Australia Construction Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)
The Australia Construction Market is anticipated to register a CAGR of more than 5% over the forecast period. The huge investment flowing in the industry is driving the market. Furthermore, the industry is being driven by technological innovation and demand for prefabricated buildings.
Key HighlightsCommercial building has been one of the strong contributing factors to the construction sector of Australia over the last couple of years and has recently reached new heights in terms of volume. In contrast to the residential building market, the value of construction in the non-residential segment has continued to grow. The investments in the non-residential sectors were focused on schools, hospitals, offices, warehouses, and hotels. The demand for warehouses is also attributed to an increasing number of data centers and e-commerce growth. Commercial building activity was expected to boom in 2020; however, this was affected by the COVID-19 pandemic.
As of September 2021, the total value of non-residential construction work done across the private and public sectors in Australia accounted for approximately AUD 35.7 billion (USD 24.20 billion). In 2020, the total value of non-residential construction work reached AUD 48.6 billion (USD 32.95 billion). The costs of commercial construction fell in 2021 due to low-interest record rates. And since the Reserve Bank of Australia has promised to keep interest rates low for at least the next three years, it is estimated that construction costs would also remain low in 2023. According to industry experts and studies, the boom in non-residential construction in Australia has come to an end and will exhibit a negative growth rate for at least the next few years.
Australia has many country-owned EPC (engineering, procurement, construction) groups, which are well-established in the mining-related engineering construction sector. Major United Kingdom and US EPC companies that have long had a presence in the market include Bechtel, Fluor, Balfour & Beatty, and Laing O’Rourke. Commercial construction has been a star performer over the last couple of years; however, such above-average growth is expected to fall back to normal levels in the forecast period. Office buildings, education, and accommodation will contract significantly, and transportation, health, and retail will have more favorable projections. With government-led projects in the energy sector and transportation ramping up, the construction industry is optimistic about seeing a growth rate during the forecast period.
Increasing Prefabricated Housing In Australia Driving The Construction SectorPrefabricated housing is mainly driven by the demand for low to mid-rise residential buildings, project homes, and public housing. Increasing awareness about prefabricated building benefits, such as reduced material waste and less disruption to the surrounding environment, is driving market growth. Revenue in the prefabricated building industry is expected to grow as the rising demand from the government and education sectors has supported the industry during the COVID-19 pandemic. Furthermore, the Australian construction industry has faced severe challenges over the past two decades.
High-quality, lightweight, prefabricated modular systems are expected to contribute to housing stock with excellent amenities for occupants at a substantially lower cost when compared with traditional housing. With Australia’s population growth expected to see a 60% increase to 37.6 million people by 2050, the industry needs to look to more cost-effective and well-designed inner-city developments at higher densities. Prefabricated housing is a next-generation housing construction industry, a game-changer in the cost of housing, competitiveness, efficiency, and productivity.
Prefabricated building systems and construction hold a high potential to improve the efficiency and performance of the Australian construction industry in a more sustainable sense. With the market just opening up in the building industry, generating trust and investments in the technology, the market is open to ample opportunities and can witness strong growth in the coming years.
Competitive LandscapeThe Australian construction market is partially consolidated and highly competitive, with a few players occupying the major share. In terms of private companies, the Lendlease Group and CIMIC Group are two of the biggest names in Australia’s construction industry. Major players in the market are moving toward innovation and digitalization. Explore, a new global technology company of the CIMIC Group, is jointly undertaking a series of research projects, partnering with MIT and IBM, contributing to the research and development of artificial and augmented intelligence related to the construction industry. Australia has numerous home-grown EPC (engineering, procurement, creation) groups that are mainly well set up within the mining-associated engineering creation sector. However, a number of them additionally have massive distant places undertaking experience.
Additional Benefits:Learn how to effectively navigate the market research process to help guide your organization on the journey to success.
Download eBook