Australia’s economic position is looking solid over the next five years with strong investment in infrastructure and construction, however efforts could be restricted by deteriorating skills shortages and ongoing supply chain constraints, according to Turner & Townsend’s International Construction Market Survey (ICMS) 2021.
The survey shows that of the 90 global markets examined, 53 markets are warm, hot or overheating; 31 are lukewarm and six are cold in terms of current tendering conditions. All state capital cities in Australia are warm with a market outlook that suggests every state will be increasing activity in future years.
A notable change in this year’s survey was Perth moving from lukewarm to warm with an expectation the market will continue to heat up.\
Sydney is ranked as the most expensive place to build in Australia with an average cost of $A2,640 per sqm. It is positioned at 43 in the global rankings, Melbourne (AU$2,576 per sqm) is 45, Brisbane (AU$2,448 per sqm) is placed at 51 and Perth (AU$2,142 per sqm) is 53. Adelaide (AU$2,070 per sqm) is a new addition positioned at 54.
Tokyo takes the number one spot as the most costly city in the world to undertake construction with an average cost of $5,465 per sqm, followed by Hong Kong ($5,317 per sqm) and San Francisco ($5,080 per sqm). Chennai ($670 per sqm) was the least expensive city in the survey.
New York topped the list for the highest average hourly construction labour rate reaching $148, while Australia’s average increased from $87.4 to AU$99.7 between 2019 - 2021. Labour availability in Australia is expected to decline over the next three years with skills shortages expected to increase across all markets. Brisbane is currently the only market where skills are in balance.
Globally, demand for steel, reinforcement, timber and copper products have seen prices rise sharply over the year, with increases of up to 40 per cent seen in some international cities. In Sydney, the cost of reinforcement increased by 20 per cent early this year and is expected to double again by mid-2021.
Turner & Townsend ANZ managing director, Anooj Oodit, said all construction markets in Australia expect to increase activity with a notable change for Perth, which went through a slump after the last resources boom and is now showing signs of heating up.
“The rapidly rising cost of building materials is expected to have a significant impact on project costs in Australia over the coming months. Freight costs have tripled which has put huge supply constraints on global ports, largely attributed to accelerating ecommerce demand,” he said.
Federal and state governments continued spend on infrastructure projects will help aid the economic recovery. The region’s prospects look solid, particularly in sectors supported by public sector stimulus such as education and health.”
The International Construction Market Survey 2021 analyses input costs, such as labour and materials, and charts the average construction cost per square metre for residential, commercial, hotels, industrial, and retail (buildings only).