CoreLogic Market Movement Report points to rising construction activity over the year

CoreLogic Market Movement Report points to rising construction activity over the year

CoreLogic captured approximately 2,429 projects moving into construction across the December quarter. This outcome delivered a result that was -7.8% lower than the number of projects commencing in the previous quarter. In addition, the value of construction projects commencing was down 7.0% over the quarter, to $13.1 billion.

According to CoreLogic commercial research analyst Eliza Owen, the lower number and value of projects in the December quarter most likely reflects seasonality, with fewer commencements occurring around December.

However, she said that the value of commenced construction was up 40% over the 2017 calendar year. Even as the number of commencements in 2017 (10,433) remains below the 5-year average (12,439), the average value of projects is generally rising.

Ms Owen said, “2017 marked continued participation in construction from state and territory governments, which accounted for 36% of construction value commencing in the year to December 2017. In fact, 85% of the value of civil engineering projects commencing in 2017 was held in government or joint venture projects, leaving only 15% owned wholly by the private sector.

“However, economic data suggests that the private sector is in recovery and reflected in the new projects added to the pipeline over 2017. The pipeline over 2017 indicated that private ownership accounted for 47.4% of the value of new civil engineering development applications in 2017, as opposed to just 24.9% in 2016.”

According to the report analysis, new projects captured over 2017 indicated that future private sector civil engineering would largely be characterised by renewable energy. Renewable energy made up $19.4 billion, or 10.6% of the value of all new projects added to the pipeline in 2017.

There were 5,274 new project applications captured in the December quarter, with a combined construction value of $43.9 billion. Over the year, there were 23,559 new projects captured at a combined construction value of $182 billion. This was up from $165 billion in the year to December 2016 and indicates continued strength in the construction sector.

As with the previous quarter, civil engineering projects dominated commencements, with 1,046 projects entering construction at a value of $5.4 billion over the period.

In closing Ms Owen said, “With new pipeline values up 10% on 2016 and commencement values up 40%, 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.”

2018-03-22T15:00:59+00:00