Where Will the Work Come from Next? ACIF Market report for May issued.

Where Will the Work Come from Next? ACIF Market report for May issued.  

The ACIF Australian Construction Market Report (ACMR) for May 2024 is now available. The ACMR aims to provide a relevant and credible 'compass' for the next ten years on the upcoming demand for work across all sectors, including major projects, and what is happening with construction costs and labour requirements.

The full 122-page report is complimentary to AIQS Members and Fellows. If you would like to become a Member, you can find further details here: https://www.aiqs.com.au/join-now 

Concerning where ACIF believe the work will come from, ACIF provides the following commentary.  

The Engineering Construction industry is mid-way through a boom. Reflecting our revised forecasts explained later in this report, this will be the largest source of work to be done in the building and construction industries for the next six to seven years.

Engineering Construction draws together transport infrastructure, utilities, and heavy industry, including mining and other construction activities. The recent surge is mainly due to the rise in transport infrastructure projects, supplemented by a ramp-up in clean energy projects in Electricity and Pipelines. This surge is anticipated to continue for the next three years, propelling Engineering Construction to reach $131 billion by 2025-26 before the investment in transport infrastructure begins to subside.

Residential Building activity will remain an important source of work even though it is expected to dip below Engineering Construction well into the medium term. Work in this category fell to $106 billion in 2022-23 under the weight of a rising cash rate and is expected to stay at around that level for the next two years before picking up with the assistance of the policy response to the housing crisis.

While non-residential buildings are the smallest of the three ACIF types, they are expected to grow over the next two years, providing an important source of work for builders and allowing them to avoid difficulties in residential buildings. The situation and outlook for Non-Residential Building reflects the diverse trends in the sector following economic recovery from Covid. Building users in areas such as Accommodation, Entertainment and Recreation, Education, and Retail and Wholesale Trade have been forced to reassess their needs in the post-Covid normal environment. However, there is strength in health and aged care, reflecting the growth in the care economy, education, and other commercial sectors (partly spinning off the increase in public transport infrastructure activity). Surprisingly, Office approvals and commencements have remained high, but downside risks are developing in that market.

Overall, there is expected to be a slight increase in work in Non-Residential Building, with work done rising to around $54 billion in 2023-24. Over the medium term, work is anticipated to continue to expand as structural changes resulting from increased working from home and online shopping become better understood and more widely adopted. Additionally, factors such as the continued growth in the care economy, education exports, and the general economy will play a role in shaping demand.