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Australia Infrastructure Report Q2 2010
Market |
Construction |
Report Type |
Market Research |
Country |
Australia |
Published |
3 February 2010 |
Number of Pages |
64 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
In this report, we have new historical data for the country’s construction industry value and real growth. In line with our new data, which shows a more encouraging growth trend over the past five years, we have upwardly revised our forecasts for the construction industry value and real growth in 2010. We are now forecasting construction industry value to contract by 0.36% year-on-year (y-o-y) in real terms to reach a nominal value of AUD88.02bn (US$73.06bn). Growth will return to the industry in 2011 and is expected to return to the above 5% growth seen before the economic downturn for the remainder of our forecast period.
The Australian government has played a pivotal role in supporting infrastructure investment across 2009 as private sector investment dried up. The Rudd government announced a public works heavy budget in 2009 to support infrastructure investment outlined by government advisory body, Infrastructure Australia. However, over the mid term, the private sector is set to make a come back, especially in terms of Australia’s freight transport network. With Chinese demand for coal somewhat insatiable, Australia is desperately trying to build up its coal export facilities in order to capitalise on demand. This has led to investment announcements from Australia’s mining majors into ports e.g. Xstrata’s plans for a US$1bn coal terminal in Queensland, and freight rail, with BHP Billiton eying up the Queensland Rail assets. Rail is one of the areas receiving investor attention over recent months, with a number of plus-US$1bn projects in the pipeline. Over the past quarter the US$1.02bn Northern Missing Link rail project in Queensland was back on track and the US$3.98bn Regional Rail link in Victoria got approval for final planning work. Construction work on both are due to start this year.
Although the freight network is proving an attractive investment, non-freight specific assets have not been performing as well. The Lane Cove Tunnel project serves as a warning to potential concessionaires against the accuracy of traffic forecasts. The tunnel in Sydney was put up for sale in October 2009 only three years after it was opened to the public. Developed as a public private partnership (PPP) by Connector Motorways, a consortium formed of Leighton Holdings, Mirvac and Hong Kong’s Cheung Kong Infrastructure, it cost AUD1.6bn (US$1.44bn) to build. Connector Motorways has made combined losses of US$1bn on the project, due to traffic forecast falling far short. Consequently all equity holders have written off their stakes and the asset is up for sale.
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