Latin America construction market faces strong demand amid diverging forecasts

Latin America construction market faces strong demand and big investments despite divergent forecasts

Two recent industry studies show sharply different estimates for market size but the same broad picture for the region: robust urban and infrastructure demand, major public investment plans and public–private partnerships, rising costs driven by materials and logistics, a deep shortage of skilled workers, growing climate and disaster risks, and an accelerating shift toward digital tools and green construction.

Top-line forecasts: conflicting numbers, similar outlook

One market report lists the Latin America construction market at USD 1.07 billion in 2024, rising to USD 1.13 billion in 2025 and to USD 1.64 billion by 2033, giving a compound annual growth rate (CAGR) of about 5.16% for 2025–2033, although that same document also references a different CAGR figure of 2.61% in its metrics. A separate analysis puts the 2024 market at USD 9.11 billion and projects growth to almost USD 13.75 billion by 2034 with a CAGR of 4.20% from 2025–2034. An accompanying FAQ summary in the materials projects roughly USD 1.13 billion in 2025 and expects growth at about 5% through 2030.

Why the numbers differ

The gap between headline figures comes from differences in scope, segment definitions, country coverage and forecasting windows. Despite the mismatch in totals, both studies point to the same near‑term drivers and risks: rapid urban growth, major public infrastructure programs, pressure on input costs and labor, and rising emphasis on sustainability and digital methods.

Demand drivers: cities, housing and big projects

Urbanization is a major force. More than 400 million people already live in cities across the region, with urban populations expected to reach 500 million by 2030. Roughly 81% of Latin Americans live in urban areas. Gaps in formal housing are large: in Colombia nearly 27% of urban households live in informal settlements, while countries such as Mexico and Colombia report over 25% of their populations in substandard housing. Mexico’s public mortgage body finances over 500,000 homes a year, showing persistent housing demand.

Public spending and PPPs

Governments are deploying significant funds and using PPPs to close financing gaps. Colombia plans to invest COP 110 trillion (about USD 27 billion) in roads and rail by 2026. Regional authorities are estimated to plan about USD 2.2 trillion in infrastructure and maintenance projects across energy, sanitation, logistics and housing over major multi‑year programs. Multilateral lenders committed over USD 22 billion in loans and grants to public construction projects in 2023. Transport PPPs are highlighted as a growing model for roads, rail and mass transit.

Country dynamics and market shares

Brazil is the largest market, capturing about 34.3% of the region’s construction share in 2024. A federal program has unlocked roughly BRL 1.5 trillion for highways, rail and sanitation, with dozens of large projects under execution. Industrial and logistics construction is strong in parts of Mexico: northern border states and industrial hubs such as Querétaro and Nuevo León recorded a 31% rise in industrial construction permits in 2023. São Paulo and the capital region report logistics warehouse vacancy rates near 4.1%, the lowest in a decade.

Market structure and segments

Building construction is the largest segment, with about 58.3% share in 2024. Land planning and development is one of the faster segments, projected to grow at a 7.4% CAGR. The private sector currently accounts for the largest portion of activity, while public‑sector spending is expected to grow at around 6.8% CAGR over forecast periods. Large contractors held roughly 54.3% of market share, while small contractors are projected to expand faster, with an expected 8.1% CAGR.

Costs, logistics and labor shortfalls

Rising material prices, import dependence and higher logistics costs constrain the sector. Logistics costs in the region are cited as about 30% higher than in East Asia. Argentina imports over 60% of its construction materials, underscoring exposure to global supply chains. Permitting complexity and inconsistent regulations are common delays; in Colombia, 45% of construction firms reported suspensions due to zoning disputes in 2022. A major labor gap persists: more than 58% of workers in construction are in the informal sector, and national training bodies forecast shortages of hundreds of thousands of skilled technicians within a few years.

Climate risk and resilience

Natural hazards and weak resilience codes present a material challenge. A large share of infrastructure assets in Central America sit in high‑risk zones, and only 12 of 33 countries in the region have comprehensive climate‑resilient construction codes. Recent storms and hurricanes have damaged thousands of homes, highlighting exposure to shocks that can stall projects and increase long‑term costs.

Technology, efficiency and mitigation

To manage costs and improve delivery, firms and public agencies are adopting prefabrication, BIM, digital twins and other digitalization steps. Investment in pre‑construction planning can cut project costs by 12–18% per dollar invested through better risk mitigation. Green building moves — including energy efficiency standards and low‑emission materials — are accelerating, and renewable energy buildouts are expected to add significant construction demand.

Dispute risks and contracting

Large projects continue to generate arbitration and investor disputes; common causes include delay, disruption, underbidding and social protest. The prevalence of international and domestic arbitration means robust contract drafting, early dispute boards and full project records are critical risk controls.

What this means for market players

The region offers sizeable opportunities in housing, transport, energy and logistics, but companies and governments will need to manage cost volatility, speed up permitting, invest in skills and resilience, and scale digital and green methods to capture value. Small and mid‑size contractors that adopt digital procurement platforms and prefabrication may grow faster than the overall market.

Key features at a glance