Executive Summary
Generative AI has become a structural driver of construction. The global AI boom is fueling a frenzy for data centers. In the US, 6.4 GW of data center capacity was under construction at end-2024, double the level of 2023. This alone represented about USD74bn of construction spending (i.e. excluding land, equipment, software etc.). EMEA’s pipeline surged +43% y/y to close to 14 GW in planning by mid-2025 (i.e. equivalent to about EUR170bn in construction spending) and China’s IT load is set to double from 4.3 GW in 2025 to above 8 GW by 2030, which represents another USD40bn construction spend. However, this frenetic pace of growth could come crashing down if grid power shortages, land scarcity and regulatory moratoria are not addressed.
AI and infrastructure are holding up the US construction sector amid residential woes. The US has been spending USD2.4bn per month on average in communication construction over the last two years, +25% compared to the two years prior to the release of ChatGPT. Going forward into 2026, this pace should not slow down amid continued AI enthusiasm. However, residential construction is weighed down by affordability: With mortgage rates still high at nearly 6%, new housing permits were down -11% over the last 12 months compared to a year ago. After dipping below 1.5mn in 2025, housing completion may recover to 1.5-1.6mn units annually by 2026 but will not top the record of 2024. Overall, tight immigration policy is also weighing on the sector in the US as labor shortages remain severe and are pushing wages up.
Meanwhile, European housing should rebound and Germany is expected to lead the infra push. The housing downturns of 2022-24 are giving way to stabilization in Europe, and some countries are seeing rebounds. In Sweden, for example, housing starts rose +12% y/y in H1 2025 (-55% in 2023). However, non-residential construction output growth is sluggish in the region and should remain below +2% in annual terms, though logistics and refurbishments of commercial real estate are supportive. Infrastructure output has been the stabilizer for Europe, but growth may slow to +1-2% per year by 2026–27 as fiscal constraints bite. Germany alone could see stronger momentum in 2026, thanks to its EUR500bn special fund for infrastructure.
In China, the infra playbook may prove insufficient to offset the ongoing housing slump. The property downturn remains a drag in China, with residential construction likely flat or contracting through 2025. Construction growth is instead being driven by infrastructure: Local governments have issued record bonds, backing high-speed rail and metro expansions, but overall growth has moderated. Beijing has been prioritizing major infrastructure since 2023, starting with roads (RMB2.8trn in 2023), then renewables (USD1.1trn in 2024). So far in 2025, railway construction has been the fastest-growing segment. Overall, China’s construction output is forecast to grow +3.2% in 2025 and about +3.5% annually over 2026-27 – well below past double-digit rates but still massive in scale.
Still-high input costs and interest rates are testing firms around the world. US construction input prices rose +2.3% y/y in August 2025, and metals and concrete still stand 40% above 2020 levels. In Europe, construction insolvencies are up by double-digits in markets like France (+10%) and Belgium (+12%). Smaller developers and subcontractors are most exposed while large contractors are pivoting to chase infra and industrial projects and diversifying into data centers.