Subdued business and consumer confidence in Australia and New Zealand
The most significant risk to the construction market outlook for Australia and New Zealand remains to be an increase in COVID-19 cases and the uncertainty this generates.
While scepticism remains, business and consumer confidence levels will remain subdued and will weigh in on future investment into new projects.
Our Q3 2020 report finds that 2021 construction cost escalation forecasts for non-residential construction are reported at 1 percent in Auckland, Brisbane, Melbourne and Sydney and 0.50 percent Adelaide and Perth.
This quarter we introduce two new markets, South Australia and Auckland, alongside New South Wales, Queensland, Victoria and Western Australia.
Public versus private
With both the Australian and New Zealand economies now in recession, private sector investment has contracted sharply, leaving many contractors concerned about their future pipeline of work.
While all aspects of private sector investment are to be negatively impacted from the pandemic, public sector construction is forecast to increase, driven by a sizeable pre-existing pipeline of major public projects and a boost to stimulus spending on shovel-ready infrastructure projects.
Re-affirming the importance of life sciences in Australia
There has been a significant reduction in investment in pharmaceuticals and manufacturing in Australia over the past ten years and the volume of medicines imported into the country has seen a sharp year-on-year increase of 500 percent over the last ten years. The 2020/21 Federal Budget included $1.3bn for advanced manufacturing.
The pandemic has emphasised the need for our country to become more self-sufficient by increasing our importance in the global value chain, improving the resilience of our local supply chain and providing health, economic and security benefits for Australia’s future population which is projected to reach 35.9 million by 2050.
To achieve this, there are five key enablers which can strengthen and re-affirm Australia as a valuable life sciences market. Manufacturing medicines locally will ensure that Australia is less reliant on the importation of medicines from overseas and can effectively support global industry and drive continuous improvement.
Download the report to read more about the challenges and opportunities affecting the construction industry in New South Wales, Queensland, South Australia, Victoria, Western Australia and New Zealand.
Please visit our COVID-19 response page for all of our resources relating to the impact of COVID-19 on the construction sector.