Australia and New Zealand market intelligence: Investment slows as construction costs soar

Construction activity remained active in Q4 2022, however, clients are cautious about investment as costs remain high due to inflation, skills shortages and rising material costs.

A significant backlog of work remains in play across Australian construction markets keeping the market buoyant. New investment has started to slow amid higher borrowing costs and the surge in construction costs. Supply issues continued to resolve over Q4 2022, however, challenges persist around skills shortages and market capacity.  

Similarly, in New Zealand, strong construction activity continued in Q4 2022, driven by public sector projects in infrastructure and housing. Skills shortages and market capacity constraints continue to keep construction costs elevated, despite some stabilisation of building material costs.  

Inflation pressures persist  

Australia’s economy has started slowing amidst high pressures from inflation and rising interest rates. GDP growth dropped to 0.6 percent over the September quarter, down from 0.9 percent in the June quarter. In New Zealand, the economy grew by 2 percent in Q3 2022, and by 6.4 percent through the year to September, supported by the return of domestic and international tourism. Both economies are likely to experience considerable softening over 2023 because of high inflation, rising interest rates and growing uncertainty on the outlook.  

Client teams become more hands-on to hit delivery targets 

The global pandemic was the greatest test the modern world economy has ever faced. When it comes to the data centre market, the sector continued to boom through COVID-19, while few other industries could say the same. This quarter, we look at how data centre investors and clients are taking a proactive approach, adopting greater creativity and sophistication in development programmes to keep both financial and carbon costs under control. 

Download the report to read more about the challenges and opportunities affecting Australian and New Zealand construction industries. 


For further information contact:


Simon Kearney
Director - Real estate

t: +61 282 450 000