Construction activity in the health and aged care sector is expected to recover after an expected slump this year.
As work winds down on a number of projects, the sector is experiencing a decline in activity. This year, the Construction Forecasting Council (CFC) expects the value of work done in the sector to plummet 17.4% from $3.961 billion to $3.270 billion (see chart).
Approval figures are not encouraging. At $3.095 billion the value of new buildings approved in the sector is well short of current activity levels, meaning that existing work is being done much faster than new work is coming in.
Starting in the second half of this year, however, a recovery is expected to take shape as work gets going on projects such as the Royal Adelaide Hospital ($1.7 billion), Gold Coast Private Hospital ($500 million) and the redevelopment of Box Hill Hospital ($407 million).
From mid next year, work on the relocation of Princess Margret Hospital For Children to the St. Charles Gardiner Hospital site overlooking Kings Park in Perth ($1.billion) will add further momentum, as will work on the Sunshine Coast Hospital ($940 million) in early 2013.
With this in mind, the CFC expects the value of work done to bounce back to $3.970 and reach $4.148 billion the following year. Beyond that, the forecaster expects growth to flatten out, with activity levels remaining below $5 billion throughout the remainder of the decade.
Significant Statewide developments
The anticipated recovery in activity is expected to be felt across the board.
According to CFC forecasts:
• Helped along by work on the Gold Coast University Hospital and the $1.28 billion children’s hospital in South Brisbane, Queensland is expected to lead the recovery, with activity rising from $774.9 million this year to $1.114 billion by financial year 2012/13.
Beyond that, however, the value of work will level off despite work on the Sunshine Coast Hospital starting early in 2013 once work on the Gold Coast project finishes up in late 2012.
• A good range of projects scheduled to begin throughout this year and next (including the Northern Beaches Hospital) is expected to underpin a modest recovery in New South Wales from $978.9 million this year to $1.179 billion by financial year 2012/13
• Despite the effect of Royal Adelaide, expectations for South Australia are subdued with activity expected to fall from this year from $254.4 million to $216.4 million before rebounding to $259.7 million in 2012/13 and $287 million by 2014/15.
• Slow growth is forecast for Victoria, where activity is not expected to reach $1 billion until 2013/14 after coming in at $931.6 million last year.
• Despite the relocation of Princes Margret, activity in Western Australia is expected to remain flat for the next two years, after which time the value of activity is expected to increase from $345.6 million in 2012/13 to $406.3 million in 2014/15.
• 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.
