BMI View: Australia's residential building sector will continue to prop up wider construction activity over 2015, but growth will not be sustainable at current levels as we expect a slowdown in the housing market beyond 2016. Growth will also be weighed by political risks, a slowdown in the mining sector and a decline in competitiveness.
Key Trends And Developments
We remain positive over growth for the sector in 2015, although our 2.9% growth forecast for the construction sector is still lower than the 10-year historical average of 4.4% (between 2004 and 2013).
We believe growth will be supported by the residential building segment. This is due to favourable monetary conditions and also the delayed impact of dwelling units being approved, but has yet to start construction. We highlight the sector's growth will not be sustainable.
Meanwhile, we believe various headwinds which we have highlighted previously will continue to persist. Heightened political risks have resulted in significant uncertainty regarding policy continuity, particularly with the Liberal-National Party losing popularity.
A slowdown in Australia's mining sector, which has a negative impact from a slowdown in China, has resulted in capital expenditure cuts by major Australian miners. A lack of competitiveness in Australia's engineering construction projects due to costs will also deter foreign investment.
Beyond 2015, we expect a key growth area to be road construction, as supported by the government's push for roadworks through the AUD40bn (USD31.1bn) road infrastructure package. This is reflected in our forecasts, with the segment accounting for more than 56.9% of the transport industry value. Airports and gas pipelines will also provide significant growth opportunities.
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.