Residential construction, defence investment and data centre development are driving growth in Australia, while skills shortages and rising input costs continue to challenge project delivery.
Australia started 2026 with high levels of construction activity, supported by housing demand, government-backed defence programs and accelerating investment in digital infrastructure such as data centres.
These are the findings of the 2026 Global Construction Insurance and Surety Market Report released by global professional services firm, Aon.
“Across Asia Pacific, construction activity remains resilient, supported by sustained investment in infrastructure, the energy transition and digital assets. Projects are also becoming larger and more complex, with potentially greater exposure to delay and governance risk,” the report said.
Aon head of commercial risk for Asia Pacific, Terence Williams, said APAC continues to be one of the most active regions for construction.
He said hyperscale data centres, battery and semiconductor plants are driving demand for higher-value, more complex builds with extended timelines and greater delay exposure.
“Insurers are increasingly differentiating projects based on factors such as governance, the quality of risk information and how exposures are managed across the construction lifecycle, reflecting the scale and complexity of developments across the region,” he said.
In Australia, preparations for the Brisbane 2032 Olympic and Paralympic Games are expected to increase construction demand across Southeast Queensland.
Major transport works, venues, accommodation and urban renewal projects will place additional demand on an already constrained construction workforce.
Aon head of construction for Australia, Mary-Catherine Hamill, said Australia’s construction pipeline remains strong but labour availability is a real pressure point.
"In the lead-up to the Brisbane Olympics, competition for skilled workers is expected to intensify across major infrastructure, specialist trades and professional roles, increasing cost pressure and the risk of project delays,” she said.
The report notes insurers in Australia are placing greater emphasis on how workforce shortages, rising labour costs and extended project timelines are managed, particularly for large and complex developments, as these factors influence claims risk, delay exposure and insurance terms.
Regulatory change in New South Wales is also adding a new layer of complexity for construction stakeholders. From 1 July 2026, proposed updates to the Design and Building Practitioners Act 2020 are expected to extend regulatory coverage to repair, alteration and renovation work on existing Class 3 and 9c buildings and may introduce professional indemnity insurance requirements for building practitioners.
While final settings remain subject to legislative outcomes, the changes are likely to increase focus on whether appropriate insurance capacity and risk frameworks are in place to support builders in meeting regulatory requirements.
Surety demand is rising as contractors manage balance sheet pressure from higher material, fuel and supply chain costs.
According to the report, surety bonds are increasingly being used as an alternative to traditional bank guarantees, allowing construction firms to free up capital tied to projects.