The worry over an apartment oversupply has prompted developers to redirect their focus on commercial buildings. Commercial construction covers non-residential and industrial buildings.
In many Australian cities, the slowdown in demand for apartments is actually benefiting business establishments as they get more options as they relocate or expand operations. Even industry leader A-Line Construction would agree.
Expansion Up Until 2022
The commercial construction sector is estimated to grow by 6.2 per cent CAGR (i.e., over multiple periods) until 2022, higher than the previous surveyed period. As per the Australian Construction Outlook Survey (2018), this year, growth is expected to reach 9.3 per cent.
The sub sectors that will continue to enjoy the growth are retail, office, and industrial. This is in response to the shifting economic growth areas which include tourism, hospitality, healthcare, and education.
Overall, the construction industry, one of the fastest growing industries in the country, will grow by 7.5 per cent by 2022.
Stronger Growth Alternative
The past years have shown commercial construction reaching its highest rate in over ten years. Policy-makers and market analysts now view that the commercial construction sector will eventually overrun the weakening residential construction sector.
Although growth in the residential building sector will keep on by over 11 per cent until 2022, volatility has characterised the sector in recent years. With a tighter lending regime and a growing oversupply in the residential sector, the commercial sector is gaining fast as a stronger growth alternative.
New Opportunities in the Making
This substitution effect is evidenced by a deluge of new orders for commercial buildings and better business opportunities, especially for small businesses.
Although high costs of construction materials and energy inputs remain a threat, the commercial sector can still bank on new opportunities, such as its high employment rate and new growth in urban areas.
The construction industry in Australia comprises 8 per cent of GDP. The significant GDP share shows how construction can deliver in development. Much so, investing in the commercial building sector can bring in sure positive returns.