Construction tender prices funding Sydney and Melbourne building design projects are poised to rise for several years in the future, as a major incoming pipeline of infrastructure work creates significant shortages of resources and skills needed to complete the work, a recent report indicates.
The built environment consultancy Arcadis predicts that tender prices in Sydney (found to be the most expensive Australian city in which to build) will rise by 4.5 percent per year for each of the three calendar years, from 2019 until 2021, and by an additional 4.0 percent in 2022.
This ensues in the wake of a 4.0 percent increase last year.
Prices are also set to rise in Melbourne, where Arcadis anticipates yearly increases of 4.0 percent in 2019 and 2020, to be followed by a 4.5 percent raise in 2021.
Lower increases are being expected in Brisbane and Perth, areas that tend to boast more working contractors.
The report references the extreme strength of Sydney’s current construction market; this thanks to mass government investment in the areas of transport and social infrastructure, and in the commercial building categories that include hotels and offices.
Current commercial vacancies loom less than four percent, with corporate giants like Amazon and Google take up the majority of space in the Central Business District.
In addition, the evolution of the Badgerys Creek ‘airport city’ has been linked to an announced investment of more than $20 billion in the areas of transport, health and education—thus also inspiring massive private investments in commercial, residential and retail building design projects.
These trends, says Arcadis National Director – Cost & Commercial Management Matthew Mackey, has led to a renewed strain on talent and resources to meet these demands.
Resources and talent are even being imported from neighboring states, but even this influx is not meeting the demand. Managers and trade contractors are setting their own prices and being very choosy about projects they undertake. And in regards to both materials and services, prices are increasing; especially when it comes to basics such as plasterboard, joinery, concrete, formwork, structural steel and engineering services.
In addition, Melbourne pricing pressures elevate as the volume of construction work increases across residential, infrastructure and commercial sectors. Major projects in this vicinity include Melbourne Metro, the West Gate Tunnel and upgrades to the Western Ring Road. And in general, additional office space is needed throughout the area.
In general, the report indicates, more is needed. More time, talent and top-notch materials to build a better Australia.