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Australia sees continued strength in construction applications

Property Markets / Outlook

Australia

Dec 19 2018

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2,210 new projects entered Australia’s construction work pipeline in November 2018, with their combined worth of $25bn being nearly double the 3 year median value.

James Shang, CoreLogic commercial research analyst comments: “The number of new construction projects entering Australia’s pipeline was just below the yearly high of 2,292 which was recorded in October 2018. Although the total estimated value of new projects is approximately 16% lower than the yearly high, it’s a strong indicator of continued strength in construction applications.”

Infrastructure projects continue to dominate new project work in both quantity and value, although apartments and units are a close second for quantities of projects.

A stand-out infrastructure project is the Aerotropolis project in Western Sydney. Described as a ‘game-changer’, the project has an estimated cost of $8bn, accounts for 50% of the total new project applications in NSW for November and is expected to create 200,000 new jobs.

Whilst the number of new project applications is strong, the picture for projects further down the pipeline and actually moving into construction is less positive. These projects have fallen for a third consecutive month: the impact from a tightening credit environment clearly extending beyond the residential market.

Mr Shang comments: “The estimated value of projects shifting into the construction stage during November was just over $2bn. Whilst this figure is 53% higher than the recent low (in October), it’s actually low when you factor in the strong level of activity in new development applications and when compared to historic levels too.”

Civil engineering projects accounted for 52% of those projects moving into construction phase, whilst 54% of value for projects moving into construction was thanks to the commercial sector. Mining held the highest median project value at $4.15m.

For detailed industry and state-wide analysis including project specifics, the full report is available at www.corelogic.com.au/reports

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