As I outlined in my previous article titled ‘Riding the Waves of Construction: Our Podcast Series is Back with a Bang!’ Emily Taylor and I are planning further podcasts. We have decided to focus on this great part of Queensland to celebrate the recent opening of a new Helix office on the Gold Coast headed up by Jonathan Miliszewski.
As I also mentioned in my earlier article, Emily and I have decided to focus on 10 construction themes in our upcoming Deconstruction-Surfs Up podcast series, namely:
- Market Dynamics and Economic Impact;
- Labor Shortages and Wage Dynamics ;
- Regulatory and Compliance Challenges;
- Construction Costs and Material Supply;
- Housing Market Trends and Development Outlook;
- Environmental Sustainability and Green Building Practices;
- Impact of Global Economic Trends on Local Construction;
- Urban Planning and Infrastructure Development;
- Technological Advancements in Construction; and
- Addressing Housing Affordability and Homelessness.
In this article, I will address Market Dynamics and Economic Impact.
I should point out that in researching this theme I identified a lot of information that I can only describe as ‘upbeat sales tainted’. In finding this, I aimed to rely on information that is reasonably balanced and not biased by this. However, in some instances, the information is still very, very positive, and some people will challenge it.
With this, Emily and I will dig into some of these positions, assumptions, and predictions with our guests who can talk to this theme.
Before I discuss the current state of the construction industry, let’s look at the overall economic position of the Gold Coast.
Economic Resilience and Growth
The Gold Coast’s economy is one of the fastest growing in Australia, with strong performance in key sectors such as healthcare, construction, and tourism.
Please refer to this excellent and very comprehensive government website where it is stated:
“The Gold Coast is Australia’s sixth largest city with one of the fastest growing economies in the country.
We are leading digital and business investment programs to establish the Gold Coast as Australia’s fastest growing economy, driven by the adoption of telecommunications and cutting-edge technologies.”
Current construction state
The Gold Coast construction market is experiencing significant activity, mainly driven by the residential sector. Key factors include:
🚧High Demand for Accommodation
The desirable lifestyle and growing population on the Gold Coast have led to a high demand for housing. Local buyers and interstate migrants have driven this demand, which has outpaced the supply of new dwellings, increasing prices and construction activity. The Gold Coast has seen substantial increases in property prices, particularly in the unit market. For example, the median unit price rose by 10.8% in 2023 to $727,000.
The industry struggles to keep up with demand due to labour shortages, material supply constraints, and rising construction costs. This imbalance has caused a shortage of available properties, further driving up prices and encouraging new construction projects.
The Gold Coast’s economy is supported by tourism, healthcare and education, which provides a solid foundation for the construction market. The region’s attractive lifestyle and amenities continue to draw both residents and investors.
Future Predictions
The Gold Coast construction market is expected to grow, with several factors contributing to this outlook:
Significant population growth driven by interstate and international migration is expected in Queensland, particularly on the Gold Coast. This will increase demand for housing and infrastructure. The population is forecast to grow by 145,000 before the 2032 Olympics, with 77% of this growth coming from domestic migration.
🏗️Preparation for Major Events
The 2032 Olympic Games in Brisbane will bring infrastructure investments and construction projects to the Gold Coast, including transportation networks, accommodation and recreational facilities.
🏗️Investment in Infrastructure
In addition to the necessary infrastructure associated with the Olympic Games, the Gold Coast is also benefiting from ongoing public and private investments, such as the $1.5 billion Harbour Shores project in Biggera Waters, which has received a 6 Star Green Star Communities rating.
The region’s strong economic foundations, including a thriving job market, desirable lifestyle, and attractive investment opportunities, will continue to support construction industry growth.
🏗️Easing of Supply Constraints
Although challenges remain, there are signs that some supply constraints, such as material shortages and labour availability, may ease, allowing for increased construction activity to meet demand.
The Gold Coast’s resilient property market with strong growth prospects is attracting both domestic and international investors, driving further development and construction projects.
I love crane reports!!
Developers are showing confidence in the Gold Coast market by launching new projects. This confidence is reflected in the number of cranes and ongoing projects across the region.
According to RiderLevettBucknall (RLB) for Q4 of 2023, there were over 50 cranes on construction projects.
Furthermore, in Key Sector Insights, RLB stated:
“AGED CARE: Activity in aged care remains steady however the feasibility of major new projects has been challenged by increased construction costs and has struggled for funding due to the revenue model.
APARTMENT: Increased interest rates have slowed demand and increased construction costs have resulted in challenges to the feasibility of residential projects.
COMMERCIAL: Commercial activity is limited to health science related developments at the Health & Knowledge Precinct. Although vacancy rates are approaching historic lows, feasibility and competition with alternate land uses are leading to a lack of new commercial project commencements.
HEALTH: The Capacity Expansion Program is underway with $10bn expenditure across 15 Hospitals over the next five years that will test the capacity of the market to deliver.
HOTEL: Hotels appear to have recovered from the impacts of COVID-19 and activity remains strong with new hotels to open at the Star and proposals for new hotels in planning at The Spit. The refurbishment of existing hotel products continues throughout Surfers Paradise and Broadbeach.
HOUSING: Increasing interest rates have slowed demand resulting in a slow-down of activity.
INDUSTRIAL: The sector remains strong with demand for increased storage facilities and distribution centres.
INFRASTRUCTURE: Infrastructure remains strong with a range of major rail and road projects, coupled with planning for Olympic venues and associated infrastructure.
RETAIL: Retail continues to be subdued on the Gold Coast in terms of new large-scale investments.”
Final thoughts
I think these RLB insights are significant because, in some sector instances, the picture painted is not as rosy as others have depicted.
Readers will recall that in researching this theme, I earlier expressed concerns about some information I read, best described as ‘upbeat sales tainted’.
Emily and I will do a deep dive with guests who know about this theme to establish informed positions.
Stay tuned, there will be much more information forthcoming on our Deconstruction -Surfs Up podcast.
Helix HQ at the Gold Coast
Helix Legal have expanded its presence in Queensland by opening a Gold Coast office.
Focusing specifically on the Queensland construction landscape and related industries, we now have four (4) offices in Brisbane, Gold Coast, Cairns and Townsville.
Helix Legal’s Director, Jonathan Miliszewski leads the Gold Coast office and brings a wealth of experience to the firm’s contract negotiation, adjudication and litigation practice areas.
Join Helix at our first Gold Coast mixer event
We are hosting our first event at the Gold Coast on Friday, 27 September at the Kurrawa Surf Club in Broadbeach. Click here to register to attend. More details to come soon.
