Construction Activity Inflated by Engineering Projects in Queensland

Large scale infrastructure is inflating activity taking place across the construction industry, offsetting a significant decline in apartment building.

In their Construction Monthly report for October, CoreLogic captured 2,018 development applications and proposals flowing into the construction pipeline across Australia in the month of September. While 15.4 per cent lower than the number of development applications captured in the previous month, it is above the five year average of 1,775.

CoreLogic commercial research analyst Eliza Owen said this was the third consecutive month where the value of construction work entering the pipeline has been inflated by a large civil engineering project.

[Related reading: Engineering Projects Bolster Australia’s Construction Sector]“While development applications remain buoyant, CoreLogic captured just 658 projects moving into the construction stages in September. This is far lower than the 5 year average of 1,041 projects per month, and is 27.9 per cent less than moved into construction in the previous month,” she said.

The combined value of projects that moved into construction over September fell by 36.8 per cent on the previous month, to $3.5 billion. While all segments outside of commercial building saw a decline, the largest by far was in civil engineering. The value of civil engineering projects commencing was $722 million, down from $1 billion in the previous month.

The total value of development applications was $11.2 billion over the month. Construction value was above the five year average of $9.3 billion, and was partially driven by the development proposal for a component of the $5.4 billion Cross River Rail in Brisbane, a project which was first reported by CoreLogic in 2002.

“The Cross River Rail project reached a milestone, following Deputy Premier Jackie Trad's announcement that 5.9 km of tunnelling, four new underground stations and associated work, will be carried out under a pubic private partnership," Owen said.

Tenders were called for a tunnel, stations and development package as of 22 September.

“While far fewer projects are currently moving into construction, the resilience of the pipeline may see higher levels of construction commencing over the next 6-12 months,” Owen said.