Q1 2024 Oceania Market Construction Update [Melbourne]: Construction activity in Melbourne remains robust, primarily driven by government-funded projects.
Construction activity in Melbourne remains robust, primarily driven by government-funded projects in public sectors such as health, education, rail, roads and infrastructure.
In the private sector, industrial and Build-to-Rent (BTR) projects show strong activity levels, whereas commercial office spaces and large-scale residential projects are more subdued.
Building contractors are facing challenges in securing both skilled and unskilled labour, as they compete with large-scale infrastructure projects and other activities across regional borders.
Trade pricing has stabilised following the volatility of 2023, with material prices either holding steady or experiencing modest increases in the first quarter of 2024. This stability is expected to continue throughout the year.
Key factors impacting escalation
- Skilled and non-skilled labour shortages are reducing productivity, leading to project delays and increased wage costs
- While material prices have stabilised, they are still rising at modest levels
- The current volume of construction activity remains close to the decade high
- High levels of risk and contingency built into trade pricing could lead to increased overall project costs
- Conservative project timelines factored into pricing may lead to higher bids and extended project schedules
- Preliminaries costs are rising due to OH&S, fees, compliance and increased supervision
Photo: RLB provided quantity surveying services on 435 Bourke Street, Melbourne, a Cbus Property commercial office development. Artist Impression.
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