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Tender prices for construction predicted to riseMELBOURNE'S strong construction market, which has bucked the national trend, is set to push up local tender prices in the year ahead, particularly in the industrial sector, research shows.
Property consultant Rider Levett Bucknall (RLB) has forecast that tender prices in Melbourne will rise 3-4 per cent this year due to new projects coming on to the market, particularly in retail.
Adelaide, Canberra and Darwin are also expected to rise by a similar amount. As smaller markets, a couple of big projects have a proportionately bigger impact.
Tender price movements in Brisbane and Perth are tipped to decline by 1 per cent, while in Sydney they will grow by 2 per cent, RLB says.
Fellow property consultant Davis Langdon has tipped that construction costs in Melbourne's industrial sector will rise as Melbourne's strength as a big industrial centre gains momentum.
Davis Langdon's leading indicator index for industrial construction for the second quarter shows that Melbourne's industrial developers are taking advantage of the depressed market to create new infrastructure for an upturn in the market.
Roger Hogg, RLB's head of global research and development, said funding constraints applied equally in Melbourne, but the evidence was clear that an upcoming package of projects will have a big impact on the tendering and construction market in the next six to nine months.
''This additional workload may not necessarily all go ahead, but there are reasonable grounds for supposing that it will, in which case it would rapidly soak up resources, particularly in the structural trades, and downstream in the finishes trades,'' he said.
The Davis Langdon index predicted that after relatively flat pricing over the past year, prices in Melbourne's industrial sector would gradually creep up over the next year by about 2 per cent. Davis Langdon's industrial index measures the movement in industrial construction prices across Australia.
The weighted national average of the Davis Langdon industrial tender level index dropped by 0.3 per cent nationally over the past year, and looking ahead over the coming year, only a very gradual rise in prices is expected in the range of 1-2 per cent.
Davis Langdon managing director Mark Beattie said activity in the Melbourne industrial sector had been low recently.
''However, with rising container activity at the Port of Melbourne, it is unsurprising that Melbourne has seen comparatively more developments in recent times than other regions,'' he said. ''Construction has been for the most part limited to distribution centres built by owner occupiers - mainly big retailers - making the most of the market downturn and developing bigger and better facilities.''
However, speculative investment remained stagnant, as ''feasibilities are constrained by low yields'', he said.
RLB found that the construction market in Melbourne, and Victoria as a whole, had retained reasonably high levels of activity since the advent of the downturn in the third quarter 2008.
Source: The Age