- Detailed profile of Australia’s Construction Industry
- Analysis of key Construction Industry issues
- Historic and forecast valuations of the Construction Industry inAustralia
- Competitive landscape of the Australia’s Construction Industry
- Data highlights of the largest construction projects in Australia
- Growth prospects of the Australian Construction Industry
Ken Research announced its latest publication on, “Construction in Australia-Key Trends and Opportunities by State and Territory to 2020”, offering insights on the changing trends and key issues within the Australian Construction industry. The publication includes a detailed analysis of the Australian Construction industry’s growth prospects, analysis of equipment, material and service costs for each project type in Australia.The reports also provides critical insights into the impact of industry trends and issues, and the risks and opportunities they present to participants in the Australian construction industry and the profiles of the leading operators in the Australian Construction Industry.
Economic Environment of Australia
Australian economy is one of the largest economies in the world. It has registered impressive economic performance and has not undergone any recession for over a period of 25years. The robustness of the Australian economy can be ascribed to various factors, apart from abundant natural resources, such as its location in the fastest growing part of the world i.e. Asia Pacific, providing for advantageous growth opportunities in the region; economic resilience on account of strong political and economic connection with the emerging Asian markets as well as with the developed regions of the world like Europe, North & South America along with Middle East and Africa; competitive and diverse market structure with skilled workforce encouraging investments from abroad and external trade.
Despite being negatively affected by global recession, the Australian economy has a promising outlook on account of the economy being boosted by depreciation of the exchange rate and energy prices; FTA signed with Korea, Japan and China; productive infrastructural investments and improved govt. regulations and policies for business and organisations.
Looking at key economic snapshot of Australia, in 2016, Australia with 23.6 million people is a home to only 0.3% of world’s population. With GDP (PPP) 1.62 trillion USD, captures about 2% of world GDP. In 2014, Australia was rankedas 12th largest economy as per nominal GDP and 15th largest as per GDP per capita (PPP). Service sector contributing 68% to the GDP, dominates the Australian economy with economic growth basically driven by the mining sector and agricultural sector contributing 7% and 12% to the GDP. Economy is experiencing consumption expanding, although at a declining rate while investment has shown negative growth rates with more or less constant inflation rates. In 2013, with FDI amounting to 115 billion USD, Australia ranked 14th largest destination country and 18thlargest source country for FDI with US, UK and Singapore being the leading investor countries. With a major share of mining and agricultural sector products, among others, being exported to mainly Asian countries, Australia is 19th largest global exporter and importer.
Brief Overview of the Construction Industry in Australia
The construction sector is a major driver of economic activity in Australia. The construction industry is the fourth largest contributor to Gross Domestic Product in the Australian economy and plays a major role in determining economic growth.
The Australian construction industry operates in both the private and public sectors, engaging in three broad areas of activity; residential building, non-residential building and engineering construction. A large number of economic factors contribute to the demand for, and supply of, these services including population growth and consumer confidence, changes in interest rates and inflation. Most recently, government policies affecting housing and infrastructure projects have been an influence. The availability of resources, such as labour and building materials, and changes within closely linked sectors (e.g. agriculture, mining and manufacturing), also drive change in the industry.
The economy’s GDP grew by 2.3 percent in the year 2014-2015. All sectors in the Australian economy saw an increase in output except for the manufacturing and construction sector. Construction activity in Australia was weak in 2015, mainly reflecting the downturn in the mining sector. The country’s construction industry contracted by 4.0% in real terms that year and output value measured at constant 2010 US dollar exchange rates fell from USD 190.6 billion in 2014 to USD 182.9 billion in 2015.
Major Players in Australian Construction Industry
There are 73,223 building and construction companies in Australia. In all, 590 companies operate in the construction and mining sector, 947 in brick, stone and other related building materials, 218 in bridge, tunnel and elevated highway construction and there are approximately another 55 sub-categories of building and construction initiatives.
The major players in the Australian Construction Industry are AV Jennings, residential property developer, BCI Australia which operates in all industrial, residential, commercial, public and mining sectors, Prime Constructions designing and constructing commercial, industrial and retail projects, Thiess Australia delivering a broad range of civil projects and many others.
Australia’s Construction Industry Prospects
Over the forecast period (2016-2020), the industry is expected to remain sluggish, owing to weakness in the industrial sector (which includes mining-related construction works). However, there will be a pickup in infrastructure investment, which will contribute to positive annual growth towards the end of the forecast period.
In real terms, the industry is expected to register a compound annual growth rate (CAGR) of-1.55% over the forecast period, down from 2.65% during the review period (2011-2015). The industry’s output value in real terms is expected to decline from USD 182.9 billion in 2015 to USD 169.2 billion in 2020, measured at constant 2010 US dollar exchange rates.
Despite a slowdown in the mining sector and the cancellation of various oil and gas projects, the infrastructure, commercial and institutional construction markets are expected to support the industry’s output over the forecast period. This is a result of a rise in government spending on the education and healthcare sectors, and retail sales growth. In addition, various infrastructure development programs such as the Investment Road and Rail Program, the Black Spot Program, the Roads to Recovery Program and the National Highway Upgrade Program will support the Australian construction industry.
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Ankur Gupta, Head Marketing & Communications