Faced with economic uncertainty and political unrest in many parts of the world, major global firms are banking on their regional diversity to find pockets of opportunity.
China’s economy continues to slow, with its gross domestic product coming in at 6.9% in October. If that rate stays consistent through the end of the year, annual GDP growth in China would fall below 7% for the first time since 1990. Growth is also stagnant in the eurozone, with its GDP recently registering at 0.3%. Low oil prices have dealt a blow to many oil-rich countries. Meanwhile, terrorist attacks—and concerns over future threats—add to the uncertainty.
“The world is an increasingly volatile place,” says Steve Morriss, CEO of AECOM’s Europe, Middle East and Africa region, noting that the company sees the impact on its business in China, western Europe and parts of the Middle East. “Given our diversity, it’s almost inevitable that we’re in a market that’s volatile. At the same time, that high level of diversity gives us tremendous robustness in the business. We’re affected by everything, but resilient to everything.”
Even within challenged markets, opportunities exist. Morriss says prospects continue to develop for commercial work in London, especially in areas that neighbor the Crossrail project, currently under construction. Despite low oil prices, Saudi Arabia has remained remarkably stable, he notes. Although, as a whole, China is experiencing an economic slowdown, he says AECOM’s office in Hong Kong is very active.
Richard Cavallaro, president and CEO of Skanska USA, says unrest in countries such as Ukraine and Syria has caused concern in the development market. “Economies are driven by confidence,” he says. “With lack of confidence, you can stop an economy cold. All of that worries me.” Still, the firm sees strong prospects in some countries. Skanska has experienced tremendous growth in Poland, particularly in the commercial office sector. In 2014, Skanska had more than 1,300 active contracts in Poland and hired more than 1,000 employees to help meet its needs. In the first half of 2015, the firm added another 570 employees.
Like many firms, Skanska is picking up commercial building work in London. “That is a red-hot market right now,” Cavallaro says. He notes that London also has proven to be a solid market for foreign investment. Last year, Skanska was selected for the $900-million Battersea Power Station project, which will redevelop the historic London site for mixed use. The station is owned by a consortium of Malasian investors.
Turner International also sees a “mixed bag” in the market, says Abrar Sheriff, president and CEO of Turner International. “People are a little hesitant,” he says. “It’s a little slower than what we expected.” Still, Turner is eyeing new opportunities for the years ahead. The company is gaining traction in India, as the country works to enable new foreign investment in projects. This year, India surpassed China and the U.S. as the country with the most greenfield foreign direct investment in the world, according to the Financial Times. “That market will open up for us in the next 18 months, with a lot of U.S. companies going into that region,” Sherriff says. “We hope to go with them.” Sherriff says the company remains bullish on Southeast Asia. In 2014, it opened an Indonesia office, and, this year, it opened a Bangkok office. Turner also is active in Vietnam, where the company has more than 80 employees. In Hanoi, Turner is building the VietinBank Tower, a 300,000-sq-meter mixed-use development, consisting of a 68-story tower and a 48-story tower. The project is scheduled to complete in 2018.
In Malaysia, Sheriff says there is a “huge backlog of work that we feel will break loose in the next six to eight months.” Turner currently is building the $290-million Four Seasons Place in Kuala Lumpur, Malaysia. Turner and many other firms hold a cautiously optimistic view of global markets in the coming years. “When you find so much unrest out there, anything can happen,” says Skanska’s Cavallaro. “You just try to be nimble and be careful about who you work for.”