Q1 2024 Oceania Market Construction Update [Brisbane]: The Brisbane market remains generally buoyant. However, the private sector faces significant challenges due to elevated construction costs.
The Brisbane market remains generally buoyant. However, the private sector faces significant challenges in rendering projects viable due to elevated construction costs. There is no apparent catalyst in sight to curtail these rising costs.
Despite robust demand for housing and apartments, developers are finding it challenging to deliver, as sales price escalations have not kept pace with the rising costs of construction.
The Queensland Government remains active, proactively pursuing major expansion projects in health, education and corrections. In addition, the Olympics venues and Athlete’s Village are slated to commence soon.
The Queensland Government has also committed to providing additional social housing. However, the delivery of these types of projects is being hampered by prevailing market conditions.
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, 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
Photo: RLB provided quantity surveying and programming services on the Surgical, Treatment and Rehabilitation Service (STARS), Brisbane, an Australian Unity, Metro North Hospital & Health Service public healthcare facility.
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