Sydney is Australia's most expensive city for construction
27 May 2019
Sydney topped the rankings for
Australia, with
Brisbane,
Melbourne and
Perth all falling middle of the
road for the
cost of construction according to the International
Construction Costs Report 2019 from
Arcadis, the leading global Design &
Consultancy for natural and built assets.
New York was the world’s most expensive city, followed by San Francisco
and Hong Kong.
Sydney was the most expensive Australian city at 34, followed by:
Brisbane (56),
Melbourne (61) and
Perth (62). The report details the relative cost of construction in
100 of the world’s leading cities. Fifty cities were added to this
year’s report, including Perth, making it the largest comparison of its
kind.
According to the report, the cost of construction in Australian cities
was heavily impacted by the economy, which continues to lose momentum
since the latter half of last year, with GDP growth expected to be
around 2.6% per year for the next two years.
Matthew Mackey, National Director, Cost and Commercial
Management Australia Pacific, Arcadis: ‘‘In November 2018
Construction activity levels fell at their fastest rate in nearly four
years. This was largely driven by an even steeper decline in the
residential sector – although this was largely concentrated in Sydney
and Melbourne. However, the total value of
non-residential construction
is expected to increase in 2019.
“Despite the slowdown in residential construction, the industry is
particularly buoyant across the Eastern Seaboard – although this is
again confined predominantly to Sydney and Melbourne.
“Cost pressures remain high industry-wide across Australia. This is due
to several factors including a robust demand for construction materials,
a lack of market competition, skills shortages, increasing energy and
labour costs and elevated supplier prices due to strengthening commodity
prices. The gap between value and cost continues to reduce and this
demonstrates that profit margins will remain tight for both contractors
and developers across the construction industry.
‘‘The limited availability of resources, at all levels of the supply
chain, has become a major issue – particularly in Sydney and Melbourne
where construction markets are quite heated.
‘‘Whilst construction activity in apartments and housing has stalled
recently, activity in other sectors such as commercial, transportation
and social infrastructure means that this decline is unlikely to be a
precursor to an economic downturn.
‘‘The cycle of infrastructure construction is continuing to fuel price
increases whilst also creating a significant demand for tradesmen to
meet the current and upcoming workload. This demand will continue to put
further pressure on both trade pricing and margins. Tender pricing will
therefore continue to increase over the short term,” said Mackey.
International Construction Costs 2019, full report: https://www.arcadis.com/media/Australia_ICC_2019.pdf
--ENDS--
Source: Arcadis - www.arcadis.com
Contact: Alex Charlwood - Senior Communications Advisor | +61 413 693 679
External Links: https://www.arcadis.com/media/Australia_ICC_2019.pdf
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