Australia market insight report Q1 2020

Despite positivity there are warning signs the construction industry will not navigate through COVID-19 unscathed.

The COVID-19 pandemic has struck hard and fast around the world and the impact on Australia’s economy is likely to be significant.

Despite many industries temporarily shutting down, construction activity appears to be holding up at the present. With construction classified as an ‘essential service’ in Australia, construction sites are able to continue to remain open, all while managing social distancing requirements and supply chain constraints. However, the industry is unlikely to come away unscathed from the COVID-19 crisis, with a likely downturn ahead.

Cost implications

Construction costs are expected to remain neutral with any additional costs incurred due to social distancing requirements, programme and procurement to be offset by the reduced workload in the pipeline and additional competition for the reduced number of projects. Cost escalation in construction is reported as 0 percent in Sydney, Melbourne, Brisbane and Perth showing already the impact of COVID-19.

Public sector keeping the industry moving

The focus of the industry has shifted to public sector projects. Approvals for projects are being fast-tracked and construction schedules are being brought forward in the aim to reduce the downtime that lies ahead. It is also looking increasingly likely that there could be a boost in public infrastructure in the form of fiscal stimulus, to make up for the lag in the private sector and to keep the industry moving.

 

For further information contact:

Simon Kearney
Director - Real estate

t: +61 282 450 000
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