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    The continuing fall in our construction activity: CoreLogic

    The latest Cordell Construction Market Movement Report by CoreLogic indicates lower construction activity in the fourth quarter based on project commencements in the December quarter.

    Approximately 2,429 projects moved into the construction phase across the December quarter, -7.8 percent down from the number of projects that commenced in the previous quarter, with the value of construction projects commencing also down 7.0 percent over the quarter, to $13.1 billion.

    CoreLogic commercial research analyst Eliza Owen attributes the reduced number and value of projects in the December quarter to seasonality, with fewer commencements occurring around December.

    However, the value of commenced construction was up 40 percent over the 2017 calendar year.

    Therefore, despite the number of commencements in 2017 (10,433) remaining below the 5-year average (12,439), the average value of projects reflects an increase.

    According to Owen, the year saw continued participation in construction projects by state and territory governments; with 85 percent of the value of civil engineering projects commencing in 2017 held in government or joint venture projects, the private sector was left with only 15 percent.

    But recent data on new civil engineering development applications in 2017 indicates the private sector is in recovery, with private ownership accounting for 47.4 percent of the value against just 24.9 percent in 2016.

    Future private sector civil engineering would be focussed largely on renewable energy projects – this field accounted for $19.4 billion, or 10.6 percent of the value of all new projects added to the pipeline in 2017.

    The December quarter shows 5,274 new project applications with a combined construction value of $43.9 billion. Over the year, 23,559 new projects were captured at a combined construction value of $182 billion, up from $165 billion in the year to December 2016. Civil engineering projects continue to dominate commencements, with 1,046 projects entering construction at a value of $5.4 billion over the period.

    Owen says that, “With new pipeline values up 10 percent on 2016 and commencement values up 40 percent, it is fair to say that the construction sector will see higher levels of activity going into 2018. However, localised challenges to capital growth in housing, state government expenditure and the feasibility of large-scale construction projects will be big factors in determining which areas will realise higher levels of construction.”

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