After a year of subdued conditions, the healthcare construction sector in Australia is set to recover as a strong increase in construction starts drives growth in activity from 2012/13 and beyond.
In its latest report on the Australian building sector, industry research firm BIS Shrapnel predicts that construction starts on health related facilities will increase by 73 per cent in 2011/12. Driving this increase are starts on the new Royal Adelaide Hospital ($1.7 billion) and the new Princess Margaret Hospital for Children ($1 billion).
In the near term however, conditions look set to remain subdued with a dearth of major project starts prior to the Royal Adelaide Hospital in 2010/11 (refer to chart) feeding through to soft conditions in 2011/12.
Not surprisingly then, in the twelve months to March next year, the Construction Forecasting Council (CFC) expects the value of work done on health and aged care facilities to drop by 11.9 per cent from $3.966 billion to $3.494 billion.
By 2012/13, however, the CFC expects the value of work done to bounce back to $3.970 billion as momentum from starts on Royal Adelaide and Princess Margaret flows through to stronger activity. Beyond that, subsequent years will see modest growth as work on the first stage of the Sunshine Coast University Hospital ($940 million) gets going.
State by State
Despite South Australia and Western Australia both receiving boosts from Royal Adelaide Hospital and Princess Margaret Hospital, larger states are expected to be the best performers going forward.
In significant statewide developments, according to CFC forecasts:
• Victoria is expected to defy national trends and record a marginal increase in activity from $892.7 million to $910.6 million in the twelve months to March next year. Beyond that, the value of work is expected to reach $966.5 million in financial year 2012/13 and $1.028 billion in 2013/14.
• Activity in New South Wales is expected to drop back from $1.102 billion to $1.049 billion in the year to March 2012 before bouncing back to $1.179 billion by financial year 2012/13.
• Likewise in Queensland, after an 11.7 per cent contraction ($868.0 million) in the twelve months to March next year, the value of work will reach $1.114 billion in 2012/13 as work on Sunshine Coast gets going.
• Despite the boost from the Royal Adelaide Hospital, the value of work done in South Australia is set to contract from $257.8 million to $232.2 million in the year to March. Beyond that, however, activity is set to bounce back to $259.7 million in 2012/13 and reach $287 million by 2014/15.
• Despite the relocation of the Princess Margaret Hospital, activity in Western Australia is expected to drop back from $658.7 million to $339.7 million in the twelve months to March. Beyond that, activity is set to remain flat in 2012/13 before returning to moderate growth shortly thereafter, reaching $406.3 million by 2014/15. Activity in WA has been abnormally strong in recent years as a result of work on the $2 billion Fiona Stanley Hospital.
• Thanks to work on the Royal Hobart Hospital, activity in Tasmania is expected to hit $74.7 million during the next financial year – up more than threefold on the $21.9 million recorded in 2009/10.