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Transcript of Rlb International Report Third Quarter 2015
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THIRD QUARTER 2015
CONSTRUCTIONMARKETINTELLIGENCE
INTERNATIONALREPORT
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Disclaimer: While the information in this publication is believed to be correct at the time of publishing, no responsibility is accepted for its accuracy.Persons desiring to utilise any information appearing in the publication should verify its applicability to their specific circumstances. Cost information in thispublication is indicative and for general guidance only and is based on rates as at September 2015.
Cover: Barangaroo, Sydney, Australia
The strength of Rider Levett Bucknall, the largest independent and most geographically prevalent construction cost
consultancy of its kind in the world, is that it has the most foremost construction intelligence available to it. We collect
and collate current construction data and forecast trends on a global, regional, country, city and sector basis. Rider
Levett Bucknall publish key industry intelligence publications throughout each year. For more detailed sector and city/country information than is published within the International Report please review our regional or country specific
publications located at rlb.com.
SOURCES OF INFORMATION – INTERNATIONAL REPORT
Information contained within this report has been compiled from numerous global sources and RLB offices.
Certain text and data contained within the report has been compiled from information published by the following
organisations.
International Monetary Fund – Regional Economic Outlooks imf.org
World Bank worldbank.org
Asian Development Bank adb.org
The Economist economist.com
Reserve Bank of Australia rba.gov.au
Reserve Bank of New Zealand rbnz.govt.nz
Further information can be found on their websites.
INDEPENDENT CONSULTANTS, LOCAL KNOWLEDGEAND EXPERTISE, GLOBAL NETWORK
RLB promotes a sustainable environment.Printed by Mercedes Waratah using the Ecoclean Chemical Recycling Process on Maine Recycled. This stock consists of 60% certified recycled (PCW)and 40% certified virgin fibre sourced from responsibly managed forests. Certified carbon neutral by The Carbon Neutral Company, Maine Recycled ismanufactured process chlorine free and produced in a facility that operates under world's best practice ISO 14001 Environment Management System.
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Rider Levett Bucknall | International Report – Third Quarter 2015 3
The Rider Levett Bucknall International Report provides a half-yearly
snapshot of construction market conditions and price movements
around the world, via commentaries and analysis from RLB directors in
key locations.
The RLB International Construction Cost Relativity Index is shown on
page 6, with each location placed in its ranking spot in respect of all the
other locations in the study.
A broad overview of global construction economic issues is provided
on page 4 followed by a table of historical and forecasted movements in
RLB’s Tender Price Index for 53 key cities on page 7.Key regional statistics are highlighted on pages 14 & 15. This data
describes the historical and projected economic conditions in which the
construction industry functions within those regions or countries.
Pages 10 to 13 consider the wider issue of the construction activity
cycle for seven building market sectors, in each location, using the
RLB Construction Activity Cycle Model to provide an insight into each
cities construction sectors position in the market cycle.
Pages 8 and 9 feature Construction Rate Ranges for different key
building types in cities within each region, providing an easy cost
comparison between locations.
From pages 17 to 53, RLB directors provide market intelligence
commentary, highlighting the key issues that are impacting on the
construction industry in major global cities together with providing
information relating to current construction price movements.
Construction Cost Ranges, RLB's Tender Price Index and International
Construction Cost Relativities can be found in the RLB Intelligence
Smartphone App and via the RLB Desktop WebApp. Further information
can be found at rlbintelligence.com
INTERNATIONALREPORT
To download our free App visit
rlb.com/app or scan the QR code.
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Rider Levett Bucknall | International Report – Third Quarter 20154
GLOBAL SUMMARY
The global growth remains quite sluggish, a state of the continuing lack of
performance in some nations together with an ongoing structural realignment in
others. Softer economic outcomes are being seen across much of East Asia and
Latin America, slowing of growth in China and the lack of growth momentum in
India, are all contributing to slower global growth. These economies have been
the main engine room of output increases in recent years. According to the World
Bank, global growth is forecast to grow at 2.8% for 2015, up 0.2% from 2014 and
down 0.2% from the January 2015 forecast.
Much of the uncertainty surrounding the outlook is
focussed on China. The world’s second largest economy
still remains a global outperformer in GDP terms. The
forecasted 2015 growth of 6.8% is still considerably higher
than the USA at 3.1%, the Euro Area at (0.5%) and Japan
at 1.1%. Only India, amongst the larger economies of the
world has a higher forecasted GDP at 7.5% for 2015. The
moderating trend in China’s growth and its reduced
need for both commodities and manufactured goods are
affecting the economies of its trading partners. China’s
recent large equity market sell-off has added another
layer of uncertainty to an already less buoyant outlook.
Growth in many of the world’s major commodity
exporting countries has also slowed. For many ofthese countries, Canada and Australia for example, the
transition from being a commodity led economy is being
morphed to highlight the importance of the consumer
and housing-related sectors, which are being underpinned
by generally favourable employment and stable
investment conditions.
Although commodity prices are still weak, the forecast of
increased prices, albeit small, will have a positive effect
on the global economy. Non-oil based commodity prices
have fallen in excess of 30% since 2012, with small rises
forecast in 2016 and 2017 of 1.2% and 1.3% respectively. Oil
has fallen about 40% since 2012 of which 32% has beenin 2015. For 2016 and 2017 increases of 4.9% and 4.7% are
forecasted. There remains a concern that the stable but
lower commodity prices will continue to place downward
pressure on the growth of the emerging countries’
economies.
In the East Asia and Pacific region, growth is expected
to ease to 6.7% in 2015 and remain stable over the next
two years. This reflects a continued slowdown in China
that is offset by a modest pickup in the rest of the region.
With the region a net importer of oil, most economies are
expected to benefit from the lower fuel prices, although
the major commodity exporters, Indonesia and Malaysia,
will face pressures from the lack of significant growth
in the prices of oil, gas, coal, palm oil, and rubber into
the future. Growth in China is set to ease to 6.8% this
year, down from 7.4% in 2014. The combined growth of
the other Asian countries is projected to be 4.9% within
the region, rising to 5.4% by 2016 due to strengthening
external demand, notwithstanding the slower growth in
China. Commodity and dairy price falls have impacted
growth in both Australia and New Zealand, but to a small
degree the fall has been offset by a strong residential
housing market with significant overseas inflows.
Growth in South Asia is predicted this year to increase to
7.1%, up from 6.9% in 2014, led by the ongoing expansionof India’s economy. The fall in global oil prices has been a
major benefit for the region, being a net importer. Within
India, the introduction of new reforms have improved
business and investor confidence which in turn has
attracted new capital inflows. Growth is forecasted at
7.5% for 2015, increasing to 7.6% in 2017.
Growth in Europe and Central Asia is expected to weaken
further to 1.8% in 2015. With no outlook for significant
oil price increases and geopolitical tensions within the
region, the fall in growth predicted in 2015 will be offset
by a moderate recovery in the Euro Area, increasing
growth in 2016 to a forecasted 3.4%. In Russia, a 3.8%contraction in 2015 is expected to be followed by a
moderate recovery in 2016 supported by policies that are
shifting the economy away from the volatility of fossil
fuel pricing dependency. In Turkey, growth is projected
at 3.1% in 2015 with private spending to recover after
the June elections. Assuming a slight rise in oil prices in
2016 and 2017, stable political tensions, and a continuing
stabilisation of macroeconomic policies in the major
economies, regional growth is expected to strengthen to
3.6% in 2016 and 2017.
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Rider Levett Bucknall | International Report – Third Quarter 2015 5
In Latin America and the Caribbean, growth will ease to
0.4% in 2015, as South America struggles with domestic
economic challenges, including widespread droughts,
weak investor confidence, and low commodity prices.
The slump in investment and business confidence in Brazil
is forecasted to push the economy into a contraction
this year of (1.0%). Mexico is remaining subdued but
activity is picking up, albeit at a slow pace, as a result of
lower oil prices, a weak first quarter in the United States,
and modest wage growth. For 2016 and 2017, growth
in the region is expected to increase by 2.0% and 2.8%
respectively, as South America emerges from recession
and the United States lifts activity in North and Central
America and the Caribbean.
Growth in the Middle East and North Africa is expectedto remain flat at 2.2% in 2015 but rising to 3.7% and 3.8%
in 2016 and 2017. The significance in the fall in oil prices
is of particular concern for the oil-exporting countries,
most of which also have major internal geopolitical
tensions (Iraq, Libya and Yemen) or have limited options
in offsetting the revenue falls from the weaker oil prices
(Iran and Iraq).
In Sub-Saharan Africa, the commodity-exporting
countries (Angola and Nigeria) have been effected by
lower prices for oil and other commodities. Although
South Africa is expected to be one of the main
beneficiaries of low oil prices, growth is being held backby energy shortages. Power black outs are impacting
business as mines and factories reduce output. Coupled
with weaker investor confidence amid policy uncertainty,
and by the anticipated gradual tightening of monetary
and fiscal policy, growth in the region is forecast to slow
to 4.2% in 2015, slower than previously expected. Growth
of 4.6% and 5% is predicted for the region during 2016
and 17.
RLB continue to monitor global trends across multiple
sectors throughout the property cycles within regions,
countries and cities, in order to better advise our clients
across the globe.
Rider Levett Bucknall offersindependent cost consultancy,
project management and advisory
services through its network of
120 offices and 3,500 staff
property professionals.
The Q3 2015 International Report
provides both macro and micro
insights into the construction
market conditions and tender
prices movements in key centres
across the globe originating from
RLB's extensive global office
locations.
RLB remains committed to it's
research activities by producing
a range of regional and country
based cost commentary reports,
the firm's renowned Riders Digest,
continuous enhancement of the
world's first mobile construction
cost app "RLB Intelligence" and arange of sector specific reports.
Currently RLB is leading a number
of Facilities Management (FM)
identity research initiatives,
notably IFMA's "FM in Asia"
project.
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Rider Levett Bucknall | International Report – Third Quarter 20156
CITY Q3, 2015
LONDON EUROPE 159
BOSTON AMERICAS 151SAN FRANCISCO AMERICAS 150
CHICAGO AMERICAS 148
WASHINGTON AMERICAS 143
MACAU ASIA 135
LOS ANGELES AMERICAS 135
BRISTOL EUROPE 133
MANCHESTER EUROPE 127
BIRMINGHAM EUROPE 125
DARWIN OCEANIA 124
SYDNEY OCEANIA 121
SEATTLE AMERICAS 118
CANBERRA OCEANIA 116
PERTH OCEANIA 116
MELBOURNE OCEANIA 113
DOHA MIDDLE EAST 113
CHRISTCHURCH OCEANIA 112
SINGAPORE ASIA 110
ADELAIDE OCEANIA 109
ABU DHABI MIDDLE EAST 107
WELLINGTON OCEANIA 107
PORTLAND AMERICAS 106
TOWNSVILLE OCEANIA 106
DUBAI MIDDLE EAST 105
RIYADH MIDDLE EAST 105
DENVER AMERICAS 101
PHOENIX AMERICAS 101
AUCKLAND OCEANIA 100
BRISBANE OCEANIA 99
LAS VEGAS AMERICAS 99
BEIJING ASIA 89
SHANGHAI ASIA 87
GUANGZHOU ASIA 84
SHENZHEN ASIA 78
KUALA LUMPUR ASIA 74
HO CHI MINH CITY ASIA 66JAKARTA ASIA 57
INTERNATIONAL CONSTRUCTIONCOST RELATIVITIES
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Rider Levett Bucknall | International Report – Third Quarter 2015 7
2012 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
AFRICA
CAPE TOWN NP NP 5.0 6.0 7.0 8.0 4.8
JOHANNESBURG NP NP 8.3 7.2 7.5 8.0 4.8
MAPUTO NP NP 4.0 4.0 4.0 4.0 4.0
PORT LOIUS NP NP 5.0 5.5 6.0 6.0 6.5
PRETORIA NP NP 8.3 7.2 7.5 8.0 4.8
AMERICAS
BOSTON 3.7 5.2 4.7 4.1 4.8 4.1 4.1
CHICAGO NP 4.7 4.9 4.9 4.6 4.1 4.1
DENVER 1.8 2.2 4.1 5.0 4.8 4.1 4.1
HONOLULU 3.1 7.7 13.3 11.2 7.2 5.1 4.1
LAS VEGAS 2.0 0.9 3.6 4.4 5.9 4.6 4.1
LOS ANGELES 1.0 1.8 4.9 4.6 5.4 4.1 4.1
NEW YORK 4.3 5.9 4.4 3.6 4.6 4.1 4.1
PHOENIX 2.4 2.5 3.7 4.2 5.4 4.3 4.1
PORTLAND 0.9 1.7 6.0 4.5 4.6 4.1 4.1
SAN FRANCISCO 0.9 1.8 6.1 5.5 4.3 4.1 4.1
SEATTLE 2.1 3.5 4.5 5.0 4.6 4.1 4.1
WASHINGTON 3.9 5.4 5.5 4.7 4.3 4.1 4.1
ASIA
BEIJING 0.5 1.0 2.0 (0.0) 2.0 2.0 2.0
CHENGDU NP NP 1.1 0.5 0.4 0.4 0.4
GUANGZHOU 4.1 4.1 3.0 (2.0) 2.0 2.0 2.0
HONG KONG 7.4 9.0 8.2 7.2 6.1 3.0 3.0
MACAU 7.2 9.3 10.4 7.2 4.1 3.0 3.0
SEOUL NP 2.4 1.1 0.4 1.5 1.7 1.8
SHANGHAI 3.5 2.0 (1.0) (2.5) 3.0 2.0 2.0
SHENZHEN (1.0) 3.0 1.5 (0.7) 1.5 2.0 2.0(1 .0 ) 3.0 1.5 (0 .7 ) 1.5 2.0 2.0
EUROPE
BERLIN NP NP 1.8 2.2 2.0 2.0 2.0BIRMINGHAM (0.8) 8.0 7.1 4.0 5.0 5.0 5.5
BRISTOL (2.1) 6.3 7.1 4.5 5.0 5.0 5.5
BUDAPEST NP NP NP 2.5 3.0 3.3 2.5
DUBLIN NP 4.0 5.0 8.0 9.0 9.0 9.0
LONDON 1.3 3.4 5.0 5.9 5.0 4.5 4.0
SHEFFIELD NP 6.3 7.1 4.0 5.0 5.0 5.5
WELWYN GARDEN CITY NP 5.9 4.6 4.9 4.8 4.4 4.3
WOKINGHAM NP 5.9 6.4 5.1 4.1 3.8 3.0
MADRID NP NP 0.0 (0.0) 0.1 0.8 0.1
MANCHESTER (0.8) 6.3 7.1 4.0 5.0 5.0 5.5
MOSCOW NP NP 0.0 (5.0) 0.0 1.0 1.5
WARSAW NP NP (0.8) 0.7 3.2 3.2 1.2
MIDDLE EAST
ABU DHABI 0.7 3.2 3.3 4.7 5.7 6.1 7.3
DOHA 4.0 3.2 4.5 5.0 5.5 6.0 7.0
DUBAI 1.4 3.2 3.7 4.6 3.1 2.5 2.9
RIYADH 3.0 4.4 5.0 4.8 5.0 5.0 5.0
OCEANIA
ADELAIDE 0.1 0.9 0.6 1.0 3.0 3.5 3.5
AUCKLAND 0.0 0.8 4.1 5.6 6.0 4.1 3.0
BRISBANE (0.0) (0.9) 5.1 5.9 5.1 4.1 4.1
CANBERRA (0.6) 2.2 1.6 2.0 2.2 3.0 3.0
CHRISTCHURCH 4.7 5.1 6.0 6.0 6.0 5.0 5.0
DARWIN 2.0 3.0 1.8 1.5 2.0 2.5 2.5
MELBOURNE 0.0 0.2 1.5 2.0 2.0 3.0 3.0
PERTH (2.3) 1.1 0.8 1.0 2.0 3.0 3.0
SYDNEY 1.2 2.0 3.0 4.5 4.5 4.5 4.0
TOWNSVILLE 1.0 1.3 2.0 3.0 4.0 4.0 4.0
WELLINGTON 1.5 2.0 3.4 3.0 3.0 3.0 3.0
NP: NOT PUBLISHED
MARKET DATARLB TENDER PRICE ANNUAL % CHANGE
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Rider Levett Bucknall | International Report – Third Quarter 20158
RANGE OF COST PER M2 OF GROSS FLOOR AREA
OFFICE BUILDING RETAIL
LOCALCURRENCY
PREMIUM OFFICES GRADE A MALL STRIP SHOPPING
LOW HIGH LOW HIGH LOW HIGH LOW HIGH
AMERICAS
BAHAMAS USD 2,495 4,455 2,335 3,270 1,635 2,830 1,520 2,390
BOSTON USD 2,155 3,015 1,885 2,635 1,290 2,260 970 1,560
DENVER USD 1,505 2,420 1,075 1,615 860 1,400 700 1,345
HONOLULU USD 2,745 5,060 2,315 3,820 1,990 4,735 1,670 4,145
LAS VEGAS USD 1,505 3,070 1,130 2,045 1,240 5,165 700 1,560
LOS ANGELES USD 2,155 3,230 1,505 2,260 1,345 3,015 1,075 1,720
NEW YORK USD 2,205 3,765 1,940 2,905 1,505 2,690 1,240 1,720
PHOENIX USD 1,400 2,585 1,075 1,720 1,130 1,775 755 1,345SEATTLE USD 1,775 2,205 1,240 1,720 1,240 2,155 1,025 1,455
WASHINGTON D.C. USD 1,885 2,585 1,400 1,990 1,025 2,045 805 1,455
ASIA
BEIJING RMB 7,650 12,600 7,150 10,800 8,400 12,850 7,400 11,550
GUANGZHOU RMB 7,200 11,500 6,650 10,050 8,200 11,700 7,100 10,650
HO CHI MINH CITY VND ('000) 23,392 33,646 19,950 24,971 18,877 25,131 N/P N/P
HONG KONG HKD 22,500 33,500 19,200 26,000 22,600 28,700 19,300 25,000
JAKARTA RP ('000) 9,648 13,200 6,670 10,620 6,520 8,515 N/P N/P
KUALA LUMPUR RINGGIT 2,500 4,000 1,300 2,800 2,100 3,500 N/P N/P
MACAU MOP 18,100 26,100 15,900 22,400 19,800 24,400 16,800 21,500
MANILA PHP 32,468 44,303 26,197 35,705 27,512 31,659 20,836 23,365
SHANGHAI RMB 7,400 11,650 6,600 10,050 7,950 12,300 6,900 11,050
SINGAPORE SGD 2,700 4,000 2,100 3,000 2,200 3,400 N/P N/P
EUROPE
BERLIN EUR 1,355 1,775 990 1,150 1,145 1,460 835 1,040
BRISTOL GBP 1,960 2,580 1,580 2,370 2,700 3,800 860 1,625
DUBLIN EUR 1,800 2,000 1,600 1,800 1,900 2,100 1,000 1,200
LONDON GBP 2,396 3,120 1,975 3,077 3,195 4,491 1,026 1,922
MADRID EUR 900 1,500 800 1,150 1,900 2,600 1,400 1,900
MANCHESTER GBP 1,907 2,501 1,646 2,470 2,678 3,762 854 1,615
MOSCOW EUR 1,500 2,000 1,300 1,600 1,700 2,100 1,200 1,500
OSLO EUR 2,840 3,690 2,190 2,850 1,800 2,340 1,440 1,870
MIDDLE EAST & AFRICA
ABU DHABI AED 5,800 7,000 4,700 6,600 4,100 6,500 N/P N/P
DUBAI AED 5,800 7,000 4,700 6,600 4,100 6,500 N/P N/P
SAUDI ARABIA SAR 4,890 7,597 4,991 6,825 4,728 6,198 3,361 4,728
DOHA QAR 6,500 8,500 6,100 8,200 5,300 6,500 N/P N/P
OCEANIA
ADELAIDE AUD 2,600 3,850 2,100 3,250 1,550 2,850 1,300 1,825
AUCKLAND NZD 3,000 4,200 2,500 3,800 1,900 2,600 1,100 1,600
BRISBANE AUD 2,600 4,000 2,000 3,000 2,300 3,100 1,100 1,600
CANBERRA AUD 3,147 4,080 2,552 3,219 2,163 3,034 1,158 1,907
CHRISTCHURCH NZD 3,700 4,800 3,150 4,200 1,650 2,200 N/P N/P
DARWIN AUD 3,000 4,050 2,300 3,700 1,650 2,500 1,100 1,950
MELBOURNE AUD 3,000 3,750 2,325 2,900 2,025 3,000 1,060 1,550
PERTH AUD 3,150 4,770 2,575 3,740 2,300 2,800 1,025 2,565
SYDNEY AUD 3,100 4,350 2,300 3,250 1,700 3,550 1,350 1,700WELLINGTON NZD 2,940 3,360 2,310 2,625 1,300 1,800 N/P N/P
N/P: NOT PUBLISHED
The following data represents estimates of current construction costs in the respective market. Costs may vary
as a consequence of factors such as local market and climatic conditions, standards, specifications, site specific
circumstances etc.
