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The 2014 FIFA World Cup and 2016 Olympic Games being held in Brazil are expected to drive growth in the Latin American construction industry.

FIFA World Cup 2014 logo.

FIFA World Cup 2014 logo. (Photo credit: Wikipedia)

The industry is expected to register growth with a Compound Annual Growth Rate (CAGR) of 8.79% to 2015.

The growth is primarily expected in the infrastructure sector, where all six sub-divisions are expected to register CAGRs between 9-11%.

The huge tourist inflows expected during these events is expected to force the governments to increase spending on improvement of infrastructure.

Other sectors like residential construction are also expected to perk up, owing to the general rise in the economy due to which demand for housing is expected to outstrip supply.

In case of industrial construction, the continuous discoveries of rich mineral deposits is expected to help the field grow at a higher rate.

While in Russia, India and China, the construction industry is expected to register robust growth owing to economic development, urbanisation and strong inflows of foreign direct investment (FDI).

The construction industry is expected to register an overall CAGR of 10.69% to 2015.

The organization of major global events such as the 2012 APEC Summit, the 2014 Winter Olympic Games and the 2018 FIFA World Cup in Russia are expected to generate growth in the construction industries in Russia, while in China and India growth will be driven by government spending.

Apart from stadiums, a great deal of additional infrastructure must be built from scratch at most of the host cities for the 2018 FIFA World Cup in Russia.

Host cities will need at least new airports, moderately priced and high quality hotels and reasonable entertainment such as restaurants, cafes and shopping malls.

In addition, thousands of miles of highways and railroads will need to be built. The country’s leaders and regional bosses are promising in unison that everything will be done as planned.

However, even they will probably have a hard time putting an exact price tag on this huge construction effort.

Prime Minister Vladimir Putin was reported as saying that the projected spending is at least USD 10 billion. Experts are confident that the actual number will be somewhat higher. Several respected analysts estimate the cost of the World Cup 2018 to Russia at a stratospheric USD50 billion.

An amount of roughly USD 3.8 billion has been appropriated for construction of stadiums, plus another USD 1.4 billion to build new airports.

At a projected USD 11 billion, spending on tourist infrastructure dwarfs both. But the most important portion of the budget is roads, as a well-developed transportation network crisscrossing European Russia could set the country back up to USD 35 billion.

So far those numbers are only an approximation. But in any case, the World Cup will be Russia’s most expensive entertainment in history.

Like most Russians, government officials believe the championship is a tribute to the power of the state and to its ability to translate large-scale projects into reality, and also view it as an opportunity to improve domestic living standards.

As for dividends, they are expected to come later – in the form of foreign investment, tourism, and a quality transportation system.

Source : World Construction Network

(this article written for 1BINA.my)