Infrastructure and other civil projects will lead recovery in the construction sector over the next 12 months.
Key findings in the Ai Group’s Construction Outlook report also show the worst is over for mining-related construction.
While the report says resources-related engineering construction is expected to continue to decline in 2017/18, the weakness will be concentrated in the oil and gas processing (primarily LNG) sector (-40 per cent) as major LNG projects, (mostly in Western Australia), are completed.
However, the drag from reduced mining investment (other than oil and gas) is moderating with a slower fall predicted in turnover-derived mining projects (-6.3 per cent) in 2017/18 after a 20.7 per cent fall in 2016/17.
On a more positive note, engineering construction is expected to rise by 8 per cent in 2017/18.
This follows three years of declining construction activity.
This reflects a strong lift in the value of infrastructure construction work (18.2 per cent), led by growth in road (+21.1 per cent) and rail (+19.7 per cent) projects.
Also dominating the positive outlook is solid growth in revenue from telecommunications infrastructure (+18.9 per cent); pipelines construction (+18.1 per cent) driven by investment in new pipeline infrastructure for gas supply and; “other” civil projects (+16.3 per cent).
For the 2017/18 financial year, the value of turnover from all major construction work is expected to recover by 7.1 per cent, following a 2.1 per cent reduction in 2016/17.
Despite a further fall in mining-related engineering construction, an expanding pipeline of publicly funded infrastructure investment is expected to drive stronger activity over the year.
It is not a good time to building apartments according to the Ai Group.
The report suggests for multi-level apartments activity is expected to drop by 15.4 per cent in 2018/19 due to excess supply and major project completions.
Ai Group’s Construction Outlook report, which is conducted in association with the Australian Constructors Association, the peak industry body representing the nation’s major construction contractors, is one of the most highly regarded reports on conditions in the nation’s construction sector. The survey is conducted on a bi-annual basis and provides an excellent barometer on the state of the engineering and non-residential building sectors – on a national and key market basis.
The Construction Outlook report is based on the responses of 100 companies employing almost 60,000 persons with combined turnover of almost $30 billion or approximately 30 per cent of total industry activity.