The Australian construction industry has been winded by the global financial crisis during 2009 but is showing signs of a recovery in 2010.

International property and construction consultants Davis Langdon have measured commercial tender prices last year at a negative 3.4 per cent across Australia, but are predicting a modest increase in prices during 2010.

Davis Langdon’s Tender Price Index measures the movement in tender prices across the country, and the latest report for the commercial sector forecasts a national increase of around two percent in 2010.

In Cairns the commercial sector remains subdued with limited demand for commercial space.

Davis Langdon’s national research manager, Rachel Kelloway, said nationally the industry was off to a slow start in 2010 and most of this increase was likely to come about in the second half of the year.

“The effect of the stimulus package in far North Queensland has put some pressure on construction resources, particularly as a result of the compressed time frame for projects,” she said.

“The tender index for the Cairns market fell by 5.7 percent over the past year, however we believe the situation is stabilizing.”

Davis Langdon has predicted that construction costs in the Cairns market place will remain unchanged during the first quarter of 2010 before showing a slight increase of one to two percent during the remainder of the year.

“Nationally the construction sector is still highly competitive and there is nothing to indicate that the sector’s competitiveness is going to drop off any time soon,” said Ms Kelloway.

“Towards the second half of this year we expect it starting to bite again and consequently we are likely to see an increase in tender prices. However, across 2010, this is expected to be only of the order of two per cent, and with an expected 3.2 per cent increase in underlying inflation, the sector still has a long way to go.”

Generally opportunities for major commercial projects remain weak at a national level, with the combination of the global financial crisis, availability of finance and weak tenant demand choking off opportunities. There are, however, clear pockets of recovery under way in each state.

As the Building the Education Revolution (BER) and housing stimulus works come on line – especially in regional areas – contractors and subcontractors are nearing capacity and market forces are pushing prices up.


For further information, contact Meaghan Jones on +61 3 9933 8800 or email mjones2@davislangdon.com.au