MARKET DATAINTERNATIONAL CONSTRUCTION RATES
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Rider Levett Bucknall | International Report – Third Quarter 2015 9
RANGE OF COST PER M2 OF GROSS FLOOR AREA
HOTELS CAR PARKING INDUSTRIALWAREHOUSE
RESIDENTIALMULTI STOREY5 STAR 3 STAR MULTI STOREY BASEMENT
LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH
AMERICAS
2,725 7,070 1,530 4,885 N/P N/P N/P N/P 1,410 2,280 1,410 4,565
2,690 4,305 1,720 2,690 645 970 860 1,185 755 1,075 1,455 3,500
1,990 3,015 1,130 1,775 430 755 645 1,025 700 1,185 700 3,820
4,950 7,160 3,120 5,220 915 1,345 1,290 2,530 1,345 2,155 1,830 7,320
3,500 5,005 1,290 2,420 540 915 645 1,615 540 1,075 755 4,305
3,230 4,845 2,155 2,960 1,025 1,240 1,185 1,670 1,025 1,720 1,615 3,335
3,445 5,115 1,990 2,850 700 1,130 915 1,345 970 1,400 1,505 3,765
2,475 4,305 1,505 1,940 430 700 645 1,075 590 1,075 970 4,3051,990 2,960 1,505 1,940 700 915 915 1,345 805 1,185 1,075 2,530
2,475 4,035 1,615 2,475 590 860 805 1,075 755 1,075 1,075 2,690
ASIA
13,000 17,200 9,700 12,450 2,250 3,050 3,750 6,550 4,350 5,500 4,050 6,150
13,000 16,800 9,600 11,700 2,100 3,000 3,700 6,400 4,150 5,150 3,800 5,700
30,418 37,252 22,867 29,583 8,528 12,742 17,537 23,963 5,845 8,849 14,985 22,719
35,100 42,800 28,900 33,400 8,800 10,400 17,100 23,800 14,800 18,700 21,100 36,500
13,670 17,420 10,410 11,875 3,460 4,450 4,450 6,190 4,650 5,680 6,430 9,986
4,800 6,500 2,500 3,800 800 1,200 1,400 3,200 1,000 1,700 1,800 4,500
30,000 37,000 24,500 28,300 N/P N/P 10,000 13,000 N/P N/P 13,650 21,700
53,507 61,599 43,190 48,854 14,666 16,892 16,083 18,510 17,397 20,533 27,209 48,450
12,600 16,600 9,400 12,000 2,050 3,000 3,900 6,450 4,000 5,150 3,650 5,800
4,300 5,600 3,300 3,700 700 1,400 1,500 2,250 1,100 1,600 2,000 3,200
EUROPE
1,985 2,755 1,355 1,770 470 680 785 1,040 365 730 990 1,407
2,250 3,000 1,300 1,740 400 800 925 1,440 360 650 1,700 2,400
2,000 2,200 1,340 1,440 400 500 600 1,000 400 560 1,400 1,600
2,526 3,400 1,706 2,191 410 820 1,090 1,760 443 799 2,008 2,785
1,950 2,600 1,350 1,800 700 900 800 1,200 600 800 700 1,000
2,042 2,793 1,292 1,719 323 646 875 1,396 354 646 1,636 2,292
2,800 3,500 1,700 2,200 430 550 800 1,000 500 600 1,200 1,500
3,920 5,090 2,960 3,850 690 880 890 1,160 1,570 2,030 2,420 3,150
MIDDLE EAST & AFRICA
9,000 12,000 6,000 8,500 1,800 3,600 2,850 4,500 1,500 2,700 4,500 6,500
9,000 12,500 6,000 8,500 2,300 3,600 3,100 4,500 1,850 2,900 4,500 6,500
8,304 10,110 5,989 7,465 920 1,220 2,265 2,845 3,312 4,046 4,576 9,647
11,500 14,500 7,500 8,500 N/P N/P 2,750 4,500 N/P N/P 6,500 7,800
OCEANIA
3,500 4,400 2,500 3,400 580 900 1,300 1,900 625 1,100 2,350 3,550
3,600 4,200 2,950 3,600 550 800 1,200 1,800 475 800 2,600 3,800
3,400 5,000 2,600 3,800 700 1,100 1,600 2,100 600 1,100 2,000 3,200
3,875 4,777 2,819 3,936 718 994 964 1,374 666 1,035 2,614 3,793
3,700 4,200 3,000 3,300 850 1,350 1,750 2,200 720 1,100 N/P N/P
3,550 4,400 2,800 3,500 750 1,250 1,150 1,500 750 1,375 2,010 2,600
3,450 4,500 3,050 3,500 655 1,060 1,110 1,365 555 1,100 2,200 3,500
3,600 4,430 2,645 3,635 750 1,000 1,850 3,100 625 1,020 2,230 3,830
3,850 5,050 2,750 3,450 650 1,000 950 1,520 640 990 2,250 4,1003,400 4,100 2,310 2,730 500 900 1,890 2,730 900 1,400 2,625 3,360
MARKET DATAINTERNATIONAL CONSTRUCTION RATES
Rates are in national currency per square metre of Gross Floor Area except as follows:
Chinese cities, Hong Kong and Macau: Rates are per square metre of Construction Floor Area, measured to outer face of external walls.
Singapore, Ho Chi Minh City, Jakarta and Kuala Lumpur: Rates are per square metre of Construction Floor Area, measured to outer face of
external walls and inclusive of covered basement and above ground parking areas.
Chinese cities, Hong Kong, Kuala Lumpur, Macau and Singapore: All hotel rates are inclusive of Furniture Fittings and Equipment (FF&E).
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HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL
AFRICA
CAPE TOWN
JOHANNESBURGMAPUTO (MOZAMBIQUE)
PORT LOUIS (MAURITIUS)
PRETORIA
AMERICAS
ANGUILLA
ANTIGUA AND BARBUDA
BAHAMAS
BARBADOS
BERMUDA
BOSTON
BRITISH VIRGIN ISLANDS
CAYMAN ISLANDSCHICAGO
CUBA
DENVER
DOMINICA
DOMINICAN REPUBLIC
GRENADA
GUADALOUPE
HAITI
HONOLULU
JAMAICA
LAS VEGAS
LOS ANGELES
MARTINIQUE
MONTSERRAT
NETHERLANDS ANTILLES
NEW YORK
PHOENIX
PORTLAND
PUERTO RICO
SAN FRANCISCO
SEATTLE
ST KITTS AND NEVIS
ST LUCIA
ST VINCENT AND THE GRENADINES
TRINIDAD AND TOBAGOTURKS AND CAICOS ISLANDS
US VIRGIN ISLANDS
WASHINGTON
NP: NOT PUBLISHED
MARKET DATACONSTRUCTION SECTOR ACTIVITY
PEAK GROWTHZONE
PEAK DECLINEZONEPEAK ZONE
MID GROWTHZONE
MID DECLINEZONE
MID ZONE
TROUGHGROWTH ZONE
TROUGH DECLINEZONETROUGH ZONE
The RLB Construction Market Activity
Cycle wave graph represents thetheoretical “boom / bust” business
cycle of the construction economy.
The market activity arrows highlight the current point in the construction activity cycle of the major sectors
within each RLB office.
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Rider Levett Bucknall | International Report – Third Quarter 2015 11
MARKET DATACONSTRUCTION SECTOR ACTIVITY
HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL
ASIA
BEIJING
CHENGDU
GUANGZHOU
HO CHI MINH CITY
HONG KONG
JAKARTA
KUALA LUMPUR
MACAU
MANILA
SEOUL
SHANGHAI
SHENZHEN
SINGAPORE
TOKYO
EUROPE
BERLIN
BIRMINGHAM
BRISTOL
LONDON
MADRID
MANCHESTER
MILAN
MOSCOW
SHEFFIELD
MIDDLE EAST
ABU DHABI
DOHA
DUBAI
RIYADH
OCEANIA
ADELAIDE
AUCKLAND
BRISBANE
CANBERRA
CHRISTCHURCH
DARWIN
GOLD COAST
MELBOURNE
PERTH
SYDNEY
TOWNSVILLE NP
WELLINGTON
NP: NOT PUBLISHED
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Liberty Place, Sydney, Australia
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RLB CONSTRUCTION MARKET ACTIVITY MODELGROWTH SECTORS VS DECLINE SECTORS
RLB CONSTRUCTION MARKET ACTIVITY MODELNO OF CITIES WITHIN ZONES
NUMBER OF CITIES
10
0
20
30
40
60
50
GROWTH DECLINE
HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL
NUMBER OF CITIES
30
10
20
0
40
50
PEAK ZONE MID ZONE TROUGH ZONE
HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL
RLB GLOBAL MARKET ACTIVITYPEAK ZONE SECTOR
RLB GLOBAL MARKET ACTIVITYMID ZONE SECTOR
RLB GLOBAL MARKET ACTIVITYTROUGH ZONE SECTOR
OFFICES 13%
INDUSTRIAL 8%
CIVIL 16%
HOUSES 13%
HOTEL 17%
RETAIL 14%
APARTMENTS 19%
OFFICES 13%INDUSTRIAL 15%
CIVIL 15%
HOUSES 19%
APARTMENTS 14%
HOTEL 12%
RETAIL 12%OFFICES 16%
INDUSTRIAL 17%
CIVIL 13%
HOUSES 10%
APARTMENTS 11%HOTEL 15%
RETAIL 18%
MARKET DATACONSTRUCTION SECTOR ACTIVITY
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Rider Levett Bucknall | International Report – Third Quarter 201514
YEAR
AUSTRALIA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 2.1 % 2.7 % 2.8 % 3.2 % 3.1 % 3.0 %
GDP PER CAPITA – AUD $65,918 $66,901 $67,988 $69,306 $70,578 $71,782
EXCHANGE RATE (AS AT 1 JULY PER US$) 1.088 1.058 1.297 1.377 1.393 1.403PPP RATE 1.475 1.460 1.421 1.419 1.412 1.407
INFLATION 2.5 % 2.5 % 2.0 % 2.3 % 2.4 % 2.5 %
UNEMPLOYMENT 5.7 % 6.1 % 6.4 % 6.2 % 6.0 % 5.8 %
YEAR
CHINA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 7.8 % 7.4 % 6.8 % 6.3 % 6.0 % 6.1 %
GDP PER CAPITA – CNY ¥13,185 ¥14,082 ¥14,956 ¥15,816 ¥16,678 ¥17,603
EXCHANGE RATE (AS AT 1 JULY PER US$) 6.181 6.152 6.115 6.386 6.560 0.000
PPP RATE 3.627 3.619 3.635 3.595 3.569 3.569
INFLATION 2.6 % 2.0 % 1.2 % 1.5 % 2.0 % 2.5 %
UNEMPLOYMENT 4.1 % 4.1 % 4.1 % 4.1 % 4.1 % 4.1 %
YEAR
EURO AREA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 1.6 % -0.8 % -0.5 % 0.9 % 1.5 % 1.7 %
EXCHANGE RATE (AS AT 1 JULY PER US$) - EURO 0.767 0.731 0.901 0.912 0.898 0.879
PPP RATE N/A N/A N/A N/A N/A N/A
INFLATION (AVERAGE) 2.7 % 2.5 % 1.3 % 0.4 % 0.1 % 1.0 %
UNEMPLOYMENT (AVERAGE) 10.1 % 11.3 % 12.0 % 11.6 % 11.1 % 10.6 %
YEAR
NEW ZEALAND 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 2.2 % 3.2 % 2.9 % 2.7 % 2.5 % 2.5 %
GDP PER CAPITA – NZD $46,669 $47,472 $48,392 $49,327 $50,165 $51,012EXCHANGE RATE (AS AT 1 JULY PER US$) 1.293 1.142 1.473 1.515 1.887 1.754
PPP RATE 1.485 1.501 1.504 1.517 1.518 1.524
INFLATION 1.1 % 1.2 % 0.8 % 2.1 % 2.0 % 2.0 %
UNEMPLOYMENT 6.2 % 5.4 % 5.3 % 5.2 % 5.1 % 5.1 %
YEAR
SINGAPORE 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 4.4 % 2.9 % 3.0 % 3.0 % 3.2 % 3.2 %
GDP PER CAPITA – SGD $68,490 $69,580 $70,997 $72,648 $74,475 $76,374
EXCHANGE RATE (AS AT 1 JULY PER US$) 1.267 1.246 1.345 1.391 1.399 1.405
PPP RATE 0.872 0.862 0.853 0.862 0.868 0.873
INFLATION 2.4 % 1.0 % 0.0 % 1.7 % 1.9 % 1.9 %UNEMPLOYMENT 1.9 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 %
NOTES
Forecasts for years after 2014.
Exchange rates are quoted as currency units per U.S. dollar.
Euro Area composed of 17 countries: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovak Republic,Slovenia, and Spain.
South America and the Carribean composed of 32 countries: Antigua and Barbuda, Argentina, The Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominica,Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, St. Kitts and Nevis, St. Lucia, St.Vincent and the Grenadines, Suriname, Trinidad and Tobago, Uruguay, and Venezuela.
