Despite a lull in the retail sector, non-residential property construction is expected to reverse its recent short-term collapse and reach record highs in the coming years, according to the latest BIS Oxford Economics forecast.
Non-residential construction is expected to experience a slight increase of 7% over fiscal years 2020 and 2021. Timothy Hibbert, Senior Economist at BIS Oxford Economics, said that publicly funded projects would likely drive this growth expected.
"We expect the volume of projects to increase dramatically over the next few years and that social and institutional buildings, such as health projects, stadiums and museums, and the like. education are growing particularly strongly, "he told the Australian Financial Review.
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The total construction activity, including residential market activity, decreased by 11% over the 2019 fiscal year, to establish at $ 111 billion, after the record $ 125 billion recorded last year.
The other segments of commercial and industrial construction recorded the highest growth in construction, at 19%. This segment includes buildings related to agriculture and mining. On the other hand, construction in care for the elderly recorded the most significant decline, at 26%. Hibbert said that construction activity of retirement homes would remain weak over the next two years.
"Occupancy rates declined as a result of fairly strong market supply growth, while at the same time the royal commission in the sector released a report later in the year. Uncertainty among the developers, "he said.
In the office sector, the 24% drop recorded during the 2019 financial year is due to the timing of the market rather than its weakness.
"Office construction has increased significantly in fiscal 2017 and 2018 under the leadership of NSW and Victoria, and we expect that offices will remain at a high base in the coming years as exercised in Sydney and Melbourne are sufficient – office markets to support a high number of new projects, "said Hibbert.
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While retail starts have grown 9% over the past fiscal year, the future of the sector is more stagnant and weaker than that of other segments.
"The year was weak for major retail projects, with the largest project being the redevelopment of Perth's Karrinyup shopping center, which was worth about $ 350 million. it has been rather rare, "said Hibbert.
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