BCG: The Construction Sector in Uzbekistan is Undergoing a Transformation
Tashkent, Uzbekistan (UzDaily.uz) — The construction sector in Uzbekistan is undergoing a transformation driven by global trends and shifts in demand for housing and commercial real estate. This was stated by Grigory Rubin, Senior Partner and Managing Director of Boston Consulting Group (BCG), during the plenary session "The Construction Potential of New Uzbekistan" at the 6th International Conference on the Construction Industry – ICCI 2025.
Global Trends and Their Impact on Uzbekistan
According to BCG's forecast, by 2030, the urban population worldwide will increase by 5 billion people, leading to a growing demand for housing and infrastructure. However, the issue of affordable housing remains a pressing problem.
"Over the past 30 years, the cost of housing has risen 2-4 times faster than income growth, making it difficult for young people to purchase apartments," emphasized Rubin. Meanwhile, developers are focusing on large apartments for sale, while demand is shifting towards compact rental properties.
He noted that, in terms of demand, an increasing number of people, especially the youth, prefer, firstly, small apartments and, secondly, rental properties rather than ownership, in order to maintain mobility. For developers, this represents a fundamentally different business model, one that not all are ready for.
Similar changes are happening in the commercial sector. By 2025, the share of online sales in retail will reach a quarter of the total volume, which reduces the demand for traditional retail spaces. This requires rethinking the concept of shopping malls and adapting them to the changing market needs.
Labor Shortage and Technological Solutions
A shortage of skilled labor in the construction industry is another challenge. "On the one hand, this creates difficulties; on the other hand, it stimulates companies to adopt new technologies," said the BCG representative. In the United States, for example, over 40 years, the productivity gap in the construction sector compared to other industries has increased 2-3 times.
The implementation of innovations such as big data, predictive analytics, AI, 3D printing, and virtualization can help bridge this gap. However, their use remains at a low level, and the government could more actively support these initiatives.
New Formats and Sustainable Construction
The pandemic changed the approach to office space usage. The average occupancy rate dropped from 65-70% to 40%, giving rise to the term "zombie offices."
In this situation, there are two possible paths: repurposing offices into residential spaces or developing coworking spaces with additional services. In New York, for example, 600,000 square meters of office space have already been converted into residential units.
Another important aspect is sustainable construction. Using "green" materials and energy-efficient technologies can reduce primary energy consumption by 75% and decrease the need for heating and electricity by 90%.
Despite the higher construction costs, such projects pay off through operational advantages.
Key Challenges for Uzbekistan
Against the backdrop of these challenges, Uzbekistan will need to adapt to the changing market. "Perhaps it’s not so noticeable now, but the demand is no longer what it was before. Developers who respond to these changes first will gain a competitive advantage," concluded Grigory Rubin.
Among the priority steps: reducing construction costs, digitalization, implementing sustainable technologies, and developing new business models aimed at meeting the changing needs of the population.
Source: UzDaily.uz