Middle East and North Africa composed of 20 countries: Algeria, Bahrain, Djibouti, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia,Sudan, Syria, Tunisia, United Arab Emirates, and Yemen.
Asean-5 composed of 5 countries: Indonesia, Malaysia, Philippines, Thailand, and Vietnam.
Sources : RLB, IMF, Scotiabank
MARKET DATAKEY STATISTICS
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Rider Levett Bucknall | International Report – Third Quarter 2015 15
YEAR
UNITED KINGDOM 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 1.7 % 2.6 % 2.7 % 2.3 % 2.2 % 2.2 %
GDP PER CAPITA – GBP £25,831 £26,317 £26,854 £27,291 £27,705 £28,126
EXCHANGE RATE (AS AT 1 JULY PER US$) 0.657 0.584 0.639 0.643 0.642 0.640PPP RATE 0.699 0.701 0.701 0.700 0.698 0.697
INFLATION 2.6 % 1.5 % 0.1 % 1.7 % 2.0 % 2.0 %
UNEMPLOYMENT 7.6 % 6.2 % 5.4 % 5.4 % 5.4 % 5.4 %
YEAR
USA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 2.2 % 2.4 % 3.1 % 3.1 % 2.7 % 2.4 %
GDP PER CAPITA – USD $49,600 $50,418 $51,644 $52,868 $53,913 $54,814
EXCHANGE RATE (AS AT 1 JULY PER US$) 1.000 1.000 1.000 1.000 1.000 1.000
PPP RATE 1.000 1.000 1.000 1.000 1.000 1.000
INFLATION 1.5 % 1.6 % 0.1 % 1.5 % 2.4 % 2.5 %
UNEMPLOYMENT 7.4 % 6.2 % 5.5 % 5.2 % 5.0 % 4.9 %
YEAR
LATIN AMERICA AND THE CARRIBEAN 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 4.9 % 3.1 % 2.9 % 1.3 % 0.9 % 2.0 %
GDP PER CAPITA (INT $) 14,255 14,780 15,254 15,489 15,569 15,929
INFLATION (AVERAGE) 6.8 % 6.1 % 7.1 % N/A N/A N/A
YEAR
MIDDLE EAST & NORTH AFRICA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 4.5 % 4.9 % 2.3 % 2.4 % 2.7 % 3.7 %
GDP PER CAPITA (INT $) 16,399 16,841 17,070 17,315 17,579 18,121
INFLATION (AVERAGE) 8.7 % 9.7 % 9.3 % 6.5 % 6.2 % 6.4 %
YEAR
SOUTH AFRICA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 2.2 % 1.5 % 2.0 % 2.1 % 2.4 % 2.7 %
GDP PER CAPITA – ZAR R 55,748 R 55,712 R 55,938 R 56,221 R 56,671 R 57,292
EXCHANGE RATE (AS AT 1 JULY PER US$) 9.92 10.66 12.21 13.51 14.46 15.44
PPP RATE 5.167 5.389 5.630 5.863 6.066 6.271
INFLATION 5.8 % 6.1 % 4.5 % 5.6 % 5.5 % 5.5 %
UNEMPLOYMENT 24.7 % 25.1 % 25.1 % 24.9 % 24.8 % 24.6 %
YEAR
ASEAN-5 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)
GDP 4.6 % 6.1 % 5.2 % 4.6 % 5.2 % 5.3 %
GDP PER CAPITA (INT $) 8,828 9,411 9,913 10,381 10,867 11,460
INFLATION (AVERAGE) 5.8 % 3.8 % 4.7 % 4.7 % 4.1 % 4.2 %
DEFINITIONS
GDP: Gross domestic product, constant prices (Annual percent change). Annual percentages of constant price GDP are year-on-year changes; the base year is country-specific.
GDP per Capita: Gross domestic product per capita, constant prices (National currency). GDP in constant national currency per person. Data derived by dividing constant price GDPby total population.
PPP rate: Purchasing Power Parity rate of exchange. Rate against the International dollar (USD), which renders purchasing power identical to the international dollar.
Inflation: Consumer Price Inflation
Unemployment: Percentage of total workforce
INT $: Hypothetical currency with the same purchasing power of goods and services in all countries
MARKET DATAKEY STATISTICS
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Menlyn Maine Mixed Use Green Precinct, Pretoria, Africa
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MARKET INTELLIGENCE
SUB- SAHARAN AFRICASub-Saharan Africa remains amongthe fastest growing regions in theworld, however, as monetary policyis being tightened in some countriesgrowth will be affected in the shortterm with GDP growth for 2014 at5.0% and forecast to be 4.5% in2015 and returning to 5.1% in 2016.The forecast fall for 2015 is subjectto the speed of a rise in commodityprices. Oil is down 50% from June2014 to March 2015. Iron Ore andnatural gas are down over 40% forthe same period, while coal andcotton are over 20% down.
South Africa’s growth has grownfrom 1.5% in 2014 to 2.0% in 2015and is forecast to recover slightlyin 2016 to 2.1%. The oil exportingcountries Congo Republic, Nigeria,Gabon, Cameroon and Angolawho rely heavily on oil for largepercentages of their revenue and
GDP are hardest hit by falling oilprices. GDP for the oil exporters isset to retract from 5.8% in 2014 to4.6% in and recover slightly to 5.0%in 2016. For Guinea, Liberia and
Sierra Leonne, the three countriesmost effected by the Ebola crisis,growth remains weak. All countriesin the region are experiencingdeflation in their currency addingfurther pressure to GDP.
Construction throughout the regionis being affected by confidence andreduced availability of funds, butthere appears to be an emphasison infrastructure together with an
increased focus on reducing povertythrough investment by developmentbanks, according to the IMF, who arepromoting sustainable fiscal growthpolicies throughout the region. Thisinvestment is likely to be initiallydirected towards the rectificationof the energy crisis and improvingtransportation throughout theregion by upgrading the poorerquality roads, which in turn willbolster the construction industry,
add demand for commodities andcreate jobs. These initiatives willbenefit most of the countries in theregion.
2015 FORECASTED GDP GROWTH
COUNTRY 2015 2016 2017 2018
ANGOLA 4.5 3.9 5.1 5.3
BENIN 5.5 5.4 5.5 5.6
BOTSWANA 4.2 4.0 4.1 4.1
BURKINA FASO 5.0 6.0 6.5 6.5
BURUNDI 4.8 5.0 5.2 5.4
CABO VERDE 3.0 4.0 4.0 4.0
CAMEROON 5.0 5.0 5.0 5.0
CENTRAL AFRICANREPUBLIC
5.7 5.7 5.7 5.8
CHAD 7.6 4.9 8.3 5.0
COMOROS 3.5 4.0 4.0 4.0
CÔTE D'IVOIRE 7.7 7.8 7.5 7.0
DEMOCRATIC REPUBLICOF THE CONGO
9.2 8.4 8.4 7.1
EQUATORIAL GUINEA (15.4) 3.7 (4.7) (7.0)
ERITREA 0.2 2.2 3.2 3.6
ETHIOPIA 8.6 8.5 8.0 8.0
GABON 4.4 5.5 5.6 5.7
GHANA 3.5 6.4 9.2 6.9
GUINEA (0.3) 6.5 8.3 8.4
GUINEA-BISSAU 4.5 4.0 4.0 4.0
KENYA 6.9 7.2 7.1 7.0
LESOTHO 4.0 4.4 5.6 5.7
LIBERIA (1.4) 5.0 7.8 9.1
MADAGASCAR 5.0 5.0 5.0 5.0
MALAWI 5.5 5.7 6.0 5.9
MALI 5.6 5.1 5.4 5.4
MAURITIUS 3.5 3.5 3.5 3.5
MOZAMBIQUE 6.5 8.1 7.8 8.0
NAMIBIA 5.6 6.5 5.5 5.5
NIGER 4.6 5.4 8.1 7.6
NIGERIA 4.8 5.0 5.3 5.5
REPUBLIC OF CONGO 5.2 7.5 8.6 4.2
RWANDA 7.0 7.0 7.5 7.5
SÃO TOMÉ ANDPRÍNCIPE
5.0 5.2 5.5 5.5
SENEGAL 4.6 5.1 5.6 6.2
SEYCHELLES 3.5 3.8 3.7 3.6
SIERRA LEONE (12.8) 8.4 8.9 6.0
SOUTH AFRICA 2.0 2.1 2.4 2.7
SOUTH SUDAN 3.4 20.7 5.1 1.3
SWAZILAND 1.9 1.8 1.6 1.6
TANZANIA 7.2 7.1 7.0 6.9
THE GAMBIA 5.1 8.7 6.2 5.9
TOGO 6.0 6.0 6.1 6.1
UGANDA 5.4 5.6 5.8 6.0
ZAMBIA 6.7 6.9 6.7 6.5
ZIMBABWE 2.8 2.7 3.5 3.6
RLB CONSTRUCTION MARKET ACTIVITY MODELAFRICA - GROWTH SECTORS VS DECLINE SECTORS
NUMBER OF CITIES
3
1
2
0
4
5
6
GROWTH DECLINE
HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL
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LOCATION INTELLIGENCEAFRICA
Rider Levett Bucknall | International Report – Third Quarter 201518
CAPE TOWN
The Cape Town construction market
continues to show signs of recovery
as there has been a significant
increase in construction activity inthe Western Cape. Building costs
however are fluctuating as contractor
capacity is taken up and then
released on shorter projects.
Projects are being executed on
extremely tight margins and tend to
be smaller refurbishments with short
programmes, therefore not providing
a sustainable pipeline of work in
the property and construction
sector. The Western Cape market
remains challenged by its shortageof commercial blue chip tenants as
large vacancy rates are inhibiting
the development of new commercial
spaces.
Some of the significant projects
in the region include the V&A
Waterfront Silo Precinct, Cape Town
International Convention Centre
(CTICC) Phase II, Netcare Hospital
(Cape Town Foreshore), Century City
ongoing development, KPMG Office,
Foreshore Cape Town, Tsogo SunHotel, Strand Street Cape Town,
V & A Waterfront Dock Road Offices
(previously Shell), Citadel Office,
Claremont and Momentum Group’s
Parkade in Bellville.
There is still high volatility in the
steel reinforcement and structural
steel trades and a shortage of large
subcontractors capable of high
specification HVAC installations,
which in turn is placing upward
pressure on pricing.
Aluminium Doors, Windows and
Shopfronts trades have seen a
number of established subcontractors
close their doors in the midst of
the recession leaving a shortage
of capability. There has also been
an increase in capability of flush
glazed facade contractors. Due to
the waning capacity and the general
increase in costs, there continues to
be an emphasis on the negotiating
of contracts rather than tenderingacross the industry.
JOHANNESBURG & PRETORIA
Johannesburg and Pretoria are
enjoying favourable conditions
across their local economy. The
government has set aside R1 billion toupgrade one of the most dangerous
but heavily used roads in South
Africa, the Moloto Road just north
of Pretoria. This is only one of the
latest projects seen as investment in
infrastructure to improve access to
healthcare, education, employment
and trading opportunities.
Infrastructure spending has been high
for some time. Between the 2009
and 2014 fiscal years, the government
spent just over a R1-trillion on
infrastructure. Within its 2015
budget, the government announced
that it will spend R813 billion on
infrastructure over the next three
years. In the 2015/16 financial year,
the government’s capital expenditure
programme will come to R274
billion. Most infrastructure spending
will be on transport and logistics at
R339-billion out of the R813-billion
programme. Other heavy expenditure
items are energy, which will take up
R166-billion and water and sanitationat R117-billion over the next three
years.
Construction of the Nelson Mandela
Children's Hospital in Parktown,
Johannesburg, is going smoothly
and is expected to be completed
in February 2016. While there is
buzz around Gauteng’s new R84
billion smart mega city being built in
Modderfontein, another high-budget
development is taking place east of
Pretoria. Dubbed “The East Capital”,the Hazeldean development is a R44
billion project adopted and approved
by the Tshwane Metropolitan District.
Madiba Street, opposite the Pretoria
News offices, “No.1 on Mutual” is
gradually taking shape. The new retail
and residential development will have466 housing units, a retail component
and covered parking for 300 cars. It
is scheduled for completion in April
next year. The old Home Affairs
Department building in Pretorius
Street is being converted into a
100-unit residential complex to be
completed in August this year. It will
be known as Centrakor.
The rand continues to weaken against
most advanced economies helping
exporters compete internationally.With lower fuel prices, falling
unemployment and forecast growth
for South Africa.
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LOCATION INTELLIGENCE
AFRICA
Rider Levett Bucknall | International Report – Third Quarter 2015 19
PORT LOUIS (MAURITIUS)
Mauritius will be embarking on a high-
investment period with the proposal
of 13 employment-rich megaprojects
spread over the country. Further tothe 3% contraction in 2012 and 9.4%
dip in 2013, we have witnessed a
contraction of a further 4% during
2014. With a new Government in 2015,
the vision proposed by the Minister
of Finance brought forward various
priority projects aimed at providing
better service-delivery to the public
and attracting higher Foreign Direct
Investment (FDI).
The north of the island which
comprises the districts Riviere duRempart and Pamplemousses have
undergone massive growth over the
last five years. With the village of
Grand Baie being the most popular,
the north is one of the most tourist-
orientated regions of the island.
The region counts approximately
thirty hotels, guesthouses, numerous
restaurants in addition to several
bars and night clubs, shops and now
shopping centres. The two most
significant projects in the area have
been the Grand Baie La Croissete
(MUR2 billion) and Azuri Phase one
project (MUR2.5 billion).
The vision of the Azuri project
is to create a new village in the
North-eastern corner of the island.
The completion of phase one has
delivered nearly 300 residential units
together with a hotel, school, and
restaurants, along with retail, wellness
and health facilities and a marine
club. Phase two will start in mid-2015
and is expected to deliver around
32 villas. Grand Baie La Croisette
is a new concept of urban lifestyle
in Mauritius and can be considered
the Premier shopping and leisure
destination in northern Mauritius,
including shops, restaurants, cinemas,
offices and apartments.
New development include: the
Omnicane airport city in the south-
east, St Félix Village projects in the
south, The Médine Integrated Park inthe west, Roches Noires in the north-
east, The Azuri Phase two project
in the north, The Terra project in
the north, The Highlands City in the
centre and The Richeterre Project
in the vicinity of Port Louis. Of the
13 projects, eight will be developed
along the new concept of ‘smart
cities’ whilst five will see the creation
of new technology parks. These
projects, six of which are ready for
implementation, are expected to
mobilise some MUR120 billion (USD
3.3 billion) of private and foreign
direct investments, giving a welcome
boost to the country’s construction
sector.
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Port of Portland Headquarters, Long-term Parking Garage, United States of America
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Rider Levett Bucknall | International Report – Third Quarter 2015 21
The growth in the United States’GDP was slightly negative in the firstquarter but is predicted to pick up inH2 2015. For the year as whole, GDP isforecasted to expand at 3.14%.
Consumer spending within the UnitedStates is growing primarily due tostrong job growth and lower oil prices.Personal consumption spending grewat 2.1% in Q1 2015 with expectationsof 3.0% in H2 2015. Most major U.S.economic indicators point to healthygrowth in the coming quarters.
Employers have added over US$1.3million net new payroll positionsthrough the first six months of theyear, suggesting that annual jobgains will be in the US$2.5 to US$3.0million range. The current pace ofgrowth helped bring the nationalunemployment rate down to 5.3%in June, from 5.7% in January. Theconstruction sector has added about140,000 jobs so far this year, pullingthe unemployment rate down to 6.3%in June for this sector from a rateof 8.2% a year ago and 9.8% in June
2013. The unemployment rate forconstruction has fallen so sharply thatlabour availability has become one ofthe most pressing concerns for theindustry.
In spite of challenging weatherconditions across major regionsof the country so far this year, theconstruction sector has performedsurprisingly well to date. Throughthe first five months, overall non-residential building activity was up16%, paced by an 18% increase in
MARKET INTELLIGENCE
AMERICAScommercial construction activity,and an unsustainable 55% increase inmanufacturing construction spending.Recent manufacturing constructionactivity is heavily concentrated inthe chemicals area, often relatedto the recent surge in domestic oiland natural gas production. Just assignificant, institutional constructionspending grew almost 5.0%,compared to the same period in2014. While the amusement andrecreation category (often sports
facilities) paced the gain, the muchlarger education and healthcaresectors also posted small gains inthe year-to-date figures.
Latin America and the Caribbean faceparticularly challenging outlooks.Growth is projected to decline for afifth consecutive year in 2015, fallingto less than 0.8% for the region asa whole, before staging a moderaterecovery in 2016. South America’scommodity exporters are seeingfalling global commodity pricesimpacting their domestic recovery
efforts. Growth is predicted to benegative in three of the largest SouthAmerican economies during 2015.Argentina (0.3%), Brazil (1.0%), andVenezuela (7.0%), while Chile andPeru are projected to see a pickup ingrowth. By contrast, most of CentralAmerica, the Caribbean and Mexicoare forecast to achieve steady orstronger growth, supported by thelower oil price and the strongereconomic recovery in the US assistingthe tourism sector.
