Construction and property leaders see short term pain but long term gain in QLD sectors
Construction and property sector bosses are assessing the challenges and opportunities ahead after the world has been turned upside down.
QBM
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It’s always been a tough business but the construction sector is facing unprecedented challenges brought on by COVID-19, razor-thin margins and new technology.
The move to flexible work-from-home arrangements, tighter regulatory oversight and increased prefabrication are all emerging as key issues, according to industry experts gathered together by QBM and BDO for a virtual boardroom lunch.
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Woollam Constructions director George Bogiatzis said the 136-year-old family-owned firm was positive despite the impact of the pandemic shutdown.
“It is a bit patchy but there has been growth in infrastructure and retirement living,” said Mr Bogiatzis. “We are cautious but positive about the outlook.”
Urban Development Institute of Australia chief executive Kirsty Chessher-Brown said surveys undertaken by her organisation revealed April was tough for the residential market but there had been a lift in May helped by government subsidies for home building.
“The growth has been mainly in the outskirts of the city where there is affordable housing,” said Ms Chessher-Brown.
She said the real challenge would be when government support programs such as JobKeeper ended.
“The sector is facing falling off a cliff, risking hundreds of thousands of jobs,” she said.
BDO partner Hung Tran said the Queensland property market was still performing better than its southern counterparts.
“There might be some short-term pain to the market but the outlook is strong,“ said Mr Tran. “Innovation will play a key role in the future of the property market.”
Queensland Building and Construction Commission commissioner Brett Bassett said that while there had been some pull back in home renovations, he was not seeing too much change in the industry due to the pandemic.
But Mr Bassett said builders continued to operate in a tough sector where margins were thin and competitors were seeking to drive down prices and win work.
He said the QBCC had been working to ensure builders had the financial capacity to perform their work.
“We don’t want to take them out of the industry,” he said. “We now have the tools to risk rate builders to ensure they have the financial capacity.”
Woollam’s Bogiatzis said the secret of the company’s success over more than a century had been its regional diversity and long term relationships with clients.
“We have seen people come into the industry and take work away from us and they then they go broke,” he said. “The problem is we have to drop our margins and miss out to fly by nighters.”
National Australia Bank’s Queensland property manager partner Sean Hannington said that while many investors were sitting on the sidelines due to COVID-19, there had been heightened interest in industrial land as online retailers looked to expand warehouses and some companies looked at bringing manufacturing back on shore.
Honeycombes Property Group managing director Peter Honeycombe said the death of the high-rise office tower due to work-from-home arrangements during the coronavirus pandemic had been greatly exaggerated.
“Commercial office space will do alright,” said Mr Honeycombe. “Initially people were saying there was no way we will go back to the office. People liked staying at home and patting the dog. But everyone is over that and we will have to go back to the office. Dividing people up into teams is not sustainable.”
UDIA’s Ms Chessher-Brown said a lot of younger workers did not like working from home because they missed the social interaction.
“Zoom has got us through a difficult period but there is no replacement for face to face,” she said.
QBCC’s Mr Bassett said new technologies such as 3D printing and prefabrication was throwing up challenges for the sector particularly in relation to building code compliance.
“We are now seeing nine storey buildings being prefabricated,” he said.
He said the QBCC now had the power to regulate building products coming from outside the state to ensure compliance.