Australian Construction Sector's Outlook Appears Positive: WT Partnerships

A review of Australia’s construction market conditions was released this month, produced by international cost management consultants WT Partnerships, and indicates that the outlook for Australia’s construction and infrastructure is generally positive, according to its report Review of Australian Construction Market Conditions.

The review noted a strong delivery continuing from residential, retail, health and commercial projects in Australia, with an increasingly strong focus on infrastructure projects, particularly in NSW and VIC.WT Partnerships say this trend will continue at a positive level as previously pending projects are now entering their planning and delivery phase.

The review's insights also show that developers of commercial real estate will be seeing the positive effects of increased demand for office space, the establishment of new office precincts and continued large-scale infrastructure project roll-outs.

Changes to superannuation contribution rules are also increasing either direct investment or interest from investment vehicles such as syndicates in this sector.

Despite this positivity WT Partnerships warns that development projects undertaken by ‘new developers’ may experience greater scrutiny from the big four banks.

This scrutiny appears to be driven by an eagerness to minimise failed settlement risk or a slowdown in demand due to the introduction of surcharges as a result of legislation changes and reversing the current exemptions on stamp duty for foreign investors.

The weakening Australian dollar continues to have an impact on cost escalation for some overseas sourced elements such as facades, lifts and mechanical and electrical plant. Exchange rate fluctuations are continuing to be heavily qualified in tender submissions for these elements.

Whilst there are fluctuations across varying sectors in different locations, the report expresses a confidence in the overall Australian construction market and WT Partnership does not predict any sharp decline in market sentiment in the short term.