In a previous post, we discussed some of the emerging trends in the Australian construction industry for 2014. In summary, experts predict that house building and residential construction will significantly increase in 2014, thanks in part to low mortgage interest rates and an increase in improved affordable housing. Mining exports and commercial spending are also expected to see some growth.
Though mining construction is going to continue to fade in 2014, it should be offset by growth in other sectors. Interestingly, in addition to house building, another sector that is expected to see significant growth is the transport sector. It may not pick up the slack from resource investment, but it is definitely looking like a promising growth area in the coming years.
Growth In Transport Construction
As we already established, though some sectors in the Australian construction industry are experiencing some slowdown - particularly mining construction projects - the good news is that billions of dollars will be going into new transit expansions for the foreseeable future. These expansions will include both roads and non-road transport developments. Experts are optimistic that this will continue to be a growth area for several years to come.
In terms of numbers, transit construction work is projected to increase by roughly 5 percent by the end of 2014, and 12.5 percent by 2015. Spending between 2013 and 2014 is expected to be close to $36 billion.
There are some fiscal constrains that could potentially affect the growth of this sector. The previously mentioned tapering off of mining construction projects certainly plays a part, because it impacts the volume of rail and port capacity to support resource infrastructure. There is also only so much public money available for investment.
However, most federal and state budgets are showing a gradual increase in infrastructure investment. This should continue, at least in the short term.
Notwithstanding, all in all, there are high expectations for transport construction in Australia for 2014.
In the major states of Australia, there is expected to be significant growth in infrastructure investment, particularly in Queensland, Victoria and New South Wales. Western Australia and South Australia may not rival the other states in growth, but they should still be considered growth areas. Following is a brief summary of what is projected in different regions.
In Victoria, it is anticipated that between 2013 and 2014, roughly $3 billion dollars will go into roads and non-road transport. In 2017 or 2018, it is projected to jump to $4 billion when East West Link developments begin.
Much like Victoria, in Queensland, there should be strong growth in road development as well as non-road transport. Nearly $6 billion dollars will be spent on these projects in 2014. This could grow to over $8 billion by 2019.
Road construction is expected to stay about the same in New South Wales, though non-road transport construction will likely reach unprecedentedly high levels.
Similarly, road construction will likely drop in Western Australia. However, non-road developments will reach nearly $4 billion in 2015 or 2016.
Road construction and non-road infrastructure development should also see an increase in South Australia, though growth will likely be modest.