period since 2019.
Where are the leading construction materials investors located?
In 2021, the US replaced Germany as the leading source of construction materials FDI by contributing to 17 projects versus Germany’s 13.
Germany has lost ground in the period since 2019, with domestic companies going from 18 projects in 2019 to 13 in 2021, a 27.8% drop.
The US had a particularly positive performance in 2021 compared with 2020, when local companies only financed five projects in the sector, a near 60% drop from 2019.
Having suffered a 53.3% drop in 2020 versus 2019, French companies investing in construction materials abroad went back to pre-pandemic levels by contributing to 15 projects in 2021.
Albeit from a smaller base, Mexican and Danish companies increased their FDI into the sector by 500% and 300%, respectively, in 2021 when compared with 2019 figures.
At company level, Switzerland’s was the largest contributor to construction materials FDI, financing ten projects in 2021. The company invested in five projects abroad in 2019, 12 in 2020 and ten in 2021.
´¡³Ü²õ³Ù°ù¾±²¹â€™s , a supplier of refractory products, systems and services, is listed on the London Stock Exchange and more than trebled its FDI in construction materials in the three-year period, going from two projects in 2019 to seven in 2021.
What does the future hold for construction materials FDI?
According to our FDI Projects Database, FDI in construction materials seems to have made a good recovery after Covid-19. However, this is a trend that is likely to come under pressure from the macroeconomic and geopolitical pressures of 2022.
Prices are rising across the board, including in raw materials and labour, which is likely to cause FDI in the sector to slow down again in 2022.
