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Australian construction to help cushion against slowdown

The Victorian Government has credited its Big Build as one of the drivers of its job creation boom.

Australia’s backlog of infrastructure and non-residential construction projects is set to protect it from a global slowdown, according to new market survey.

Turner & Townsend’s International Construction Market Survey 2019 found out of the 64 global markets examines, 35 were warm, hot or overheating. It also found 21 were lukewarm and eight were cool.

Sydney and Melbourne were considered hot, with Brisbane ranked as lukewarm. Perth was found to be cold, although there are signs of it warming up.

The survey included 18 new markets in 2019, and ranked San Francisco as the number one most expensive place to undertake construction activities. New York, London, Zurich and Hong Kong followed. Bangalore was the least expensive, followed by Istanbul, Guangzhou, Nairobi and Beijing.

Sydney fell four places and is now positioned at 13, followed by Melbourne which fell from 19 to 31. Brisbane was placed 34, falling from 21 and Perth dropped from 23 to 38 since last year’s survey.

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Sydney construction costs also grew 3.5 per cent in 2018, according to the survey which expects this to be repeated in 2019. Melbourne Construction costs grew by four per cent, and Turner & Townsend expects this to increase by five per cent in 2019.

Perth rose by one per cent and is expected to rise by 1.5 per cent in 2019, while Brisbane construction costs increased by two per cent, with expectations it will rise by 2.5 per cent in 2019.

Global construction costs are set to rise by 4.1 per cent in 2019, following a 4.2 per cent increase in 2018, according to the survey.

Turner & Townsend Economist Gary Emmett said despite global trade barriers and tightening financial conditions, the local construction sector remained strong.

“Sydney Metro, Melbourne Metro, Cross River Rail in Brisbane and Perth’s METRONET will help counterbalance downturns elsewhere. The announcement of the Inland Rail project for freight adds to the high levels of infrastructure investment,” he said.

“An already busy construction sector in Sydney and Melbourne in 2018 was boosted by a pledge of around $50.4 billion of public funding for road and rail projects in these states alone. Work on Western Sydney Airport has already started with $5.4 billion given by the government-owned Western Sydney Airport Corporation to deliver the project through to completion.

“Activity in Sydney and Melbourne has increased costs and led to skills shortages and supply-chain bottlenecks, putting stress on schedules,” Emmett said.

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