Australia Construction Industry Outlook - ConsTrack360

Construction activities in Victoria lead the industry through lockdowns in Australia

In Victoria, more than AUD15 billion worth of construction has been completed from July to September 2021. The growing construction activities in Victoria have supported the industry in Australia while shrugging off the Melbourne lockdown impact.

During Q3 2021, Victoria recorded a growth of 5.8% in the construction sector as opposed to a sharp fall recorded in NSW and ACT. According to the Australian Bureau of Statistics, NSW recorded an 8% decline to AUD14.9 billion, whereas the output in ACT declined 15.5% to AUD778 million because of the global pandemic-induced lockdown restrictions.

Construction activities growth in Victoria were largely driven by the infrastructure sector, which recorded a growth of 12% to over AUD5 billion during the September quarter. With lockdown restrictions easing in Melbourne and infrastructure construction activities gaining further momentum, ConsTrack360 expects the state to record further growth in the construction sector over the next four to eight quarters.

Notably, Victoria, along with NSW, has a very strong pipeline of infrastructure projects. In October 2021, the Victorian Government awarded an AUD11.1 billion contract for the North East Link Project, which will connect the M80 Ring Road to an upgraded Eastern Freeway. This infrastructure construction project will subsequently keep assisting the growth of the overall industry over the next four to eight quarters.

Apart from the infrastructure sector, construction activities in the residential sector, including renovations and conversions, are also expected to offer support for the growth of the industry over the short to medium-term perspective in Australia.



Global construction firms are bringing innovation to the Australian construction market

With more than AUD200 billion worth of transport projects in the pipeline, global construction companies are bringing innovation to the Australian market to support the growing infrastructure need of the country. For instance,

In October 2021, South Korean construction firm, GS Engineering and Construction (GS E&C), announced that the firm had strategically decided to enter the construction market in Australia. The firm entered the market on the back of the huge pipeline of mega-infrastructure projects coming online.
In February 2021, Infrastructure Australia (IA) added 44 new infrastructure projects to its infrastructure priority list. With several projects in the pipeline, ConsTrack360 expects more global firms to operate in Australia, either through a strategic partnership with local construction companies or independently, over the next four to eight quarters. This will subsequently drive the growth of the overall construction industry in Australia.



Growing investment in South Australia is expected to further push the growth of the construction industry in Australia

A number of infrastructure projects have been planned and are in the pipeline for South Australia. The Department of Infrastructure and Transport (DIT) is focusing on bringing these projects to shovel-ready status as soon as possible. Consequently, investment in the construction sector is expected to grow over the next four to eight quarters.

For instance, over the next four years, investment is expected to reach close to AUD18 billion, with approximately AUD9 billion projected to be spent on road and transportation infrastructure.
The North-South Corridor upgrade is one of the major infrastructure projects expected to start in early 2022. This will keep supporting the growth of the construction industry in Australia over the next few quarters. Some of the other notable projects include New Women's and Children's Hospital (AUD1.95 billion), Riverbank Arena (AUD662 million), and Hahndorf Township Improvements Access Upgrade (AUD250 million). Consequently, ConsTrack360 expects the construction industry to record robust growth from the short to medium-term perspective in Australia.

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