Rider Levett Bucknall shows 15 working cranes in Adelaide only but dig deeper for the true picture says Master Builders’ Ian Markos
DESPITE the uplift in the Adelaide CBD skyline over the past few years, the city is flailing in the wake of the eastern seaboard cities when it comes to actual construction in progress.
DESPITE the uplift in the Adelaide CBD skyline over the past few years, the city is flailing in the wake of the eastern seaboard cities when it comes to actual construction in progress.
The current “Crane Index” report by award-winning property group Rider Levett Bucknall shows 15 cranes – an indicator of industry busyness it claims – operating within Adelaide, far in the wake of Sydney which boasts 334 cranes currently, with Melbourne hosting 146 cranes and Brisbane 81.
With such a low base, a single addition or subtraction can skew the Adelaide landscape significantly however.
As with elsewhere, residential construction holds sway in Adelaide (with seven cranes) but the crane count in our health sector has upped from four in the third quarter of 2016 to seven right now. Positive news, but then education has slipped from three cranes to just one says RLB.
Across Australia we are lagging far behind in the residential build sector, which accounts for almost 84 per cent of national crane activity. The mechanics are different elsewhere too, clustering of new builds is common in Melbourne CBD and Parramatta in Sydney’s west for example though more spread out in Adelaide.
But don’t panic says Master Builders Association (SA) chief executive Ian Markos, dig a little deeper to see what the cranes are working on and the news is more positive.
About half of Adelaide’s cranes are engaged in health related construction but much work is transitioning from the Royal Adelaide Hospital to private or not-for-profit projects, not taxpayer funded sites Mr Markos said.
“The other half stems from residential builds which, again, are not reliant on government funding. We would rather see the private sector investing, because it’s sustainable, a sign of a stronger economy and it’s unlikely to fuel a bigger public sector needing higher taxes.”
The report is focused on the big, CBD builds he said whereas the bulk of construction activity in Adelaide is spread out across the city and many projects simply don’t need a crane.
The Adelaide total reveals cranes in the residential, health and education sectors only and accounts for only 2.3 per cent of the 654 cranes nationally, with no SA presence at all in the civic, hotel or recreational work seen elsewhere.
The crane count is however reasonable shorthand for the pipeline of underlying construction activity Mr Markos said.
“There’s a whole heap of activity that goes on before a crane goes up and after it comes down, so a simple count is a quick insight into work that subcontractors and suppliers can expect or are benefiting from.
“It’s also worth seeing smaller builds. If one project carries three cranes, that’s only one chain of companies connected to a project. If there are three projects, each with one crane, then there are three builders, three chains of subcontractors, involved. As a smaller state, SA has smaller building companies, so to have the work spread around a greater number of businesses is healthier for our economy.”
The value of the survey, suggests Mr Markos, lies in its representation of a lack of confidence across all sectors in SA, not just big builds with cranes.
“Building and construction is a bellwether for the health of the economy. We are busy when there is a strong, growing economy, and we suffer when the rest of the economy slows.
“We need to get basics right: low taxes, less red tape, affordable homes and reduced business costs.
“If a business is confident in facing a healthy economy with low taxes and other business costs — including reasonable power prices — it is more likely to invest for the long term. SA can’t boast those factors at the moment.”
The State Governement’s ‘Industry Participation Plan’, which is focused on getting SA investment going, is a drain on the resources of smaller businesses and subcontractors and leading to a state of administrators, not builders Mr Markos claimed.
Growing better business skills locally and regaining SA’s reputation for housing affordability is paramount he said.
The most recent Census revealed average SA housing costs are the third highest across the country when compared to average incomes he said. It has to change .
“Cut stamp duty up to the median house price for first-time buyers to give them one more reason to stay and invest in SA. We need more people with good reasons to stay and grow the state.”
The 10th edition of the RLB report, a biannual publication, shows 654 cranes sighted on working developments. The residential sector continues to dominate with 548 cranes commissioned on future residential dwellings. The sector saw a net gain in crane numbers of nine since the last index.
The only other sectors to show growth in crane numbers nationally were the health, retail and civil sectors
Commercial projects underway across Australia account for 30 cranes, down from 35 at the last count and is about 5 per cent of all cranes in Australia.