Following on from a relatively subdued quarter of activity in Q1 2018, the number of projects moving into construction surged over April according to CoreLogic data.
While in March, there were just 597 projects that moved into construction, April figures increased 83% to 1,090 project commencements. The strongest proportional increase was in the community build segment (comprised of schools, hospitals and other public service buildings). Commencements in this space increased 127% on the previous month, from 113 community starts in March to 256 starts in April.
The combined value of these commenced projects was $7.2 billion. This is 46% higher than the value of projects moving into construction in the previous month. Aside from the month on month trend, the year to April has seen a 35% increase in the value of works commencing.
New development applications collected over April also increased by volume. The combined value of work proposed saw 7% growth on the previous month. The total number of new projects collected over April was 1,827. The combined value of these projects was $14.6 billion, up 14% on the previous month.
CoreLogic commercial research analyst Eliza Owen said, “Interestingly, the new project space diverted from the trend in development application movements observed in the last 12 months whereas the year to March was characterised by steady increases in the civil engineering space, April data on new projects suggested a 28% decline on civil engineering projects on the previous month.
“While month-to-month is too volatile to derive trends in construction, the April quarter data has seen the number of new civil engineering projects at 1,576, which is 1% lower than in the previous quarter.”
Meanwhile, the analysis found that the mining sector encompassed the highest value project entering the pipeline over April. This was the $3 billion proposal for an extension to the Northern Gas Pipeline in Western Australia. Commercial real estate also saw strong performance in the new project space in April, with industrial and commercial builds representing 23% of the number of new projects captured over the month, and 18% of the value.
However, New South Wales, and Sydney in particular, continued to see a buzz of residential and accommodation activity. Major site activity noted over the month includes the following:
- A site at Sarah Street in Mascot, close to Sydney Airport and with approval for a hotel, has been purchased by a private hotel developer and operator. The site approval was for a hotel up to 9 stories, and 169 rooms. It currently supports two adjoining office/warehouse buildings.
- Chinese-backed Adelaide-based developer Greaton has snapped up a site in Sydney’s Haymarket with the likelihood of constructing an apartment tower. The site is close to Greaton’s ‘The Ribbon’ hotel development at Darling Harbour, which is due for completion in 2020.
- Desane Group Holdings has purchased a 50-apartment, masterplan-approved site in Leichhardt. The original masterplan was approved together with adjacent Chinese developer Changfa’s 139-unit Epicure Collection project.
With large scale residential projects still in the pipeline against moderating dwelling growth, the composition of the pipeline is likely to pivot to the non-residential building space over the rest of 2018.