USA CONSTRUCTION COST RELATIVITIES
Q3, 2015
HONOLULU 182
NEW YORK 178
BOSTON 151
SAN FRANCISCO 150
CHICAGO 148
WASHINGTON 143
LOS ANGELES 135
SEATTLE 118
PORTLAND 106
DENVER 101
PHOENIX 101LAS VEGAS 99
NUMBER OF CITIES
15
5
0
10
20
30
25
GROWTH DECLINE
HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL
RLB CONSTRUCTION MARKET ACTIVITY MODELTHE AMERICAS - GROWTH SECTORS VS DECLINE SECTORS
2015 FORECASTED GDP GROWTH
COUNTRY 2015 2016 2017 2018
NORTH AMERICA
CANADA 2.2 2.0 2.0 1.9
MEXICO 3.0 3.3 3.5 3.8
UNITED STATES 3.1 3.1 2.7 2.4
SOUTH AMERICA
ARGENTINA (0.3) 0.1 0.3 0.4
BOLIVIA 4.3 4.3 4.1 4.0
BRAZIL (1.0) 1.0 2.3 2.3
CHILE 2.7 3.3 3.6 3.7COLOMBIA 3.4 3.7 4.0 4.2
ECUADOR 1.9 3.6 4.5 4.0
GUYANA 3.8 4.4 4.0 4.0
PARAGUAY 4.0 4.0 4.0 4.0
PERU 3.8 5.0 5.5 4.8
SURINAME 2.7 3.8 4.5 4.8
URUGUAY 2.8 2.9 3.0 3.3
VENEZUELA (7.0) (4.0) (2.5) (1.5)
CENTRAL AMERICA
BELIZE 2.0 3.0 2.7 2.6
COSTA RICA 3.8 4.4 4.5 4.4
EL SALVADOR 2.5 2.6 2.6 2.3
GUATEMALA 4.0 3.9 3.9 3.9HONDURAS 3.3 3.4 3.6 3.8
NICARAGUA 4.6 4.3 4.0 4.0
PANAMA 6.1 6.4 6.7 7.1
THE CARIBBEAN
ANTIGUA ANDBARBUDA
1.9 2.3 2.7 2.7
BARBADOS 0.8 1.4 1.5 1.8
DOMINICA 2.4 2.9 1.6 1.8
DOMINICAN REPUBLIC 5.1 4.5 4.0 4.0
GRENADA 1.5 2.0 2.0 2.4
HAITI 3.3 3.8 3.8 3.8
JAMAICA 1.7 2.3 2.5 2.7
ST. KITTS AND NEVIS 3.5 3.0 2.5 2.5
ST. LUCIA 1.8 1.4 1.8 2.0
ST. VINCENT ANDTHE GRENADINES 2.1 3.1 3.2 3.2
THE BAHAMAS 2.3 2.8 1.8 1.7
TRINIDAD ANDTOBAGO
1.2 1.5 1.6 1.7
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Rider Levett Bucknall | International Report – Third Quarter 201522
HONOLULU
Hawaii’s economic climate is steadily
improving with the labour market
continuing to show year-on-year
improvement. In the last year,Hawaii’s employment growth has
increased 1.6% and risen 4.4% higher
than the same period peak levels
which occurred in 2007. Hawaii’s
unemployment rate is ranked the
7th lowest in the nation, currently
standing at 4.4%, the lowest June
rate since 2007. Consistent with an
improving economy, visitor arrivals
and time spent in Hawaii have
increased by 6.1% while expenditures
by these visitors have risen 4.4%.
In correlation with the increased
employment and increased tourism
dollars, the state tax revenue
has increased a dramatic 20.3%
compared to last year. These are all
positive signs of Hawaii’s regularly
improving economic situation.
The surge in Hawaii’s economic
performance corresponds with the
growth of the construction market.
This is demonstrated by a total of
US$318.8 million worth of private
building permits being issued in
June 2015, which is a staggering
16.1% higher than June of last year.
New developments in up–and-
coming areas, such as Kaka’ako and
renovations in Waikiki and Ala Moana,
have kept the construction industry
busy. In addition, new landmark
projects such as the HART rail project
will hopefully keep the growth steady.
Notable construction projects in
Honolulu include the Park Lane
Residential Development at Ala
Moana Shopping Centre, OahuSequel at the Hilton Hawaiian
Village, the new NICU-PICU tower at
Kapiolani Medical Centre for Women
and Children, Howard Hughes
Corporation’s Waiea (Water of Life)
and Anaha (Reflection of Light)
residential towers at Ward Village,
Symphony Honolulu’s condominium
project and the new International
Market Place in Waikiki.
Tourism related projects and retail
development state-wide have beenthe primary causes of this surge in
activity. However, it seems that the
growth is cooling down with some
original construction start dates of
the residential projects being pushed
back. There will likely be some
slower growth over the next two
years; undoubtedly non-residential
construction has accounted for the
major activity in the past few years,
but with its eventual decline, and
assuming positive resolution to the
Koa Ridge and Hoopili developments,
single family residential construction
will likely begin to pick up over the
next few years.
LOS ANGELES
In southern California since 2010,
new housing building permits had
been rising steadily after the peak in
2006 and the rapid decline in 2009.With levels projected to rise and
continue their recovery, the outlook
for on-site residential work in 2016
and 2017 seems positive. In addition,
rising home prices, employment,
income and population growth will
all assist in the growth of new home
construction. This is likely to stretch
over many years.
With an unemployment rate of 7.1%,
an overall drop of approximately
0.7% within the past year, LosAngeles County remains below the
national construction unemployment
rate of 8.4%. Over the past year,
construction employment in Los
Angeles rose 6.6%, adding 7,800
employees to the industry. This
6.6% increase represents the largest
percentage growth in any industry for
the County. Although construction is
a highly cyclical industry, the long-
term outlook is optimistic.
Residential construction remainsstrong in both, the apartment and
condominium markets with significant
projects under construction in Playa
Vista and projects proposed in
Beverly Hills. There are approximately
13,635 residential units in the
pipeline for downtown Los Angeles
alone. Residential developments
are leading the increase in crane
counts. Buyers are signing deals to
reserve units in multiple new high-
end projects. In Los Angeles, 40-plus
high-rise condominiums have begun
construction after a 22-story project
that started last year sold out within
weeks.
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Rider Levett Bucknall | International Report – Third Quarter 2015 23
The hotel market is also on the rise
in downtown Los Angeles as the city
pushes for more hotel construction
near the convention centre. Last year,the area experienced the opening
of the new Marriott Courtyard/
Residence Inn in South Park and the
announcement that InterContinental
Hotels, will operate the 900 room
hotel, currently under construction
in the US$1 billion Wilshire Grand
project, currently the largest non-
infrastructure project in the country.
Since 2008 over 700 new
restaurants, bars, and retail stores
have opened in downtown LosAngeles. The US$160 million
renovation of The BLOC, which
includes an upgraded Macy’s and a
new slate of stores on three levels, is
in full swing. Approximately 1.2 million
ft2 of retail space is currently under
construction. The retail sector has
had some improvement in the H1 of
2015, with positive net absorption,
albeit at a slower pace than in recent
years. The sale of shopping centres
has slowed recently, but prices have
increased and improving market
fundamentals may support additional
investment activity in the near future.
PHOENIX
Arizona's economic recovery
continues, as indicated by a growing
local labour market, which has
expanded by an average of 50,000 jobs per year since 2012. During the
next three years, the state is forecast
to add nearly 200,000 net new jobs.
Many of those new jobs will be in the
service-providing sectors, particularly
professional and business services,
education and health services, trade,
transportation and utilities and the
leisure and hospitality sectors. These
four sectors alone are expected to
account for over 70% of net job
growth in Arizona. Construction
is forecast to generate increased
employment, as the housing sector
improves. Manufacturing jobs are
predicted to remain stable, as is
government employment.
Key construction projects in the
Phoenix-Metro area include State
Farm’s two million ft2 project along
Tempe Town Lake. The 20-acre,
US$600 million mixed-use site will
include five office buildings leased
by State Farm, retail amenities, and
a 10-acre plaza to be completed
by 2017. Another major project
in the same vicinity is Arizona
State University’s US$256 million
renovation of their existing 71,706-
seat Sun Devil Football Stadium.
The renovation work, combined with
the construction of a new Student
Athlete Performance Centre, is being
undertaken in three phases with
completion of the project proposed
by mid-2017.
The housing market in Arizona has
significantly improved over the last
12-month period. Housing permits in
June 2015 were up 46% from June
of last year and are up almost 36%
year-to-date. New home closings are
up 24% from the same month last
year and are up over 9.0% year-to-
date. This dynamic change suggests
that the overall housing market
performance for 2015 will be stronger
than originally forecasted.
The Phoenix-Metro office market has
recovered while supply growth has
been minimal. Recently the office
market has recorded an increasein net absorption, stable vacancy,
and continued rent increases. Office
vacancy levels have begun to level off
after improving steadily from 2012-
2014 levels and, while the first half of
2015 trended along the same path
as much of last year, the long-term
outlook suggests greater volatility,
as new projects are completed and
vacated spaces come online to be
backfilled.
Recently, industrial vacancies haveremained fairly stable. However, the
pace of development has begun to
slow, following a very active 2014 and
first half of 2015. Despite the recent
slowdown in activity, conditions are
expected to improve by the end of
the year, particularly as the delivery
of new industrial space slows. Within
the retail sector, there has been
some improvement in the first half
of 2015 with positive net absorption,
albeit at a slower pace than in recent
years. The sale of shopping centers
has slowed recently, but prices have
increased and improving market
fundamentals may support additional
investment activity in the near future.
Ongoing improvement in many of
Arizona’s major real estate market
sectors will most likely have a direct
impact on construction costs as
Arizona still suffers from a significant
loss of both skilled and unskilled
labor.
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Rider Levett Bucknall | International Report – Third Quarter 201524
PORTLAND
Oregon’s economy continues to
strengthen, as the state’s gross
domestic product has increased
over 5% from last year - the sixthhighest growth rates among all
states. Jobs (and incomes) in Oregon
are increasing at a rate similar to
the mid-2000s, ranking as the 13th
fastest population growth in the
nation last year and forecast to reach
4.35 million by 2022. As of May 2015
construction employment stood at
its highest in seven years at 81,300
jobs, representing a gain of 1.4% since
May 2014. The construction market
remains buoyant in most sectors.
The office market shows continued
growth with an increase in “trophy”
buildings whereby prominent
class A properties offer premium
enhancements or upgrades to attract
top rents. There is a lot of activity
in the suburbs of Portland with
notable projects such as the Nike
Campus additions. The condominium
and apartment market continues to
flourish with several new mid-rises
under construction in and around
the Pearl district as well as the
Oregon Square high rise residential
development in North East Portland.
The healthcare sector has several
new projects under design such
as OHSU and Providence as
well as the pending VA Portland
Seismic upgrade. Several major
educational projects are now well
into construction for school districts
such as Portland Public Schools and
Beaverton School District with many
more projects under design and at
feasibility stage. Several community
college projects are also anticipated
to break ground early next year.
The hotel sector remains active with
several boutique hotels as well as a
convention center hotel development.
The Oregon legislature surprised
many by deciding to shelve the
Oregon State Capital Seismic
renovation project as well as failingto pass a large transportation funding
package. The new Multnomah
Courthouse, however, has full
approval and is now under the
early stages of design. Industrial/
manufacturing work should see less
activity, primarily due to the oil and
gas industries lower energy costs
impacting investment. Projects such
as the Intel Campus are now winding
down to completion.
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Rider Levett Bucknall | International Report – Third Quarter 2015 25
Meanwhile, as business continues
to grow, so does the demand of
the hospitality sector. Uniquely, the
city has to meet both the demandof increased business and leisure
clientele. In years past, the average
daily room rate could not offset the
premium to build in San Francisco,
along with the union demands of
operating a hotel. However, with
occupancy rates consistently residing
at 84.1% and the average daily rate
increasing 9% annually over the
past 4 years, the returns on hotel
investments are starting to add up.
A number of new build projects are
in development, including a new
Highgate Hotel off of Union Square,
and upcoming projects for both
Eaton and Stanford Hotels.
SAN FRANCISCO
San Francisco is experiencing
continued growth in the job market,
with their unemployment rate at
4.2%, down 1.0% from this time lastyear. With the job market continuing
to prosper, housing stock in the city
and around the Bay Area bear the
burden of stifled long-term growth.
San Francisco's home sale prices
have increased 12.7% over the past
year. The total number of multifamily
units is growing over 2.0% annually in
the City, which is outpaced by 3.2%
job growth, further supporting the
burden of a city struggling to meet
the housing demand of its rampant
growth. Current projects contributing
to housing supply include 1545 Pine
Street, Lumina, and The Rockwell.
Within the office sector, leasable
office space has decreased over
6.0% while the subleasing market
continues to expand. Although there
is some debate as to whether this is
a cause for concern, a recent study
found this trend to be best explained
by companies having outgrown their
current leases and or planning for
future growth by leasing an excess
of space subleasing in the interim.
Despite the high demand for office
development, Proposition M limits the
amount of office development that
can be approved annually; the current
amount of proposed developments
submitted to the city is tenfold the
permitted amount. The city has
assembled a selection committee to
review each submission and award
entitlements according to the needs
of the neighbourhood.
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Holiday Inn Express Clarke Quay, Singapore
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Growth within Asia is forecast tocontinue through 2015 and 2016.India and most member economiesof the Association of SoutheastAsian Nations (ASEAN) arehelping achieve growth numbers,compensating for the slowdownbeing seen in China. GDP inChina is being carefully plannedby the Central Government toachieve sustainable and moderategrowth through economic reformthroughout China. The growth inChina during 2014 of 7.4% is forecastto reduce through 2015 and 2016 to6.8% and 6.3% respectively.
China is benefiting from strongdomestic demand as a key driverto growth. Construction continuesto benefit from domestic demandand is seeing a boost to realincomes and strong labour marketconditions. Japan, although stagnant
for the past year is forecast toexperience growth of 1.0% for both2015 and 2016. Terms of trade forthe likes of Indonesia and Malaysiahave put downward pressures ongrowth, however this is forecast tostabilise in the short term.
MARKET INTELLIGENCE
ASIAFor the 10 ASEAN economies, theforecast growth for 2015 is 4.9% upfrom 4.4% in 2014. 2016 is forecastto see further growth to 5.3%.Thailand is adding to the increasein growth, as is Indonesia despitethe resultant pressure from terms oftrade. Notwithstanding the potentialrisks associated with the effectsfrom recoveries of other advancedeconomies and the possibilities ofupward volatility in commoditiesthe region is currently stable andforecast to continue that way. Whileexpansion has moderated sincethe global financial crisis, Asia isprojected to remain a global growthleader in the medium term.
ASIA CONSTRUCTION COST RELATIVITIES
Q3, 2015
SINGAPORE 110
BEIJING 89
SHANGHAI 87
GUANGZHOU 84
SHENZHEN 78
KUALA LUMPUR 74
HO CHI MINH CITY 66
JAKARTA 57
RLB CONSTRUCTION MARKET ACTIVITY MODEL
ASIA - GROWTH SECTORS VS DECLINE SECTORS
NUMBER OF CITIES
6
2
0
4
8
12
10
GROWTH DECLINE
HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL
2015 FORECASTED GDP GROWTH
COUNTRY 2015 2016 2017 2018
BANGLADESH 6.3 6.8 7.0 7.0
BHUTAN 7.6 8.2 8.6 11.5
BRUNEI DARUSSALAM (0.5) 2.8 3.4 6.5
CAMBODIA 7.2 7.2 7.3 7.4
CHINA 6.8 6.3 6.0 6.1
HONG KONG SAR 2.8 3.1 3.4 3.4
INDIA 7.5 7.5 7.6 7.7
INDONESIA 5.2 5.5 5.8 6.0
JAPAN 1.0 1.2 0.4 0.7
KOREA 3.3 3.5 3.7 3.7
LAO P.D.R. 7.3 7.8 7.7 7.4
MALAYSIA 4.8 4.9 5.0 5.0
MONGOLIA 4.4 4.2 3.8 6.2
MYANMAR 8.3 8.5 8.3 8.0
NEPAL 5.0 5.0 4.5 4.5
PHILIPPINES 6.7 6.3 6.0 6.0
SINGAPORE 3.0 3.0 3.2 3.2
SRI LANKA 6.5 6.5 6.5 6.5
TAIWAN PROVINCEOF CHINA 3.8 4.1 4.1 4.2
THAILAND 3.7 4.0 4.1 4.0
VIETNAM 6.0 5.8 5.9 6.0
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BEIJING
Beijing’s GDP growth rate slid to 6.8%
year-on year in Q1 2015, 0.5% less
than that in Q4 2014. Consumer Price
Index recorded a mild increase of1.5% year-on-year. Beijing’s economy
continues to lose momentum
despite several incentive polices
being announced by the Central
Government in Q1 2015 to shore up
the economy. The People’s Bank of
China (PBOC) further cut interest
rates and bank reserve requirements.
