Global construction growth remains slow

Global construction growth remains slowRider Levett Bucknall’s latest international report predicts continued slow growth for construction this year in advanced economies worldwide, with New York, Honolulu and London the costliest cities in which to build, and Darwin the priciest in Oceania.The global quantity surveyor and advisory group’s first-quarter 2015 ‘International Report’, released on 12 March, forecasts slow growth for local and global construction over the coming year on the back of low and falling inflation in large developed economies. According to RLB’s director of Research & Development, Stephen Ballesty, “Whilst the US economy is growing at an above-trend pace, in part with strong jobs growth, construction growth within China’s real estate sector remains strong and showed on a year-on-year basis for 2014 an increase of 12.4 per cent.”Ballesty says falling oil and commodities prices and volatility in exchange rates over 2014 have impacted construction costs globally. “The slowing manufacturing base in China, coupled with positive sentiment, albeit small, for global construction volumes during 2015, is seeing forecasted increases in RLB’s Tender Price Index similar to those forecasted six months ago,” he said. As at February 2015, RLB’s International Construction Cost Relativities shows New York, Honolulu and London are the three most expensive cities globally in which to build, while the costliest cities regionally are Hong Kong in Asia, Doha in the Middle East, and Darwin in Oceania.”Falling export commodity prices in Australia are having a detrimental effect on revenues but the fall in the Australian dollar and oil pricing is assisting this shortfall,” Ballesty said. “In Australia, construction work yet to be done in the non-residential building sector remains elevated and should support investment in the near term.”In 2014 the Australian economy grew at 2.9 per cent, “a small amount below trend”, he added. Growth in non-mining activity remained below its long-run average but picked up thanks to stronger growth in dwelling investment and public demand and a modest rise in consumption growth. Forward-looking indicators such as non-residential building approvals have weakened over the course of this year, noted Ballesty, “implying that there is less growth in prospect in this sector than previously expected”. However, he added, “Residential construction is still very strong all around the country.”Currently, Darwin is the most expensive city in Australia for building construction, followed by Sydney, Perth, Canberra, Melbourne, Adelaide, Townsville and Brisbane. RLB forecasts that by the end of 2015, building construction costs will rise by 5.1 per cent in Brisbane, 4.5 per cent in Sydney, a further 4.0 per cent in Darwin, 2.5 per cent in Melbourne and Adelaide, 2.1 per cent in Canberra, and 2.0 per cent in Perth and Townsville. To read the report click here