BMI View: Slowing GDP growth and political tensions in the run up to federal elections are dampening investor sentiment in Australia, particularly as the key mining sector continues to post weak results and concerns are rising about the overvalued housing market. The outlook for Australia's construction sector therefore remains subdued , with low single digit growth expected for much of the forecast period through to 2025 . While limited activity in the residential sector and in transport infrastructure will stimulate some increase in construction sector value , overall growth prospects are muted.
We currently maintain our estimate for growth of 0.4% in the construction sector for 2015, although we note our forecasts may be subject to downward revision, following the release of full-year figures, with several regions reporting a fall in construction activity over the last quarter. The outlook for 2016 is marginally more positive, with growth forecast at 1.6% based primarily on a number of projects in the pipeline in the residential and transport infrastructure sectors.
Several transport projects are progressing, underpinning our forecasts for a return to growth in the transport infrastructure sector in 2016. These include the Melbourne Metro Rail public/private partnership project where the first package of works will reportedly start in 2017, delivering critical works worth hundreds of millions of dollars to prepare main sites for the start of major construction in 2018.
|f = BMI forecast. Source: National sources, BMI|
|Construction Industry Value, Real Growth, % y-o-y||1.53||2.59||2.93||2.85||2.83||2.90||3.70|
|Construction Industry Value, % of GDP||7.8||7.8||7.8||7.9||7.9||7.9||8.0|
|Construction industry value, AUDbn||135.42||142.38||150.40||158.74||167.52||176.90||188.22|
Australia has fallen to third position in the Asia Pacific region on our Infrastructure Risk/Reward Index in Q216 with an overall score of 64.7 out of 100.
Flat growth in the construction sector and limited public spending have dampened Australia's performance in the Rewards sector, with a score of 57.8 this quarter.
Australia's performance remains strong in terms of Risks, supported by a transparent operating environment and solid access to financing.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Australia Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Australia Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Australian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Australia to test other views - a key input for successful budgetary and planning in the Australian infrastructure market.
- Target business opportunities and risks in the Australian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Australia.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.