The sales volume of residential units
has rebounded in response to the
relaxation measures. Residential
prices are expected to stabilise in the
remaining months of 2015.
The Beijing office market remained
stable in Q1 2015, despite a tight
vacancy rate and strong competition
for space as there is abundant supply
in the pipeline. Rents for retail space
also remain stable, thanks to Beijing’s
growing middle class, which provides
support to the retail market.
A coordinated development plan
for the Beijing-Tianjin-Hebei bloc
was announced last year, aimingto relieve the economic and social
pressure on the Capital and to boost
development in its surrounding
regions. The construction of Beijing
Daxing International Airport or Beijing
Capital Second International Airport,
finally commenced in Q4 2014.
The Beijing Universal Studios will
start construction in Q3 2015 with
completion targeted in 2019. The
park is situated in Tongzhou district
with an area of 1.2 km2 and a totalinvestment of more than ¥20 billion.
Tender prices in Beijing have
decreased slightly by 0.5% in the last
two quarters. Material prices have
continued to decline, especially the
price of reinforcement bars which has
fallen to a record low since 2003.
CHENGDU
Chengdu’s total GDP in Q1 2015 was
¥246.23 billion, an increase of 7.4%
compared to Q1 2014 year and 0.4%
higher than the national GDP growthrate. The Consumer Price Index
increased 1.3% year-on-year, which
was the same compared with the
same period last year.
In Q1 2015, a total of ¥51.19 billion was
invested in the local real estate, an
increase of 20.2% year-on-year while
a total of ¥25.54 billion was invested
in Tianfu Xinqu, a decrease of 8.7%
year-on-year. In March to April, 2015,
the Central and Sichuan Governments
announced a series of measures toloosen the limit of down payment for
a second home along with a change
to the period of free transaction tax
for housing ownership from five years
to two years. These new measures
reflect the government’s objective
of creating a stable housing market
within the region.
Due to the weakening economy,
construction activities in Chengdu
have been declining, but the fall was
lower than the national trend. Therewere few new projects commencing
in Q1 2015. Labour costs increased
by 2.68% in Q1 2015 compared with
end of 2014. The prices of concrete
and steel decreased 2.47% and
9.27% respectively. The price of
flat glass has also been decreasing
continuously. On the other hand,
the prices of ceramic, wall finishes
and stone finishes have been rising
moderately. Overall, material costs
have slightly decreased comparing
with the end of 2014. Tender prices in
2015 are expected to remain flat.
GUANGZHOU
Guangzhou's economic growth,
mirroring the national trend, slowed
down to 7.5% year-on-year in Q1 2015.
Consumer price inflation eased to1.4% in Q1 2015 compared with 2.3% in
end 2014.
The Central Government has
reacted quickly to the economic
contraction since late last year by
slashing interest rates and the bank
reserve requirement ratios a number
of times. Liquidity and investment
sentiment in both the private and
public sectors are set to improve on
the back of such moves. The Central
Government is aiming to meet the 7%annual GDP growth target and is very
likely to continue to roll out growth-
supportive measures as is necessary.
The property market has experienced
a downturn since 2014 after a
string of government cooling
measures were introduced to curb
the then overheated market. Major
projects under construction or in
the pipeline, as identified by the
municipal government, were mostly
infrastructures in the public sectorsuch as underground railways,
highways, site development and
facilitating works for earmarked
development zones.
The construction sector suffered as
a result of developers’ cautiousness
in the current economic conditions.
Nevertheless, the construction
industry growth has remained stable,
thanks to the volume of public
works including infrastructure and
affordable housing projects nowunder construction. Tender prices
have remained relatively flat since the
beginning of 2015 and are forecast to
remain stable or to decline marginally
in the H2 2015.
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HO CHI MINH CITY
Vietnam continued its economic
recovery from 2014 as its gross
domestic product (GDP) expanded
6.0% in Q1 2015. This growth wassupported by continued lower
commodities prices, well-performing
foreign direct investment (FDI)
enterprises and higher demand in
export markets. Average consumer
price index (CPI) in Q1 2015 rose 0.7%
compared to the figure of the same
period in 2014. This is the lowest
growth for the last 10 years. The
total investment in real estate in the
January-May period was US$461.5
million and governmental statistics
reported that 66.5% of the total
investment in the property sector
was contributed by foreign direct
investments (FDI).
The government is expecting GDP
growth to reach an annual rate of
6.5% for 2015, higher than the initial
target of 6.2%. The World Bank
projects growth to be 6.0% in 2015
before expanding to 6.2% and 6.5% in
2016 and 2017 respectively.
Building works for Ho Chi Minh City’sfirst Metro Line has been accelerated
to an anticipated completion date
of 2019, with the first trains to be
fully operational by 2020. The
construction industry expanded 4.4%
in Q1 2015, as compared to 3.4% for
Q1 2014. Domestic steel consumption
surged 17.0% over last year to 2.7
million tonnes where more than half
of the steel consumed (1.29 million
tonnes) was construction steel,
marking a 10.5% y-o-y increase.
Barring any unforeseen market
conditions, building tender prices in
Ho Chi Minh City are anticipated to
increase by 3.0% to 6.0% for 2015.
HONG KONG
Hong Kong’s economy grew
moderately at 2.1% year-on-year,
in real terms, in the first quarter of
2015. According to the CompositeConsumer Price Index, overall
consumer prices rose by 3.1% in
June 2015 over the same month a
year earlier, slightly higher than the
corresponding increase (3.0%) in
May 2015. The seasonally adjusted
unemployment rate stood at 3.2% in
April to June 2015, the same as March
to May 2015. The underemployment
rate stood at 1.4% in April to June
2015, the same as March to May 2015.
There is a concern that Hong Kong‘seconomy will weaken in the coming
months as both the number of
tourists and volume of retail sales
have been declining. As the Hong
Kong dollar is pegged to the US
dollar, the latter’s rise against all
major currencies will likely result in
imported deflation in the medium
term.
The construction industry is still being
dominated by major infrastructure
projects such as the Shatin CentralLink of the Mass Transit Railway, the
High Speed Rail and Hong Kong-
Zhuhai-Macau Bridge. Construction
output in Hong Kong remains very
high, but any further increase will be
constrained by the shortage of skilled
labour. The delay in completion of
some of the infrastructure projects
may ease the heavy demand on
skilled labour as construction work
will be more evenly spread out.
There was an increase of 2.0% intender prices in the first quarter of
2015. On a year-on-year basis, the
increase was 6.4%. With a rather
stable materials market, the rate of
increase in tender prices since early
2015 has been slowing down and
this trend is likely to continue in the
coming months.
JAKARTAIndonesia’s economy grew 5.0% for the
Q1 2015 on a year-on-year basis. The
economy weakened further by 0.2%
from the preceding quarter. Based onthe latest data from Statistics Indonesia
(BPS), annual headline inflation peaked
in May at 7.2% year-on-year mainly due
to rising food, tobacco and electricity
prices. The consumer price index (CPI)
increased 0.5% in May from April. Bank
Indonesia expects inflation to reach
between 3.0% - 5.0% by end of 2015.
Jakarta’s first subway development, the
North-South line, is being constructed
while an East-West line is being studied.
The North- South line, which will be
constructed in two phases, connectsKampung Bandan (in North Jakarta)
to Lebak Bulus (South Jakarta), over a
distance of 23.3 km. The first phase of
the Jakarta MRT is anticipated to open
to the public in 2018. The total cost
of the project is estimated to cost at
least US$1.7 billion and should be fully
completed by 2027.
Another government initiative is the
construction of a new port at Tanjung
Priok in North Jakarta. When fully
operational in 2023, this New Priok
Port (also known as Kalibaru Port) is
expected to handle more than triple the
annual capacity of the current Tanjung
Priok. The construction industry,
through public private partnerships
(PPPs) is expected to continue to
expand at an annual rate of 6.9% over
the next five years (2015-2019). The
focus on infrastructure, including road
works, energy and maritime works
will continue to drive growth, on the
back of a rising population, greater
urbanization and increasing disposableincome.
On the lowest end of the real estate
spectrum, the nation currently faces a
backlog of 15 million dwellings for its
low-income citizens. Plans are already
underway to build 10 million houses
and apartment units between 2015 and
2019. Launched on 30 April 2015, the
“One Million Houses Program” is part
of President Widodo’s nine priorities
agenda called “Nawa Cita”. State-
owned housing developer Perumnas
has been tasked with the constructionof these 10 million houses. Barring any
unforeseen market changes, building
tender prices are anticipated to
increase by 3.0% - 5.0% for 2015.
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KUALA LUMPUR
Malaysia’s gross domestic product
(GDP) grew to a four-year high of
6.0% in 2014. The economy in Q1 2015
remained resilient with a growth of5.6% on a year-on-year basis. The
consumer price index (CPI) was
significantly lower at 0.7% in Q1 2015
against 2.8% in Q4 2014. The central
bank, Bank Negara Malaysia (BNM)
projects inflation to remain relatively
stable at an average of 2.0%-3.0% for
2015. The World Bank forecasts the
Malaysian economy to slow to 4.7%
in 2015, before rising to 5.0% for both
2016 and 2017.
Public transport operator PrasaranaMalaysia Bhd is looking to start the
construction of the RM9 billion light
rail transit line 3 (LRT3) by Q1 2016.
Expected to be completed by 31
August 2020, the 35km rail line will
link Bandar Utama to Johan Setia in
Klang.
Bandar Malaysia, a 197 hectare
(1.97km2) transport transit is
proposed under the 1Malaysia
Development Berhad (1MDB). Sited
on 1MDB owned land and 3km fromKL's financial district, it is expected
to begin construction in 2017. The
development will span between 20 to
30 years before fully completed.
The highly-anticipated Kuala Lumpur-
Singapore high speed rail, which is
330km long, aims to cut down travel
time between the two cities to just
90 minutes. The rail alignment is
expected to run through Nusajaya,
Muar, Batu Pahat, Malacca, Seremban
and Putrajaya.
The total value of construction work
done in Q1 2015 recorded a growth
of 15.1% year-on-year to RM28.74
billion, reflecting an increase of 6.1%
quarter-on-quarter as compared to
the previous quarter. Overall, the
Malaysian construction industry is
expected to remain strong in year
2015. Barring any unforeseen market
conditions, building tender prices
in Kuala Lumpur are anticipated to
increase by about 3.5%-4.0% in 2015.
SHANGHAI
From the beginning of 2015,
Shanghai’s economy grew modestly,
with both industrial production and
private consumption growing slowlyand steadily. The Consumer Price
Index increased modestly. Shanghai's
GDP amounted to ¥581.579 billion
in Q1 2015, a year-on-year growth of
6.6%, but a drop of 0.4% compared
to the same period last year.
In the first four months of 2015,
real estate investment in Shanghai
amounted to ¥95.041 billion, a
year-on-year growth of 15%, which
represents 62.4% of total investment
in fixed assets in Shanghai. Theincrease of investment in the
commercial sector was significantly
higher than the residential and official
sectors.
The total floor area under
construction was 124.3 million m2,
a year-on-year growth of 4.4%.
The total floor area of residential
development under construction
was 69.9 million m2, a drop of 1.1%.
The total floor area of new projects
commenced was 6.1 million m2, a dropof 17.5%.
Projects under construction include
Hongqiao Transportation Centre
with exhibition centre, official and
commercial areas and a Disneyland
development. New projects include
QianTan development centre; XuHui
Central Urban Complex development.
Tender prices in Shanghai have been
on a downward trend since Q3 2014.
The prices of major construction
materials (such as steel, cement,
concrete and sand) have been falling
for two consecutive years. It is
expected that the downward trend
of tender prices will continue in the
remaining months of 2015.
MACAU
Macau’s GDP for the first quarter of
2015 decreased by 24.5% on a year-
on-year bases in real terms, which
was a reflection of the decline ofgaming revenue. The unemployment
rate for February to April 2015 stood
at 1.7%, same as that in January
to March 2015. The average daily
wage of construction workers was
MOP704 in the second quarter of
2015, which is a decrease by 3.0%
on a quarter-to-quarter basis. The
average daily wages of skilled and
semi-skilled workers decreased
by 3.3% to MOP707 and that of
unskilled workers increased by 3.1% to
MOP405.
Major projects under construction
include the expansion of the six
major gaming resorts, which will be
completed this year and in 2016. The
Light Rapid Transit (LRT) System
commenced construction in 2012 and
has a target completion of phase one
in 2016. Other than these projects,
there have not been many significant
projects commencing work since
early 2015.
With the gradual completion of major
resort projects during 2015 and 2016
and the uncertainty of any further
expansion plans amid the current
weak gaming industry, construction
costs in Macau are likely to fall
gradually towards the end of 2015.
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SHENZHEN
Shenzhen's GDP growth in Q1 2015
decelerated to 7.8% year-on-year
from 8.8% in 2014. Fixed-asset
investment expanded by 16.8% fromthe same period last year, up from
13.6% recorded in Q4 2014. The
Consumer Price Index in Q1 2015 rose
moderately by 1.4%.
Despite signs of economic slowdown,
it is unlikely further slowdown will be
significant on the back of the Central
Government's pro-growth efforts
recently.
Ping An Finance Centre, more than
600m tall and one of the tallest
towers in China, topped out in May
2015 with full opening targeted in
mid-2016. The adjacent ancillary
tower comprising the Park Hyatt
hotel and serviced apartments is
anticipated to be completed by
the end of 2017. Many mixed use
developments in Qianhai and the
redevelopment of the existing old
areas are also underway.
The prices of some construction
materials went down significantly in
the first half of the year as a result
of overcapacity. There have only
been moderate fluctuations in tender
pieces since the end of 2014 and
this trend is expected to continue
throughout 2015.
SINGAPORE
The Singapore economy grew 2.1%
in Q4 2014 on the back of a stable
services sector, before expanding
2.6% year-on-year in Q1 2015. Theconstruction sector improved to 3.1%
year-on-year in Q1 2015, from 0.7% in
the previous quarter, supported by a
pick-up in private sector construction
activities. As global growth is
expected to improve marginally
from 2014, the Ministry of Trade and
Industry (MTI) maintains Singapore's
GDP growth forecast to increase
from 2.0% to 4.0% for 2015.
The CPI-All Items inflation inched
up to -0.4% in May from -0.5% inApril, which mainly reflects the cost
escalation of private road transport,
while core inflation was reported at
1.0% in May, compared to 0.4% in
the previous month. For 2015, The
Monetary Authority of Singapore
(MAS) Core Inflation and CPI-All
Items inflation are projected to
average between 0.5% to 1.5% and
-0.5% to 0.5% respectively, before
rising towards the end of the year
and into 2016.
After a record S$37.7 billion worth
of construction demand in 2014, the
Building and Construction Authority
expects to achieve S$29 billion to
S$36 billion worth of contracts in
2015, with the public sector taking the
lead.
Total supply of housing infrastructure
in Singapore is expected to upsurge
by about 11.0% over the next three
years (2016 – 2018) with the addition
of more than 100,000 public flats,45,000 executive condominiums
(EC), and 67,000 private non-landed
units.
In view of the overall housing supply
backlog, HDB will be constructing
new public homes at a slower pace in
2015. The supply for public housinghas been reduced to 16,900 in 2015
from 22,455 in 2014.
In addition, HDB will be raising the
income ceilings, likely in August 2015
for the second time since 2011, for
Build-To-Order (BTO) flats and ECs
in a bid to divert some demand from
the HDB resale and private property
market and encourage transactional
activity for mass market homes.
The government aims to maintain
the foreign share of Singapore's
workforce at a third of the total
workforce. The annual foreign
workforce growth has moderated to
34,000 in 2014, down from a high of
144,500 in 2007.
In the midst of a moderating
construction market, construction
costs remain competitive, while
enduring pressures from the effects
of regulatory fees and foreign
manpower shortages. The RLB
Tender Price Index (TPI) remained
relatively flat from Q4 2014 to Q1 2015
but is anticipated to expand about
1.0% to 2.0% for the whole of 2015.
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Headingley Carnegie Stadium, United Kingdom
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The European Union is forecastinga pickup in GDP from 2014 levelsin 2015 and 2016. The IMF isforecasting GDP growth of 1.8% and2.0 % respectively, up from 1.4% in2014.
The outlook for the Europeanregion is forecast to continuerecovering albeit moderately. Withthe depreciation of the Euro in June2014, the Euro area has progressed
somewhat faster than previouslyexpected and is likely to continue.With increased confidence fromlower oil prices, consumer spendingis likely to increase, as will corporateprofits.
The UK is forecast to remain slightlydown from the recent high of 2.6%in 2014 to 2.7% in 2015 and 2.2%in 2016. The UK recovery remainson track despite slightly weakerthan expected construction andmanufacturing activity in Q1 2015.There was slowdown in private
MARKET INTELLIGENCE
EUROPEinvestment across much of Europewith the exception of Ireland, Spain,and Germany. Ireland howevercontinues to report and forecast thehighest growth of 4.8% in 2014 butdeclining to 3.9% in 2015 and 3.3%in 2016.
