Global construction volume on the up

The future looks bright for global construction markets, including Australia’s, but the industry faces more work with fewer workers, reveals Turner & Townsend’s International Construction Market Survey 2018.

The survey, which analyses the average construction cost per square metre for a host of building types, finds “synchronised global growth” – driven by Australia, the USA, Europe, Japan and China – will increase construction industry activity.

According to Turner & Townsend economist Gary Emmett, 2018 is the “strongest construction year” since the global financial crisis.

“This year looks positive for employment, business profits, investment and construction,” Emmett says.

Of the 46 global markets surveyed, 21 expect to warm up, 23 are set for stability, and only two are likely to cool. Sydney and Melbourne are considered hot, Brisbane is lukewarm, and Perth is cold.

“Construction in Australia is entering another growth phase, which is set to continue until the end of this decade led by road and rail projects, commercial, health, retail, defence and hotel sectors. Costs are likely to increase as competition for construction labour heats up,” Emmett adds.

Global construction costs are expected to rise 4.3 per cent in 2018, following a 4.1 per cent increase in 2017.

Steve McGuckin, Turner & Townsend’s global head of client programs, says this may not seem an “excessive increase”, but it is “an average and at the beginning of increasing global demand”.

“There will be price spikes in some markets, but not only in those ahead of the curve.”

New York takes the top spot for the most expensive place to undertake construction activities, followed by San Francisco, Hong Kong, Zurich and London. Sydney is again positioned at number nine, with Melbourne ranked at 19, Brisbane placed at 21 and Perth at 23.

Sydney construction costs are expected to increase by four per cent in 2018 – the same as 2017.  Melbourne’s costs will rise by two per cent to four per cent, Perth is expected to increase by 1.5 per cent, and Brisbane to ease by one per cent to three per cent overall for 2018.

McGuckin says the industry “faces more work with fewer workers”, and the “challenge for the supply chain is how to convert this increased output into profit”.

“The less obvious but more profound conclusion from this year’s survey is that, regardless of the cyclical ups and downs, productivity will become an even bigger global issue for the construction industry,” McGuckin concludes.

Download Turner & Townsend’s International Construction Market Survey 2018.