Soft landing forecast for construction

Australia's mining investment boom has probably peaked but the descent does not look too frightening, the Australian Construction Industry Forum says.

Australia's mining investment boom has probably peaked but the descent does not look too frightening, the Australian Construction Industry Forum says.

Engineering construction will plateau rather than collapse, slipping by an expected 2.5 per cent this financial year, by 0.8 per cent in 2013-14 and by 0.6 per cent in 2014-15, the forum's semi-annual forecasts, compiled with the help of ACIL Allen Consulting and Deloitte Access Economics, show. "New projects are still being commissioned," forum executive director Peter Barda said, "just not as many and not as big.

"There is no doubt that in some sectors demand is off and prices are down but there is still demand for the things we've got to sell.

"We are pretty confident, looking out three to five years. Beyond that it is difficult. Firms can and do make sudden decisions to stop what they are doing, but for the moment the world has not stopped.

"The world continues to need energy and minerals and we continue to be lucky enough to be in a position to provide them at a globally competitive price."

While engineering construction firms will need to get used to lower or zero growth at a still exceptionally high level of activity, residential and commercial construction will increase.

"There has been little investment in shopping centres for some time, since before the global financial crisis. All of sudden the big institutional investors who own the shopping centres are starting to think they look shabby," Mr Barda said.

"They are facing competition from online retailers and from big-box retailers, and they are starting to spend to smarten them up."

Things were also picking up in warehousing and logistics.

"The way that supermarkets and others want products delivered is changing. It's like mining: the name of the game is building facilities that shave fractions of a cent per tonne-kilometre off the transport cost."

The forum expects rises in residential and commercial construction, and for growth in NSW to be much faster than the rest of the country, but not all the mining job losses would be absorbed, Mr Barda warned.

"It doesn't take as many people to bring a mine to market as it does a shopping centre. You don't find too many people who want pretty railway lines, but people do want pretty homes."

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