The Commonwealth of IndependentStates (CIS) are expected tocontract in 2015 with ongoingconflict in the region as well
as sanctions on Russia. CIS hasrecorded slightly under 1.0% growthfor 2014 with a further reduction to(2.55%) in 2015 and (2.57%) in 2016.Russia had 0.6% growth in 2014and is forecast for (3.8%) in 2015and 1.1% in 2016. Lack of confidenceis contributing to any recoveryprocess, due to the debt crisis inGreece, sanctions and tensions inRussia and Ukraine and slower thanexpected recovery in some of the
advanced economies.
EUROPE CONSTRUCTION COST RELATIVITIES
Q3, 2015
LONDON 159
BRISTOL 133
MANCHESTER 127
BIRMINGHAM 125
RLB CONSTRUCTION MARKET ACTIVITY MODEL
EUROPE - GROWTH SECTORS VS DECLINE SECTORS
NUMBER OF CITIES
5
2
1
0
3
4
6
9
7
8
GROWTH DECLINE
HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL
2015 FORECASTED GDP GROWTH
COUNTRY 2015 2016 2017 2018
AUSTRIA 0.9 1.6 1.4 1.2
BELGIUM 1.3 1.5 1.5 1.5
BOSNIA ANDHERZEGOVINA
2.3 3.1 3.6 3.8
BULGARIA 1.2 1.5 1.8 2.0
CROATIA 0.5 1.0 1.7 2.1
CYPRUS 0.2 1.4 2.0 2.2
CZECH REPUBLIC 2.5 2.7 2.5 2.2
DENMARK 1.6 2.0 2.1 2.2
ESTONIA 2.5 3.4 3.4 3.4
FINLAND 0.8 1.4 1.5 1.7
FRANCE 1.2 1.5 1.7 1.8
FYR MACEDONIA 3.8 3.9 4.0 4.0
GERMANY 1.6 1.7 1.5 1.3
GREECE 2.5 3.7 3.2 3.2
HUNGARY 2.7 2.3 2.2 2.1
ICELAND 3.5 3.2 2.7 2.7
IRELAND 3.9 3.3 2.8 2.5
ITALY 0.5 1.1 1.1 1.1KOSOVO 3.3 3.5 3.5 3.5
LATVIA 2.3 3.3 3.7 3.9
LITHUANIA 2.8 3.2 3.4 3.6
LUXEMBOURG 2.5 2.3 2.3 2.2
MALTA 3.2 2.7 2.6 2.6
MONTENEGRO 4.7 3.5 2.7 1.6
NETHERLANDS 1.6 1.6 1.7 1.7
NORWAY 1.0 1.5 1.8 1.9
POLAND 3.5 3.5 3.6 3.6
PORTUGAL 1.6 1.5 1.4 1.3
ROMANIA 2.7 2.9 3.4 3.5
SAN MARINO 1.0 1.1 1.2 1.3
SERBIA (0.5) 1.5 2.0 3.5
SLOVAK REPUBLIC 2.9 3.3 3.2 3.1
SLOVENIA 2.1 1.9 1.8 1.8SPAIN 2.5 2.0 1.8 1.7
SWEDEN 2.7 2.8 2.7 2.5
SWITZERLAND 0.8 1.2 1.5 1.9
TURKEY 3.1 3.6 3.6 3.5
UNITED KINGDOM 2.7 2.3 2.2 2.2
COMMONWEALTH OF INDEPENDENT STATES
ARMENIA (1.0) 0.0 1.5 2.5
AZERBAIJAN 0.6 2.5 2.6 3.6
BELARUS (2.3) (0.1) 0.2 0.4
GEORGIA 2.0 3.0 4.5 5.0
KAZAKHSTAN 2.0 3.2 4.8 4.6
KYRGYZ REPUBLIC 1.7 3.4 5.2 5.2
MOLDOVA (1.0) 3.0 3.5 3.8
RUSSIA (3.8) (1.1) 1.0 1.5TAJIKISTAN 3.0 4.1 5.0 5.0
TURKMENISTAN 9.0 9.2 9.6 8.6
UKRAINE (5.5) 2.0 3.5 4.0
UZBEKISTAN 6.2 6.5 6.5 6.5
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BERLIN
Ongoing global, political and
economic upheavals continue to
dampen the previously high levels
of economic growth and exports.Never-the-less Germany commenced
2015 with growth of 0.7% versus
the Eurozone average of 0.3%.
Berlin continues to attract domestic
investment, particularly in property.
The area around Berlin main station
(Hauptbahnhof) is seeing significant
construction activity. Several hotels
and office buildings are under
construction or planned, among
which is the John F Kennedy House,
a ¤70 million office block due forcompletion in 2015. A new 33-storey
tower building ¤250 million "Upper
West" near Zoo Station has been
started this year and is scheduled
for completion in 2016. A new
Entertainment Centre at Mercedes
Platz, adjacent to the Mercedes
Arena in Friedrichshain comprising
65,500m2 of cinemas, bowling and an
auditorium, 20,000m2 of basement
parking, offices and two hotels, is also
due to commence construction in late
2015.
The overall rate of inflation in
Germany is still very low. Stagnating
at present at under 1.0%. Construction
costs however, have been rising more
strongly, at around 1.8% and may well
reach 2.0% by the end of 2015. Fit-out
trades continue at around 2.2–2.5%,
while shell & core trades are at much
lower levels of around 0.7 %.
BIRMINGHAM
The Midlands area is continuing to
show signs of recovery. Although
patchy, many schemes need to be
underpinned with pre-lets. The regionis seeing increased activity from
overseas investors, as funds and
developers are looking for projects
and deals outside of London. City
centre residential schemes are
coming back to the market, with the
Private Rented Sector seeing growing
activity. The prime areas of activity
for new build offices are Paradise
Circus, Snowhill 3 and Arena Central.
The retail market shows signs of
growing confidence with manyschemes being resurrected. The
changes in retail habits are having
an impact on the style and mix of
uses being developed with more
stringent agreements. Flexibility is
being considered, with a greater
emphasis on mixed use, together
with the utilisation of other sectors
being used to springboard the retail
developments. Small churn and
micro developments continue to be
developed to maximise and improve
current assets. Several retail schemes
are on the drawing board, as either
new ventures or previously shelved
schemes are being resurrected.
The university and education sectors
continue to develop their campus
facilities to feed the increasing
demand (including student housing,
teaching, sports and leisure and
research facilities). The Universities
in and around Birmingham have or
are in the process of major project
delivery. Warwick University with
JLR & TMETC have underpinned the
development of a 33,000m2 research
facility, with works now having
commenced. Aston University has
recently resurrected a redevelopment
where a tower scheme and student
accommodation blocks are under
consideration.
The pressure on sourcing skilled
resources continues to increase, due
primarily to the increased demand,
which were depleted during therecession. This is now driving inflation
in the professional and contractor's
staff costs. Tender price inflation that
is expected to continue to climb into
2015 and 2016 due to this resource
shortage.
With more work available in the
region, contractor's appetite to
expose themselves to riskier projects
and lengthy single stage tender
processes is waning. Residential
biased trades were driving earliergrowth out of the recession, whereas
more mainstream building and MEP
trades are rapidly catching up.
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BRISTOL
The South West market activity is
continuing to increase. The Design
and Construction industries in Bristol
are showing a continuing trend ofincreased demand for their services.
Management consultancies are still
seeing very competitive fee levels
with margins being squeezed.
Overall the South West is set to see
an increase in activity with some
suggesting it will outperform the
other areas of the UK in the next two
to three years.
Although EDF has put a pause on
works at Hinkley Power Station, with
many hundreds of people losing their jobs, it is anticipated the project
will be reactivated within the next
6 to 12 months. Bristol Airport, the
University of Bristol and University
of the West of England are still
proposing significant projects. There
are significant increases in residential
projects throughout the South West,
both in small scale isolated sites and
very large housing developments. In
the near future, Plymouth City Centre
is expected to undergo re-appraisal
of the current master plan.
The major themes in the South West
are the shortage of construction
personnel, increased lead-in times,
inflation, market pressure cost
increases and people changing
companies, which in turn affects
project continuity. The residential
market is the main sector soaking
up the available labour and skills
shortages are a constant discussion
in all arenas. The short to medium
term forecast is for the market to
further increase in activity with a
corresponding pressures on pricing
and labour markets.
LONDON
London continues to experience
an increase in construction market
activity across most sectors. The
greatest upsurge has been witnessedin the commercial office and new-
build residential sectors and the
increase for the demand for housing
continues.
Examples of the increased activity
in the commercial sector include
the Land Securities continued re-
development of the Victoria area.
In addition to 600,000 ft2 of new
office area, Nova Victoria is billed
as becoming the most innovative
restaurant quarter in London.
The capital continues to benefit from
overseas investment, highlighted by a
staggering 250 proposed tall towers.
As well as on-going construction and
infrastructure projects, new major
projects continue to be announced in
the city; many of which could change
the face of London.
The £1.5 billion redevelopment of
the famous Elephant and Castle
Heygate Estate continues. The
scheme will contain 3,000 new
residential properties and 160,000
ft2 of retail space. The Kings Cross
area continues to benefit from
regeneration, with a major boost
emerging from Google’s plans to
develop their new 950,000 ft2.
London headquarters in the area.
With the flurry of new buildings,
re-generation of formally
underdeveloped areas and forecasted
population growth in London, therequirement for further infrastructure
is becoming crucial. Plans are moving
forward for the £16 billion Crossrail
2 project. If the new London line
from north-east to south-west is
given the go-ahead, contracts could
be awarded in 2019. To service the
Nine Elms redevelopment, plans are
progressing for the £600 million
Battersea Northern line extension.
As construction activity continues to
rise in London, it is not a surprise thatconstruction costs are following suit.
With the order books of the supply
chain following an upward trend,
coupled with pressures on adequate
levels of both manpower and material
production, some elements are
reaching premium levels. Tender
prices are forecast to increase by
5.0% in 2015 and 5.25% in each of
2016 and 2017.
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Snowhill Development, Birmingham, United Kingdom
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MADRID
The last months of 2014 saw
residential construction in Spain grow
for the first time since the beginning
of the 2008 financial crisis. Due to itsimportance, this is pushing different
investments in the industrial, retail,
offices and hospitality sectors.
Construction represents around
5.0% of Spain’s GDP. Most of the
construction activity in Madrid can
be attributed to the market’s focus
on developing and commencing
developments, which were delayed
or stopped years ago. Official figures
show growth of 0.6% in the first
quarter, while annual GDP for the12 months ending in March 2015
reached 1.9%. For the year ending
2015 government and economic
bodies are forecasting 3.0% growth
in GDP. This economic conditions
show a sustainable internal demand,
supported additionally by large
international investment.
Current projects for the area
are the Wanda Hotel in Madrid
Centre, Banco Popular Data
Centre and headquarters, BBVABank Headquarters and the new
commercial centre in Puerta del Sol.
Construction activity is concentrated
predominantly in the two main cities,
Madrid and Barcelona with projects
such as the FC Barcelona Nou Camp
Stadium, Real Madrid Stadium
(delayed) and the new Atletico de
Madrid stadium.
MANCHESTER
Led by the city regions of Leeds,
Liverpool, Manchester, Newcastle and
Sheffield, the ‘One North’ proposition
reflects the critical importance oftransport for vibrant, sustainable
economic growth across the North.
Led in response to the development
of HS2, One North aims to develop
a coherent strategic transport plan,
integrating HS2 with the existing rail
network, transforming connectivity
across the North. In addition, the
UK Government’s commitment to
the Northern Powerhouse, with
Manchester at its centre, is also
driving massive investment in
transport and infrastructure. This is
delivering wider dividends through
attracting further investment into
the City and wider regions across all
construction and property sectors.
Indeed, Manchester is now the
primary destination for investment
in the UK outside of London. The
Northern Powerhouse is becoming
a reality and beginning to deliver
on the Government’s long term
economic plan to reduce the
decades-old gap between north andsouth, London and the rest.
Manchester is currently benefitting
from a revival across all sectors,
driven by increasing international
investment in the City and significant
improvements in local and regional
transport links. As part of the £1.4
billion programme to triple the size
of the City’s Metrolink tram system,
including the critical ‘Second City
Crossing’ development, Transport for
Greater Manchester are transformingthe heart of the city and providing
additional links to major transport
hubs including Manchester Victoria
Rail station and Manchester Airport.
In addition, Network Rail’s £100
million ‘Ordsall Chord’ project will
improve rail travel in the North,
through the construction of a new
viaduct to connect Manchester’s
Victoria, Oxford Road and Piccadilly
stations. This project is shifting the
emphasis on further developmentin the City Centre, increasing the
appeal in the south and west of the
City Centre adjacent to Salford City
Centre.
Muse Development, Scarborough
Developments, Allied London and
Bruntwood are investing upwards
of £1 billion in major mixed usedevelopments including New Bailey,
Salford Central, Middlewood Locks
and the redevelopment of the
former ITV/Granada site, all within
the vicinity of Salford Central Rail
station, one of the key beneficiaries
of the Ordsall Chord Scheme.
Manchester Airport Group continues
to expand and work continues
on the £800 million Airport City
development, which includes new
offices, hotels and distribution
space. The airport has also recently
announced the ‘Manchester Airport
Transformation Programme’, which
will see a complete overhaul of the
airport’s offering to customers,
whilst increasing their air passenger
capacity significantly over the next 10
years. This £825 million programme
of work aims to secure Manchester’s
place at the heart of the Northern
Powerhouse.
As construction activity continues
to rise in Manchester, it is not a
surprise that construction costs are
also beginning to accelerate. The
contracting market is beginning
to overheat; labour supply cannot
cope with demand. This is leading
to increasingly accelerating tender
prices and in some instances difficulty
in securing competitive tenders
for more complex, less profitable
schemes. The key challenge for the
region over the coming years will be
finding and training new supply fastenough to meet the growing demand.
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MILAN
The Italian property market is still
struggling to restart after the 2008
crisis and the Milan market is no
exception, although there is clearevidence that the international
investors are returning. The 2015
Milan EXPO has provided some work
to local companies sub-contracting to
specialised international corporations.
Current opportunities still include
mainly retail and hospitality projects
funded by foreign investors, as
well as office refurbishments for
some international corporations.
It is doubtful, though, that these
developments will provide enoughstimulus to restart the local
construction sector.
The planned Westfield development
in Milan appears stalled, although it is
not clear if this is intentional or due to
exterior factors. Other large shopping
centre developments appear to be on
hold due to political indecision and
discontent.
The CityLife development in the
former city fairgrounds site is
progressing slowly. With the housing
completed some time ago, the first
tower by Isosaki opened recently
and the Hadid tower remains under
construction. The new metro line 5 is
open as of 1 May 2015 and connects
the stadium and CityFife to the main
railway lines and other underground
trains.
General observations are leading to
the conclusion that prices are quite
unstable at the moment and difficult
to predict. The lengthy downturn in
the sector is leading some to resort
to desperate measures and willing to
undercut market prices in order to
move forward until times are better.
This results in very unstable and
erratic pricing, making it difficult to
predict.
MOSCOW
The Russian economy is forecast to
contract by around 3.0% in 2015. The
currency is now worth around 60% of
its value from one year ago. GeneralRouble inflation is running at around
17%, as economic sanctions take
effect. Partially due to the ongoing
conflict with Ukraine, some projects
have stopped and western investors
are making no new commitments
into Russia. The price of construction
has significantly increased, in terms
of the Rouble, whereas the cost of
construction has decreased, helped
by the reduction in the cost of some
local materials.
The Skolkovo Innovation Centre
continues to be under development.
Despite the current crisis, the Russian
Government is continuing to fund the
massive project, which is located in
the outskirts of Moscow and includes
a technological centre for start-up
companies, a university, office and
residential facilities and a transport
hub.
There are other key ongoing projects
in various cities that are hosting thefootball World Cup in 2018, including
new stadia, hotel accommodation
and associated infrastructure works.
With so much fluctuation in the
exchange rate between the US$ and
the Rouble, not knowing how long
the sanctions will remain in force, nor
the next steps in the conflict with
Ukraine, it is impossible to accurately
forecast future movements in the
tender price index. The fact that
there is a reduction in the volume ofconstruction, suggests that there will
be no significant upward movement
in tender prices for the foreseeable
future, as contractors margins will
inevitably decrease, as the market
becomes more competitive.
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LOCATION INTELLIGENCE
EUROPE
Rider Levett Bucknall | International Report – Third Quarter 2015 39
There has been an increase in the
sector following the general trends
of the economy. This has led to full
order books for main contractors,causing difficulties in compilation of
tender lists. Sub-contractors have
also seen a steep rise in workload,
resulting in difficulties in creating
competitive tender processes. This
increase in workload has also seen
a number of sub-contractors being
liquidated, due to difficulties in
delivery of work with minimal staff
numbers and increased labour rates.
