Q1 2024 Oceania Market Construction Update [Gold Coast]: The Southeast Queensland market continues to operate at, or near, capacity driven by government activity.
The Southeast Queensland market continues to operate at, or near, capacity. This is being driven by government activity, with major expansion projects in health, education, and corrections. In addition, the Olympics venues and Athlete’s Village are expected to commence soon.
These major government projects are diverting resources from the private sector. As a result, the private sector is facing major project feasibility challenges, particularly in the residential sector. Projects valued at over $80 million in construction value are proving particularly challenging, with a very limited pool of tier one contractors and subcontractors
The signs of a two-speed market are emerging in Southeast Queensland. Lower tier contractors are subcontractors are providing competitive pricing on some projects to shore up workload in the wake of waning new private sector project commencements.
Key factors impacting escalation
- Skilled labour shortages are reducing productivity, leading to project delays and increased wage costs
- Industrial relation activities, including stoppages and interference in subcontractor and supplier selection, is causing disruptions and reduced efficiency and productivity
- A lack of competition in the tier one contractor and subcontractor markets, and their hesitancy to bid on projects (particularly private sector projects), is resulting in higher project costs and limited options for developers and asset owners
- Insolvency risks and associated provisions in construction contracts are increasing project costs and financial uncertainty for the entire construction supply chain
- National Construction Code changes and material bans are influencing material supply and installation methodologies
- Sub-contractor additional risk pricing by larger, higher-tier subcontractors could lead to inflated costs for construction projects
Photo: RLB provided quantity surveying services on Jewel, Gold Coast, a Dalian Wanda, Ridong Developments, Yuhu Group and AW Holding Group residential and mixed-use development
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