Login
iscover
The Australian Construction Industry Forum (ACIF) has forecast demand for commercial building assets to rise over the next year, buoyed by increased social and economic infrastructure projects.
Characterised by a 3.8 per cent forecast growth in 2022 to 2023, infrastructure construction is expected to be resilient against an economic backdrop of continually rising interest rates and construction prices.
Primarily driving the sturdiness of the sector are increases in offices and other commercial and industrial projects, as well as minor increases in retail and wholesale trade.
Additionally, governments have alluded to significant spending increases across social infrastructure — set to spur building work within health, aged care, and education projects.
This ramping up of work is expected to remain until at least from 2024 to 2025 due to expanded state and commonwealth government infrastructure projects flowing into construction.
Moreover, the heavy industry — which includes sectors like mining — is expected to increase healthily across the next three years at a rate of approximately 13 per cent per year. This is set to be driven by projects in traditional areas like iron ore and coal as well as by the diversification of works into areas like hydrogen development.
Kerry Barwise, ACIF chief forecaster and managing director for FTI Consulting, explained that “engineering construction work is expected to pick up and carry total building and construction activity over the next four years [as] residential building is expected to fall over the next three years”.
The report explained that “demand for commercial buildings is proving to be resilient, and social and economic infrastructure spending is ramping up. Growth in these areas will offset the drop off in residential building and produce an increment in growth in the value of work done of less than one per cent to $251 billion.”
Nerida Conisbee, deputy chair of ACIF’s construction forecasting council, explained that “residential building approvals fell by 9 per cent over the 2022 financial year, while commencements followed the same tune, dropping by 3 per cent”.
“Both indicators are forewarnings of more contractions to come,” she added.
As for what is underpinning the stalling residential sector, the report explained that “risks, like the bills, are mounting up. The cost of key building materials has spiked. Labour costs are rising. It is proving hard work to get customers to pay more for the large volume of work in hand that has been delayed.”
“Interest rate increases threaten demand for new projects, and banks are less willing to lend to tide things over,” it said.
ACIF concluded, “the outlook for the industry is precarious.”
Never miss a beat with 
Stay across what’s happening in the Australian commercial property market by signing up to receive industry-specific news and policy alerts, agency updates, and insights from reb.
Subscribe to reb Commercial:
Newsletter