Professional fees are starting to
rise throughout the private sector,although many consultants are
committed to historical framework
rates in the public sector, whilst
seeing wages rise. Contractors are
facing difficulties in the procurement
of steelwork, cladding and facing
brickwork. Some brickwork factories
quoting 44 weeks lead in, has led to
alternative specifications and delivery
vehicles.
SHEFFIELD
Different cities within the Yorkshire
& Humber region have recovered
from the recession at differing
speeds. Leeds, part of the "NorthernPowerhouse" has seen development
increase dramatically over the last
12 months. Currently, there are a
number of speculative Grade A
office developments in the pipeline
and the private residential market
is making a significant comeback.
The development of Leeds Arena in
the city centre has seen an increase
in demand for hotel bedrooms and
leisure space.
Sheffield, Bradford, York and Hullare recovering at a slower pace
but are showing signs of the
economic recovery. Development
is still somewhat dominated by
the Universities, with strong new
build projects both directly for the
Universities and with private sector
partners such as Rolls Royce and
Boeing. Retail is increasing, with a
long planned major development in
Bradford commencing and the Retail
Quarter in Sheffield tendering for
development partners.
Key projects recently completed
include the Leeds Arena in the centre
of Leeds, which is now hosting
concerts and sporting events. Further
projects have been developed at the
Advanced Manufacturing Research
Centre (AMRC) on the border of
Sheffield/Rotherham, a joint venture
between University of Sheffield, Rolls
Royce and Boeing. Across from the
AMRC, the former Orgreave Open
Cast Mine is being developed into
a new suburb, Waverley, which will
eventually provide 10,000 houses and
ancillary facilities. Numerous housing
developers have completed schemes,
which will eventually include a
terminus to the tram network. The
Children’s Hospital in Sheffield is
undergoing a major multi million
pound extension with an associated
multi storey car park.
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Gemstone Business Bay Tower, Dubai, UAE
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Rider Levett Bucknall | International Report – Third Quarter 2015 41
Growth in the Middle East andNorth Africa is likely to increaseduring 2015 with forecast growthat 2.4% rising in 2016 to 2.7%. Theoil exporting developing economiesare likely to experience above theregional growth to 3.0% and for oilexporting high income economies,
it is forecast to be below. Oilexporting economies are forecastedto be slightly above the region’sgrowth rate by the end of 2016, at3.7%.
Continuing security risks, which areescalating within the region andlower oil prices, are impacting thegrowth of the region. Yemen sawgrowth of 0.3% in 2014 and facesa forecasted contraction in 2015to (2.2%) and recovering to 3.4%in 2016, if conflicts subside. Withthe rise of various armed groups inIraq, Syria and conflicting factionsin Libya, oil installations are seenas a strategic target for insurgents.Negative growth in Libya of -24.0%and in Iraq of -0.5% for 2014highlight the impact of instabilityand uncertainty on their economies.
MARKET INTELLIGENCE
MIDDLE EAST
& NORTH AFRICAFor the high income oil exportingcountries in the region, growth isstable at 3.8% for both 2014 and2015 with a slight drop to 3.5%for 2016. With the impact of U.S.oil production, OPEC have nottightened supply, which is havingthe effect of stable supply and lower
prices worldwide. Iran saw 3.7%growth in 2014 and is forecast todecline to 0.6% in 2015 reboundingslightly to 1.3% in 2016. Amid boththe social and political upheavalsseen within Egypt, the economycontinues to perform well withstrong growth forecasted in 2015 at4.0% and 4.3% in 2016.
MIDDLE EAST CONSTRUCTIONCOST RELATIVITIES
Q3, 2015
DOHA 113
ABU DHABI 107
DUBAI 105
RIYADH 105
NUMBER OF CITIES
2
1
0
3
4
GROWTH DECLINE
HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL
RLB CONSTRUCTION MARKET ACTIVITY MODEL
MIDDLE EAST - GROWTH SECTORS VS DECLINE SECTORS
2015 FORECASTED GDP GROWTH
COUNTRY 2015 2016 2017 2018
AFGHANISTAN 3.5 4.9 6.0 5.6
ALGERIA 2.6 3.9 4.0 3.9
BAHRAIN 2.7 2.4 2.4 2.8
DJIBOUTI 6.5 7.0 7.1 7.1
EGYPT 4.0 4.3 4.5 4.7
IRAQ 1.3 7.6 8.9 8.3
ISLAMIC REPUBLICOF IRAN
0.6 1.3 1.5 1.8
ISRAEL 3.5 3.3 3.0 3.0
JORDAN 3.8 4.5 4.5 4.5
KUWAIT 1.7 1.8 3.1 3.1
LEBANON 2.5 2.5 3.0 3.0
LIBYA 4.6 17.7 32.1 6.7
MAURITANIA 5.5 6.7 4.8 5.0
MOROCCO 4.4 5.0 5.3 5.4
OMAN 4.6 3.1 2.3 1.7
PAKISTAN 4.3 4.7 4.8 5.0
QATAR 7.1 6.5 5.6 4.5
SAUDI ARABIA 3.0 2.7 3.1 3.1
SUDAN 3.3 3.9 4.9 4.8
SYRIA N/A N/A N/A N/A
TUNISIA 3.0 3.8 4.5 5.0
UNITED ARABEMIRATES 3.2 3.2 3.4 3.7
YEMEN (2.2) 3.6 4.0 5.2
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The Address Residence Fountain Views, Dubai, UAE
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LOCATION INTELLIGENCE
MIDDLE EAST & NORTH AFRICA
Rider Levett Bucknall | International Report – Third Quarter 2015 43
ABU DHABIConstruction activity in Abu Dhabi
is very flat, with numerous projects
being suspended and put on hold.
This cycle is likely to continue untiloil prices climb above US$80/barrel.
Construction prices are unlikely to
increase in 2015, in fact they may
decline, as contractors compete in a
declining market.
Notwithstanding the lower oil prices,
construction work continued across
the education, healthcare, and
infrastructure sectors.
Projects currently under construction
include office developments such
as Al Hilal Bank building, Al MaryahIsland and ADGM Square (FZ). Office
demand in Abu Dhabi can further be
strengthened through continuous
spending on the city's infrastructure,
in order to make it an appealing
destination for private investment.
RIYADHThe construction industry in Saudi
Arabia will remain among the fastest
growing in the world, supported
by investment in buildings andinfrastructure to diversify the
economy. The drop in oil prices could
impact on the viability of new energy
projects. However, the country’s fiscal
position is robust and thus public
investment plans are not expected to
be greatly affected.
According to the Central Department
of Statistics and Information, the
Saudi Arabian construction industry's
contribution to GDP increased from
4.3% in 2011 to 4.8% in 2013. As part
of the country's economic goals ofdiversification and job creation, the
government has allocated significant
funds for the development of
healthcare, infrastructure, education
and social services. The 10th five-year
development plan for 2015-2019 will
focus on economic development and
raising living standards through a
number of welfare activities.
Current projects within the region
include: The Kingdom Tower, Madinah
City Masterplan, Madinah Charity CityMasterplan and KAFD (King Abdullah
Financial District). Other key projects
in the Kingdom are Riyadh and
Jeddah Metros, Knowledge Economic
City, Jeddah Economic City, Old
Airport Development (Emaar) and
King Abdullah Economic City.
The market in the Kingdom of Saudi
Arabia remains strong with current
projects and a good pipeline of future
projects at the early stages in pre-
concept design. In comparison to the
troughs and peaks of the other MiddleEast countries, the Kingdom remains
steady, as reflected in the historic
data, and this is proposed to be the
same going forward. The oil price has
played a factor in decision making in
the construction industry regarding
projects and spending, but the overall
pipeline of projects remains strong.
Core materials such as steel, copper,
aluminium and nickel, each of these
has seen a drop in price at the start
of 2015, but a steady growth back to
'generally' where they were prior tothe Q1 2015 drop off. Other materials
such as concrete has seen a growth at
inflationary levels, but nothing beyond
that.
DUBAIUAE’s market is showing signs
of recovery, Dubai’s position as
the central hub in the Middle East
continues to remain strong and asa result continues to impact the
construction industry growth.
There are numerous substantial
projects being undertaken. Fountain
Views, the Opera House, Skyviews
and others are part of the continuous
development of the Burj Khalifa
precinct. Around the marina area,
there is The Bluewaters Island
development, which includes retail,
residential and hospitality offerings.
Other developments continue on Palm
Jumeirah, where numerous hospitality
and retail projects are underway.
Expectations for a major acceleration
underpinned by Expo 2020 are still
to be fully realised in terms of explicit
projects, but with a large portion of
current developments underway, is
at least partly focused on providing
accommodation, offerings and
services for the Expo.
While tenders are generally being
returned with favourable pricing,a definite swing has been noticed
in terms of Contractor eagerness.
Mechanical electrical and plumbing
contractors are starting to fill order
books and offer regrets on projects.
Main contractors are starting to
display more selectivity in terms of the
projects they are tendering on and the
clients they are tendering for.
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Barangaroo, Sydney, Australia
Images supplied by Lendlease 2015
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Rider Levett Bucknall | International Report – Third Quarter 2015 45
The Oceania region remainsrelatively stable with Australia’sgrowth in 2014 at 2.7% and forecastto increase to 2.9% in 2015 and to3.2% in 2016. As an oil importingregion, the lower oil prices are setto provide additional support todomestic spending. The effects ofthe fall in commodity prices hasbeen in part offset by Australia’sdepreciating currency and softeroil prices. The Reserve Bank ofAustralia reports that dwellinginvestment has grown strongly overthe past year. Interest rates remainon hold and continue to support theresidential construction sector.
New Zealand’s growth is nowsoftening. The Canterbury rebuildhas peaked and world prices forNew Zealand dairy exports havefallen over the past 12 months. Dairyprices have fallen -23.8% since June
2015 and are likely at the bottomof the market and forecast to turnupwards. This is seen in forecastedGDP decreasing to 2.9% in 2015 and2.8% in 2016.
MARKET INTELLIGENCE
OCEANIAAustralia and New Zealand arecontinuing with record levels ofresidential construction. This ishelping stabilise the Australianlabour market as within the miningsector, the labour force is reducing.The talk of the property bubble inSydney and Melbourne during theQ2 2015 seems to have lost somemomentum, while property pricescontinued to rise through Q2 2015and supply continued to meetdemand. The economic outlook forAustralia remains positive. Australiaand New Zealand will be affectedby any volatility in China and areadjusting to the moderate slowdowncurrently forecast for China.
RLB CONSTRUCTION MARKET ACTIVITY MODELOCEANIA - GROWTH SECTORS VS DECLINE SECTORS
NUMBER OF CITIES
5
1
2
3
4
0
6
7
8
9
GROWTH DECLINE
HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL
OCEANIA CONSTRUCTION COST RELATIVITIES
Q3, 2015
DARWIN 124
SYDNEY 121
CANBERRA 116
PERTH 116
MELBOURNE 113
CHRISTCHURCH 112
ADELAIDE 109
WELLINGTON 107
TOWNSVILLE 106
AUCKLAND 100
BRISBANE 99
2015 FORECASTED GDP GROWTH
COUNTRY 2015 2016 2017 2018
AUSTRALIA 2.8 3.2 3.1 3.0
NEW ZEALAND 2.9 2.7 2.5 2.5
PACIFIC ISLANDS
FIJI 3.3 3.0 2.9 2.9
KIRIBATI 2.9 1.5 1.9 2.0
MALDIVES 5.0 3.9 4.2 4.4
MARSHALL ISLANDS 1.7 2.2 1.8 1.8
MICRONESIA 0.3 1.0 1.0 0.9
PALAU 2.2 2.7 2.5 2.2
PAPUA NEW GUINEA 19.3 3.3 3.5 3.5
SAMOA 2.8 1.4 (1.0) 0.8
SOLOMON ISLANDS 3.3 3.0 3.5 3.4
TIMOR-LESTE 6.8 6.9 7.0 7.2
TONGA 2.7 2.4 2.0 2.5
TUVALU 2.5 2.5 1.9 2.0
VANUATU (4.0) 5.0 4.5 3.5
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LOCATION INTELLIGENCEOCEANIA
Rider Levett Bucknall | International Report – Third Quarter 201546
ADELAIDE
All trade contractors continue to
remain very competitive and actively
seeking new work. The tender market
continues to be very strong. Limitednew projects have been generated
from both the Private and Public
sector to feed trade and head
contractors, and the outlook still
remains slow. Larger contractors are
still pricing smaller projects to ensure
that they maintain work flow. Tertiary
Institutions remain active with large
projects being tendered to Tier 1
companies, though no new major
projects have been released into
the market in the last quarter. Both
the retail and the apartments/hotel
sector continue to show signs of
growth with new project work – these
projects are being very competitively
tendered.
Enterprise Bargaining Agreement
(EBA) negotiations continue with
some trade contractors maintaining
nil adjustments for this year as a
reflection of the lack of work in the
current market. It is anticipated that
this may be common with many
trades. There has been a slight
price increase in the supply of cost
for material, where the materials
have been imported from overseas
– mainly affecting mechanical
plant items, foreign lighting, tiles,
etc., however, the supply cost of
reinforcement has come down in
recent months reflecting the drop in
cost of salvaged / recycle steelwork.
With this potential volume of
work, along with other significant
construction projects in Christchurch,
there will likely be industry capacityissues requiring significant industry
investment. Key commercial projects
in the planning for Auckland in
the short to medium term, include
the proposed new International
Convention Centre, the Precinct
Downtown redevelopment and the
City Rail Loop.
The increased construction
activity has seen an increase in
main contractor margins and
subcontractor pricing, includingincreased labour costs. This has been
concentrated in structural trades, but
is now being seen across the board in
building services and finishing trades.
Should construction activity continue
to grow as expected, then we will
see a volatile market and tender
prices. The falling New Zealand dollar
will also affect imports and building
material costs. Going forward,
construction cost escalation will
need to be considered as a key risk
element of project feasibility models.
AUCKLAND
The New Zealand economy continues
to perform strongly, with strong
residential construction activity
being a key contributor to GDPgrowth, which is driven by house
building demand in Auckland and
Canterbury. There are some risks
to the New Zealand economy with
slowing growth in Australia and
China and weak dairy prices. The
Reserve Bank of New Zealand
recently lowered interest rates
and the NZ$ has dropped to a
recent low. The Auckland economy
however, is still strong, driven by
population, job growth and a strong
housing market with the demand
outstripping supply. Residential
building activity is increasing with
high density residential developments
making a strong comeback and
retirement villages sprouting up
all over Auckland. This increased
level of activity is affecting resource
and supply chain capacity and is
ultimately increasing labour and
material costs. The strong residential
market and demand has provided
strong work flows through the civiland infrastructure sectors, with new
land zoning opening up areas of new
residential development, particularly
in the north west and south of
Auckland, where new Town Centres
such as Westgate and Ormiston are
currently being developed.
Non-residential construction activity
has increased steadily over the
year and has highlighted capacity
issues within the industry with long
lead times for off-site prefabricatedproducts and labour shortages on
structural trades. This is of concern,
given that whilst construction activity
has increased, the current volume of
work is not yet significant.
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LOCATION INTELLIGENCE
OCEANIA
Rider Levett Bucknall | International Report – Third Quarter 2015 47
BRISBANE
The Queensland Government
handed down its budget in July
2015 and it included a AU$10.1 billion
commitment for infrastructureincluding the Toowoomba 2nd Range
Crossing and upgrade of a section
of the Gateway Motorway north of
Brisbane. However, these projects are
not new and construction contracts
have been awarded. There was also
a commitment of AU$180m for the
expansion of four regional hospitals.
However, the State Government's
capital expenditure is limited by the
State debt and a commitment to
return the budget to surplus.
Building construction volumes are
at a four year high, driven by private
sector residential construction,
which has increased 18% over the
year ending 31 March 2015 compared
to the corresponding period of
the previous year. Non-residential
construction declined 2.0% for
the year ending 31 March 2015 in
the same period due to a fall in
Government spending, offsetting a
10.0% increase in private sector non-
residential activity. Notwithstanding
the high-level of activity in the
residential sector, population growth
remains low with the net population
growth in 2014 being the lowest since
2001. Jobs are the key to sustainable
growth and unemployment is
currently 6.5%. The budget forecasts
that this rate will be maintained
through to 2017 indicating jobs
growth will be sluggish.
The long-awaited decision regarding
the successful proponent for the
Queens Wharf Precinct in Brisbane
has been made and this project will
result in a AU$2 billion to AU$3 billion
investment in development of an
integrated Casino, Hotel, Residential,
Entertainment and Retail Resort with
considerable investment in the urban
realm, including public spaces and
a new pedestrian bridge linking the
resort to Southbank.
CANBERRA
The Australian Capital Territory
(ACT) market, following a period of
subdued market sentiment due to
the impact of Federal Governmentcuts, appears to be turning a corner.
A recent survey by ANZ and the
Property Council of Australia showed
a slight increase in confidence in
the property sector for the coming
quarter. However, the release of
the 2015/16 ACT Budget did not
bring any new major project or
infrastructure commitments for
the coming years. Indicators show
that residential approvals increased
marginally over the last quarter.
