Australia’s commercial and residential building markets are recovering, driving increased demand for architectural services, say market researchers.
The changing market prompted an updated report from industry research firm IBISWorld.
The firm noted the architectural services industry has suffered for five years with the downturn in the construction market. The winding back of educational building investment and weak housing construction are blamed for subdued demand for industry services.
In a media statement, IBIS explained: “Revenue is estimated to rise by an annualised 0.4 per cent over the five years through 2013-14, corresponding with a slump in the value of total building construction.
“The key building markets for architectural services have displayed divergent trends over the past five years.”
“In the non-residential building market, the value of institutional building has benefited from the injection of federal funding for school refurbishment under the Building the Education Revolution program. In contrast, the value of commercial and industrial building is expected to fall because of slower economic growth and the global financial crisis.”
“Architects have faced subdued conditions in the new housing market, with the value of construction remaining flat over the past five years. Declining investment trends in the traditional single-unit housing market has offset growth in the townhouse and apartment design market.
In 2013-14, the industry is forecast to generate revenue of $6.4 billion, rising 2.1 per cent on the previous year. Rising housing investment is expected in the single and multi-unit sectors, due to record low interest rates and an expected recovery in economic growth.
Architectural services competition landscape
The researchers pointed out the industry has been facing growing competition from vertically integrated firms in the building construction and engineering consultancy industries over the past five years.
IBISWorld industry analyst Sebastian Chia said, “clients are growing towards more integrated service offerings, and architecture firms have to improve links with construction firms or even offer their own range of services to compete.”
Chia said this is difficult due to the nature of the industry, which has a fragmented structure with few large-scale national players and many small-scale firms that operate in narrow regional markets. These trends are forecast to grow over the next five years.
According to Chia, “despite growing competition, demand conditions are forecast to strengthen over the next five years due to improved investment in the commercial and residential building markets.”
IBISWorld’s Architectural Services report outlines an industry with a low concentration of ownership. It has a fragmented structure with few large-scale national players, a larger number of state or regionally based firms (influenced by the requirement for individual state registration procedures), and many small-scale firms and sole practitioners operating in narrow regional markets.
The industry is classified as establishments that mainly provide planning and design services of buildings and structures, or planning and designing land development. Industry activities may include design, construction procedures, zoning regulations, location and land use, building codes and building materials.
For more information, visit IBISWorld’s Architectural Services report in Australia industry page.