50 Cranes showcase historically high levels for construction market

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  • 50 Cranes showcase historically high levels for construction market
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Jim Krebs


Jim Krebs


Market Research , Oceania Market Update
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Q4 2023 Australia Report [Gold Coast]: The Gold Coast construction market remains at historically strong levels, with over 50 cranes currently on construction projects, predominately across the residential sector.

In Queensland, construction work done in FY 2023 has seen a 3.5% with non-residential work up $369m for the year, after a $286m rise in FY 2022 with adjusted work done (removing heavy industry, houses, and renovations) for the year up by 8.7% ($2.2bn) for the quarter.

Work yet to be done on year-on-year basis also increased 10.1% to $34.4bn on 30 June 2023, which is a result of longer than expected program durations and shows continuing pressure on the market to deliver existing projects under construction.

Looking at the values of commencements, approvals and WYTBD, the Queensland market is moving forward. With strong approval levels, commencements and WYTBD during 2023, activity was 3.5% stronger than the forecast for 2023 and the current metrics would indicate that the forecast 2024 will be exceeded by a significant factor (by $1-2bn) or 3-5%.

This continued pressure on the market is resulting in challenges in delivery due to increased construction costs negatively impacting the feasibility of projects and lack of available head and sub-contractors, particularly in the residential sector. Notwithstanding this, demand for accommodation is at an all-time high and the lack of supply is exacerbating the situation, investors have generally withdrawn from the market and build-to-rent is difficult to make feasible. The market desperately requires more labour resources to move to the state, however, housing opportunities are very limited.

The health and related services sectors are also increasing in market impact, with new developments underway at the Gold Coast Health & Knowledge Precinct coupled with proposed commencements of private and public hospitals in 2024.

Private sector projects are expected to reduce their overall share of the construction market due to feasibility pressures, however, this will be offset by an increased pipeline of public works resulting in higher market capacity demand.

Escalation insights

The rate of increase in escalation in 2023 has slowed due to stabilisation in trade costs from supply chain and logistic impacts, however, given the labour challenges forecast to impact the market, we expect this to be short-lived with the proposed health, corrections and education programs to be followed by the Olympic Games spend. These programs will test market capacity for tier 1 contractors, tier 1 sub- contractors and particularly the availability of skilled resources for key trades including formwork, ceiling and partitions, joinery, building services and vinyl.

The shortage of skilled resources remains the major challenge that will drive construction costs over the next decade unless there is a significant influx of workers from interstate or overseas. Loss of productivity and insolvencies also remain a major challenge to the industry.

Supply chain issues have eased with reduced freight costs. The significant increase in construction costs over the past two years, as well as rising interest rates, has seen a slow-down in activity in the residential sector, particularly apartments, although the right product in the right location is still in demand.

Photo: Jewel

Australia Report Q4 2023