Ongoing planning continues for major
projects:
• The new University of Canberra
Public Hospital short listed tenders
have closed and will commence
construction prior to the end of the
year providing 140 new beds in a
sub-acute unit.
• Construction is well underway
for phase one of the CSIRO ACT
consolidation with planning for
phase two to commence towards
the end of the year.
• Both shortlisted consortia for the
Capital Metro and ACT Supreme
Courts are in a tender process at
the moment with both projects
planning to commence in 2016.
We expect a modest rise in housing
activity to rise over the coming
quarter. As the market slowly
recovers, we forecast a rise in the
tender price index line, with inflationfor 2015 of 2.0%.
Major projects expected to
commence in the second half
of 2015 include the Myer Centre
Redevelopment, Brisbane Skytowerand Jewel on the Gold Coast as well
as the expansion of Hotel facilities at
Jupiters Casino. The sectors that are
performing strongest, other than the
residential sector, are retail, industrial
and defence.
The increase in residential
construction activity has seen an
increase in the cost of a number of
trades that have a heavy involvement
with residential construction.
Trades that have been particularlyaffected include formwork, tiling and
mechanical services. We anticipate
further increases in plasterboard,
partitions and ceilings trades over the
next period. The weaker Australian
dollar has seen the cost of imported
manufactured materials rise, although
the lower commodity prices has
offset part of this increase. There is
an opportunity for new entrants into
the Queensland market, particularly in
the formwork trade.
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CHRISTCHURCH
Canterbury construction levels
have been at record highs, although
there are now signs that growth
is flattening. In the year to May2015, 4,274 consents were issued
in Christchurch, an all-time record,
although the monthly figures for
March, April and May 2015 were
lower than those for the equivalent
period in 2014. Recent months
have continued to see an increased
number of tower cranes evident in
Christchurch as major construction
projects continue. In the coming
year, a number of CBD commercial
developments are due for completion
and occupation, which are expected
to bring more earthquake displaced
workers back into the central city.
There are indications that Residential
post-earthquake recovery has peaked
with Residential Building Consents
reducing in number as the rapid
domestic construction in the suburbs
and City outskirts begins to slow.
While the focus in recent periods has
been on rebuilding in the Victoria
Street precinct, the emphasis is
now moving further towards the
central city with a number of large
and medium size commercial
projects at various points of
construction. The Burwood Hospital
redevelopment project is now well
through the construction programme
and Christchurch Hospital has
commenced the foundation works
package in preparation for the major
redevelopment planned for later
this year. Christchurch Council has
recently committed to the NZ$127million Town Hall redevelopment.
The University of Canterbury, while
continuing earthquake repairs, have
awarded contracts for two major new
developments.
DARWIN
The Northern Territory government
policy is directed at the ongoing
infrastructure development of
the North and the provision ofan affordable housing market. To
these ends, a number of large road,
marine, mining and gas projects are
under consideration, exploration and
evaluation. This emphasis has given
rise to a buoyant industrial sector
servicing these economic drivers
as well as a very active housing
construction market on the back
of an increased release of land for
housing.
The INPEX gas project continues tobe the primary focus of construction
and engineering activity in the
Top End in 2015 and 2016. The
construction market remains
otherwise flat, with only a handful
of medium/high density apartment
projects under construction.
Residential housing development is
strong as is industrial development,
especially those associated with
the oil, gas, transport and logistics
sectors. Retail and hospitality are
showing very weak signs of recovery.
A number of projects remain in
planning, undergoing feasibility and
awaiting demand through population
and visitor increase.
The construction market remains
very competitive with an increasing
number of bidders vying for the few
projects on offer. Labour availability
is not an issue and labour prices
are stable and very competitive,
yielding considerable benefits to
those projects under way. Demand
for construction output remains low
with slow take up rates leading to
greater lead times between projects
development. The slow pace of such
developments and current market
conditions will ensure price stability
during the rest of this year.
The Ministry of Justice, The
Christchurch City Council, Ministry
of Education, Lyttleton Port and
Lincoln University are among othermajor institutions that also have
considerable building programmes
at various stages of planning and
development. While several of the
rebuild anchor projects such as the
Convention Centre and Metro Sport
have delayed start dates at present,
recent announcements include the
NZ$800 million East Frame housing
project awarded to Fletcher Living,
which has an 8-9 year programme.
Supply and demand continue to bethe key market factors in Canterbury
with regard to TPI. The NZ$ dollar
has recently been affected by the
impact of interest rate changes
and global reaction to the Greek
financial situation. Construction
cost escalation continues to be seen
on a trade by trade and project by
project basis and the market reacting
to risk and project complexity.
Certain trades with resource and
capacity issues are seeing the highest
increases, but even within these
trades there are fluctuations as the
demand wave rises and falls.
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LOCATION INTELLIGENCE
OCEANIA
Rider Levett Bucknall | International Report – Third Quarter 2015 49
MELBOURNE
The Victorian economy is gathering
pace, up by 2.9% for Q2 2015
on a year on year basis, through
population growth and housingactivity. Victoria now has the
strongest annual population growth,
with population 1.75% higher than
a year ago and a growth rate that
is 2.2% higher than the ‘normal’ or
decade-average level.
The findings reinforce data released
by the Real Estate Institute of
Victoria (REIV) which showed that
over the June quarter, Melbourne
median house prices rose strongly to
AU$706,000. This is an increase of5.2% over the quarter, and 6.3% for
the year.
Residential activity is providing
a solid base for the construction
industry with more multi-residential
dwelling developments approved in
H1 2015 than were issued for the same
period in the years 2010 to 2014.
Non-residential work is contracting
with the exception of the retail
sector with significant works being
commenced and planned for
Chadstone, Eastland and The Glen
among others. Both the commercial
and health sectors are slowing down
with significant projects nearing or
achieving completion. The recently
announced AU$200 million Joan
Kirner Women’s and Children’s
Hospital will give a much needed
boost to the health sector with the
Peter MacCallum Cancer Centre
nearing completion. Commercial
projects planned but not yetcommenced construction are QIC’s
80 Collins Street, Cbus’s 447 Collins
Street multi use project, Mirvac’s
477 Collins Street, ISPT’s 271 Spring
Street and Leighton Properties’ 130
Lonsdale Street.
With the residential sector continuing
to perform at record levels and the
non-residential sector holding its
own, considerable pressure is beingput on the availability of trades such
as formwork and concrete, glazed
curtain walls and joinery, while falling
exchange rates are putting pressure
on imported goods and materials.
Head contractors are indicating that
trade coverage is starting to become
an issue when tender pricing, but this
is being offset by the requirement for
work continuity. Tender Pricing is still
very keen with uplifts anticipated at a
forecasted level of 2.0% for 2015.
GOLD COAST
There has been an uplift in offshore
investment on the Gold Coast in both
development sites and apartments
due to the success of the Light Rail,the drop in the Australian dollar and a
significant pick up in interest by Asian
developers, particularly the Chinese.
There has been an increase in
residential selling prices in the order
of 10% that has seen renewed interest
in residential development sites. The
fringe areas of the Gold Coast and
Surfers Paradise are the strongest
markets.
It is the sheer size of the new
developments in the pipeline thathas taken the Gold Coast by surprise,
with more than 6 developments in
excess of AU$1 billion currently being
considered. The commencement of
the AU$1 billion “Jewel Project” at
Surfers Paradise, the AU$400 million
2018 Commonwealth Games Village
at Parklands and the continued
construction of the AU$500
million redevelopment of Pacific
Fair Shopping Centre are the main
projects that continue to drive the
market.
With the increase in construction
activity, we are starting to see an
increase in the cost of a number of
trades including formwork, tiling,
plasterboard partitions and ceilings.
We are also seeing the influence
of the lower Australian dollar on
the cost of imported materials and
equipment with trades such as lifts,
mechanical, aluminium windows and
doors and white goods.
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The Adelaide Oval Redevelopment
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LOCATION INTELLIGENCEOCEANIA
Rider Levett Bucknall | International Report – Third Quarter 201552
PERTH
The Western Australian economy
continues to struggle through its
own, delayed version of the Global
Financial Crisis where raw materialprices have shown flashes of recovery
only to sink lower again.
Work is now progressing on the new
Perth Stadium with the successful
Brookfield Multiplex consortium
in possession of the site and
construction work underway. The
design for the pedestrian bridge
linking back to the CBD side of the
river has been publicly announced
and in the meanwhile, PTA are
proceeding with their plans for thenew rail station. Work on Capital
Square is progressing with the
podium and the first (of three) towers
is emerging from the ground. The first
two (of four) new office buildings at
Kings Square are nearing completion
and the site infrastructure works
at Elizabeth Quays is continuing.
The refurbished Old Treasury
development (now renamed the
State Buildings) is nearing completion
and will be the first of a number of
planned new hotels in Perth. Over
the river, on the Burswood Casino
site, the structure of the new Crown
Hotel development is progressing
quickly. There are a number of major
shopping centre expansions in design
phase at present, as the next round
of competitive redevelopment of the
major centres approaches.
The Western Australian construction
market remains flat with very
competitive tendering across all
sectors. Supply continues to exceed
demand and consequently there has
been no growth in pricing. There has
been a number of business failures
on both main contractor and sub-
contractor levels as the depressed
pricing takes its toll. There has also
been an increase in litigation and
disputes, particularly in the resources
sector as the promise of 'future work'
ceases to be available as an incentive
to settle disputes.
SYDNEY
The NSW economy is relatively
strong position, however the State’s
growth has not been consistent, nor
sustained across all segments ofits economy. The major issue that
continues to dominate discussions
and is the subject of continual
speculation, is that Sydney has
entered into housing bubble. A closer
examination of the issue is that this
housing bubble term should be
referred to as a “residential pricing
bubble for the sale of property”.
Certainly, residential real estate sales
continue to report a strong demand
for existing property and premiumprices are being obtained for all types
of residential property. This strong
demand has been reinforced by new
developments, where premium sites
report pre-sales being fulfilled in very
short time periods. Strong activity for
these types of presales continue to
provide developers with confidence
to commence construction as quickly
as possible. Alternative delivery
systems to the traditional lump sum
methods are being explored, to bring
projects to market and construction
stage, prior to any downturn in
the market that my occur, due to
changed economic or commercial
trading conditions.
Whilst commenters continue to
question residential sales rates, an
examination of Australian Bureau
of Statistics Building Approvals are
yet to indicate an oversupply of
new residential developments. Q1
2015 Building Approval are some
30% above the similar period for
2014. However, approvals for the
second quarter to date are variable,
compared to recent reports that may
indicate the prospects of oversupply
may not eventuate.
The tender pricing of residential
developments remains within
expectations as subcontractors
and contractors seek work inthe residential sector to offset
opportunities in the non-residential
sector.
It is becoming evident that
opportunities in the non-residential
sector are below expectations.
It has been observed in recent
tenders, that contractors advise the
availability of staff for the immediate
commencement of projects, such
occurrences indicate contractors are
experiencing difficulties in securing asteady workload.
The progress of commercial
developments continue to be
positive, despite increased industrial
action as CFMEU seek increased
wages for the renewal of Enterprise
Bargaining Agreements (EBA).
Features of the new agreements are
the inclusion of site allowances for
various types of projects, which will
be a cost risk to both contractors and
clients.
Progress on the Barangaroo South
site continues to attract attention
as to the speed of construction.
Completion and tenant occupation of
the first tower will be obtained in the
Q3 2015. The project is on or ahead
of programme for the remaining
commercial towers, residential
component and public domain works
for Q4 2015 and early 2016.
An analysis of industry forecasts
notes that construction activity for
commercial and retail developments
has peaked and it is likely future
activity for these sectors will be at
levels similar to 2012 and 2013.
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LOCATION INTELLIGENCE
OCEANIA
Rider Levett Bucknall | International Report – Third Quarter 2015 53
Major contractors have commenced
to adjust their focus on major
infrastructure and health projects
following the re-election of theState Government. The subsequent
approval to commence a number of
significant projects across the state
has been granted.
Small to medium sized contractors
are experiencing reduced
opportunities in the education sector,
however, this fall in the short term
is offset by new opportunities in the
entertainment, recreation and aged
care sectors.
Contractors report, price pressures
are emerging on structural trades,
due to significant increases in
material costs such as concrete
supply, bricklaying rates and wage
rises reflecting the 8% to 10% of
wage increases agreed to in EBAs.
In addition trades that are subject to
currency fluctuation such as curtain
wall and engineering services are now
experiencing price increases, due
to the declining currency exchange
rates of the AU$ to US$.
There are concerns that cost
increases will rise at a faster rate than
current forecast escalation rates of
4.0% to 5.0% per annum.
In order to reduce the impact
of higher prices, clients and
contractors are negotiating an
increased responsibility for design
and coordination issues to be
the contractor’s responsibility.
As a part of this increased
responsibility contractors are seeking
subcontractor involvement in design
issues prior to contract award so that
the most economical design solution
is obtained and price certainty is
gained at an earlier stage, together
with a reduced construction period as
contractors seek efficiencies through
solving design issues at an earlier
stage than would be the case under a
traditional lump sum delivery method.
WELLINGTON
The Wellington region construction
levels continue to improve with a mix
of good sized projects underway and
a pipeline of other work in late designor consent stages. Signs remain
good for increasing development
across all sectors including offices,
infrastructure/civil, leisure and
community based activities.
Strengthening of existing buildings
still remains a key construction
component in the region, and this
continues to drive much needed fit
out upgrade works at the same time.
The Lower North Island regional
centres continue to experience weakconstruction activity, although a
number of potential projects are
being discussed and it is possible that
some good activity gains will be seen
later this year.
Victoria University projects, Gateway
and Rutherford House extensions,
are now well underway and will
continue through 2015, as will the
airport terminal extension works and
some large office refurbishments
for Government ministries - Health,Social Development and Education. A
number of smaller public and private
fit out works are also underway and
more are set to get underway soon.
Transmission Gully and other major
civil road works on the Kapiti Coast
are progressing well and will lead
to greater accessibility, providing
a boost to local communities for
residential and commercial activity
gains.
Two new office towers close to
the Waterfront are planned. The
demolition of an existing tower is
currently underway on one site andplanning discussions continue with
the second tower site. Upgrade of
existing Social Housing complexes in
Wellington is also a focus for the City
Council, who are midway through a
15 year renewal programme totalling
over NZ$300 million.
Cost escalation remains at low levels
compared with other centres around
New Zealand, but we are starting
to see some movement locally,
particularly with material prices.Subcontract resources remains an
issue as more projects come to
market. Overall, the market remains
competitive and should do so for the
remainder of the year. The Wellington
region, whilst improving, remains a
distant third or fourth behind the
other major centres of Auckland and
Christchurch in terms of work put in
place.
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Rider Levett Bucknall | International Report – Third Quarter 2015 55
OFFICES AROUNDTHE WORLD
CANADA
Calgary
Toronto
CARIBBEAN
BahamasBarbados
Grand Cayman
St Lucia
USA
Austin, TX
Boston, MA
Chicago, IL
Denver, CO
Guam, GU
Hilo, HI
Honolulu, HI
Kennewick, WA
Las Vegas, NV
Los Angeles, CA
Maui, HI
New York, NY
Orlando, FL
Phoenix, AZ
Portland, OR
San Francisco, CA
Seattle, WA
Tucson, AZ
Waikeloa, HI
Washington, DC
CHINA
Beijing
Chengdu
Chongqing
Dalian
Guangzhou
Guiyang
Haikou
Hangzhou
Hong Kong
Macau
Nanjing
Qingdao
Shanghai
Shenyang
Shenzhen
Tianjin
WuhanWuxi
Xiamen
Xian
Zhuhai
INDIA
Mumbai
INDONESIA
Jakarta
JAPAN
Tokyo
MALAYSIA
Kuala Lumpur
PHILIPPINES
Cebu
Davao
Manila
SINGAPORE
Singapore
SOUTH KOREA
Jeju
Seoul
THAILAND
Bangkok
VIETNAM
Ho Chi Minh City
MIDDLE EAST
Abu Dhabi
Doha
Dubai
Muscat
Riyadh
AFRICA
RLB Pentad
Gaborone (Botswana)
Johannesburg (South Africa)
Port Louis (Mauritius)
Maputo (Mozambique)
Pretoria (South Africa)
Cape Town (South Africa)
UK
Birchwood/Warrington
Birmingham
Bristol
Cumbria
Glasgow
London
Manchester
Sheffield
Welwyn Garden City
Wokingham
EUROPE
RLB|EuroAlliance
AustriaBelgium
Czech Republic
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Luxembourg
Netherlands
Norway
Poland
Portugal
Russia
Serbia
Spain
Sweden
Turkey
AUSTRALIA
Adelaide
Brisbane
Cairns
Canberra
Darwin
Gold Coast
Melbourne
Newcastle
Northern NSW
Perth
Sunshine Coast
Sydney
Townsville
NEW ZEALAND
Auckland
ChristchurchHamilton
Palmerston North
Queenstown
Tauranga
Wellington
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