Press release
Indonesia Construction Market Report 2026-2034: Size, Share, Growth, Industry Trends & Forecast
Indonesia Construction Market Report
The Indonesia construction market size was valued at USD 125.4 Billion in 2025 and is projected to reach USD 226.1 Billion by 2034, growing at a compound annual growth rate (CAGR) of 6.77% during the forecast period of 2026-2034. The market growth is fueled by significant government infrastructure investments, rapid urbanization, and strong foreign direct investment inflows, stimulating demand across residential, commercial, and industrial construction sectors.
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Indonesia Construction Market Growth Factors
In Indonesia the construction market is substantial and all sectors of the construction industry are expected to achieve growth, including the residential, commercial, industrial and infrastructure segments. Factors influencing this growth include urbanization and the challenge of providing adequate housing and service infrastructure to a growing population. Also, construction activities in tier 2 and tier 3 cities, apart from tier 1 cities, create opportunities for region-led growth along with inclusive economic growth. The investment interest witnessed in the real estate and infrastructure space is also strengthening the overall construction ecosystem.
Long-term development planning and initiatives by governments to improve connectivity and infrastructure quality are contributing to the growth of the market. Further, rising demand for industrial space, logistics centers, and warehouses due to increased trade and manufacturing activities in the region is driving the growth of construction activities during the forecast period. In addition, the tourism related development in the form of hotels, resorts and other supporting infrastructure is also contributing to this demand and therefore keeping the construction activity afloat.
Advances in materials and methods of construction are enabling firms to take on larger and more complex projects. Increasing partnerships and cooperation between domestic and international construction firms are resulting in technological improvements, better project planning and management, and the dissemination of knowledge from elsewhere, along with improved project financing and structure that make the industry more attractive to investors and project developers. The overall outlook for Indonesia's construction market is good, supported by solid demand fundamentals, a growing number of projects, and greater efficiency in construction practices.
Indonesia Construction Market Trends
The Indonesia Construction Market is experiencing some rapid growth, due to urbanization modernization and active construction practices, increasing demand for housing, commercial, and mixed-use developments in metropolitan cities, secondary cities, and urban areas, infrastructure investment, construction on transport networks, public buildings, and utilities such as electricity, gas, water and waste management. The use of prefabrication, modular construction and digital project management tools is helping to increase efficiency and shorten timelines in construction as productivity-improving technologies are embraced.
Another trend is sustainability, with developers incorporating green building techniques and sustainable materials into the construction of buildings. There is also a rise in energy efficient designs, reducing the amount of waste at the site and the sustainable sourcing of materials. In addition, the use of building information modeling (BIM) and smart construction solutions (to improve planning accuracy, cost control, and better coordinate project participants) helps contractors reduce errors and improve the outcome of projects.
The private sector has slowly regained ground in the market with the help of PPP models that aim to fast-track projects, while construction firms are focusing on reskilling and rationalization efforts in the wake of labor shortages and to improve project execution. The increased mechanization and automation of the building site, the rise of new architectural impulses particularly in the fields of flexible and modular spaces, and a stronger momentum towards digitally controlled construction and production processes, move the construction industry in a direction increasingly orientated towards technological solutions, sustainable development, and efficiency.
Indonesia Construction Market Recent Developments & News
In June 2025, PT Semen Indonesia Tbk (SMGR) increased its solar power capacity sixfold to 6.5 MWp, supporting sustainable construction initiatives. The Tuban plant's 6.4 MWp solar system generated 1.726 MWh in 2024, reducing approximately 1,450,260 kg of CO2 emissions. This expansion aligns with SMGR's 2030 Sustainability Roadmap, reflecting commitment to renewable energy and green building practices.
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Indonesia Construction Market Segmentation
Sector Insights:
• Commercial Construction
• Residential Construction
• Industrial Construction
• Infrastructure (Transportation) Construction
• Energy and Utilities Construction
Indonesia Construction Market Regional Insights
• Java
• Sumatra
• Kalimantan
• Sulawesi
• Others
Indonesia Construction Market Key Players
The report offers an in-depth examination of the competitive landscape, including market structure, key player positioning, leading strategies for success, a competitive dashboard, and a company evaluation quadrant.
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Key Questions Answered in This Report
Q1. How big is the Indonesia construction market?
A1. The Indonesia construction market size was valued at USD 125.4 Billion in 2025.
Q2. What is the projected growth rate of the Indonesia construction market?
A2. The Indonesia construction market is expected to grow at a compound annual growth rate of 6.77% from 2026-2034 to reach USD 226.1 Billion by 2034.
Q3. Which sector held the largest Indonesia construction market share?
A3. Residential construction held the largest share of 38.06%, driven by persistent housing demand from population growth and urbanization, government stimulus measures including VAT incentives, and favorable financing conditions supporting housing market development.
Q4. What are the key factors driving market growth?
A4. Key factors driving the Indonesia construction market include substantial government infrastructure investment programs, rapid urbanization and population growth creating sustained construction demand, rising foreign direct investment in industrial and commercial facilities, and the development of Nusantara as Indonesia's new capital city providing long-term project visibility.
Q5. What are the major challenges facing the Indonesia construction market?
A5. Major challenges include land acquisition complexities and regulatory coordination requirements that can delay project timelines, skilled labor shortages impacting project execution capacity, construction material cost volatility affecting project economics, and the need for continued investment in modern construction technologies to enhance productivity and quality standards.
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