Counting cranes to get a measure of economy
THE approval of the $1 billion-plus redevelopment of the Sydney convention centre and parts of Darling Harbour will take the number of cranes on the skyline back to the pre-2000 Olympics level.
The renewed activity will be a fillip for the ravaged construction sector, which had four major companies go to the wall last year. But experts still warn the sector faces headwinds for a further six months, or until more projects come online.
One of these is said to be a tender being put out by Sydney University for the $150 million redevelopment of its business school.
There is also the planned upgrade of the Direct Factory Outlets at Homebush, the Sydney Cricket Ground, Macquarie shopping centre and Westfield Eastgardens.
The inaugural Rider Levett Bucknall Crane Index recorded 12 cranes in the Sydney central business district (incorporating Lend Lease's Barangaroo and the joint Frasers Property/Sekisui House Australia Central Park development in Chippendale), six cranes in Parramatta (predominantly for new residential apartment projects), four in North Sydney (again, residential projects) and four in Chatswood.
The index will biannually track the number of cranes operating across the Sydney market.
The director of Rider Levett Bucknall, Stephen Mee, said that while the numbers of cranes recorded indicated varied construction workloads, the future workload remained uncertain.
"There is clearly a head of steam in the construction sector but we don't believe things will really turn a corner until about mid-2013," Mr Mee said.
"It is positive to see so many cranes on the horizon but there will be a time lag, so tough times will still prevail into the start of [the] year."
One of the other concerns is the slowing resources sector. According to research from Citi, record investment in Australian mining projects has resulted in an escalation in the cost of projects.
"As a result of the fall in commodity prices driven by the slowdown in China growth and global economic uncertainty, resource companies are focusing on reining in capital costs and cutting operating costs to boost cash flow and improve margins," the research says.
One of the key concerns for the country's construction sector is the cost of employment. In a global context, Australia's average resource construction hourly wage is 1.4 times higher than in Canada, 1.7 times the US and 5.5 times higher than South Africa and Brazil. Australian engineering wages are 60 per cent higher than the global average.