Non-residential starts to grow

NON-residential building starts in WA are forecast to experience moderate growth over the next two years to 2000-01 before a downturn in 2001-02, says the latest Building Industry Prospects report by BIS Shrapnel.

In 2001-02, non-dwelling building activity is forecast to decline 14 per cent because of an expected economic slowdown, the report said.

Office starts in WA are expected to increase by 91 per cent to $191 million during the current financial year.

The strong forecast recovery for office work is based on the start of the new $70 million Woodside offices and the $20 million ABC studio headquarters during the current year.

The increase in office work will be dominated by refurbishments and fitouts, the report said.

A vacancy rate of 12.3 per cent in July 1999 indicated there was still an oversupply of office space in Perth, it said.

“Activity in office commencements will than decline by 17 per cent in 2000-01. The next boom is likely to peak around 2005-06,” the report said.

WA shop commencements are expected to decline from the 1998-99 year and return to normal levels.

The value of shop starts is expected to fall by 57 per cent to $160 million in the current year following the blip in shop commencements as a result of the Westfield Carousel expansion program in the 1998-99 year.

“Retail building is currently at the peak of the cycle. On the whole, developers have continued to expand and refurbish existing regional shopping centres, rather than build major new ones,” the report says.

“However, some oversupply has been created in the retail sector from the high level of activity in extensions and refurbishments of larger established regional shopping centres. This will sow the seeds for the next decline expected to continue until 2002.”

Hotel commencements are expected to increase to $112 million in the current year from $49 million last financial year.

The main activity for the year is the expected commencement of the $50 million five-star Stamford Hotel. Thereafter, hotel activity is expected to fall to a nine-year low over the two years to 2001-02.

Factory commencements are forecast to increase by 30 per cent in all states while WA factory starts are expected to increase more moderately by 7 per cent to $94 million.

On the future of demand for factory space the report said: “Increased activity in factory buildings will eventuate from increased manufactured exports as well as increased import substitution from the favourable Australian dollar.”

“In addition, recent strong domestic demand caused by a recovery in consumer confidence, together with an upturn in

business confidence, should result in a pick up in business investment,” it said.

“Consequently factory commencements are forecast to bounce back sharply in 1999-2000.”

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