Commercial building slowdown looms
The Construction Forecasting Council today released its latest forecasts.
Non-residential Construction
Total non-residential building is now near its peak and will experience a modest cyclical downturn in 2004/05 and 2005/06.
Office construction in Melbourne will peak this financial year and 2004-05 will see a marked decline as activity returns to more normal levels.
Retail building is forecast to ease over the medium term as some large retail projects reach completion (such as Westfield at Bondi Junction, Sydney).
With business investment in warehousing and distribution continuing to rise over the medium term, industrial building remains a growth sector for construction activity.
Engineering Construction
Engineering construction work done is forecast to remain extremely high this financial year but has limited capacity for further growth in the medium term. The peak of activity is expected in 2004-05 with a number of major road and rail construction projects keeping activity simmering despite a modest downward correction forecast in mining construction.
Road construction is expected to continue rising strongly over the next two years. The Westlink M7 and the Lane Cove Tunnel will provide a number of years of significant activity in Sydney while the commencement of the Mitcham-Frankston Freeway in 2004-05 will boost activity in Melbourne.
Rail construction in the medium term is being supported by a few large projects such as the Parramatta rail link, the Victorian regional fast rail project and the Perth MetroRail project.
After reaching a record $5.9 billion in 2002-03, mining construction is forecast to remain at a high level in 2003-04, boosted by current large mining projects in the Northern Territory, Queensland and WA. The forecast for the medium term, however, is for activity to recede to more usual levels around $4.8 billion in 2006-07.
"The CFC forecasts have established a good track record for quality and accuracy" the Chair of the CFC Expert Committee, Peter Verwer said.
"Coveraqe of the forecasts will be expanded later this year by the addition of residential activity".
The Forecasting project has been developed with support from the Department of Industry Tourism and Resources, Australian Construction Industry Forum, Econtech, and Ernst & Young (Leadership Sponsors), Reed Construction Data (Principal Sponsor), Australian Institute of Quantity Surveyors ( Associate Sponsor).
The detailed forecasts can be viewed and downloaded free from the Construction Forecasting Council Website at www.cfc.acif.com.au.
For more information contact: Chris Murphy, Econtech (02) 6295-0527, Kathryn Matthews, Econtech (02) 9929-4700, Peter Verwer, Property Council of Australia (02) 9033-1920.