Tender pricing costs to head lower on Gold Coast as high-rise projects shelved or near completion: Rider Levett Bucknall report

THE looming completion or shelving of major Gold Coast projects, such as Jewel and the 89-storey Spirit tower, will create more competition between contractors tendering for projects under $50 million.

THE looming completion or shelving of major Gold Coast projects, such as Jewel and the 89-storey Spirit tower, will create more competition between contractors tendering for projects under $50 million.

And that should lead to better value for developers and higher margins for builders rolling out projects across the Gold Coast.

A report by global quantity surveyor Rider Levett Bucknall has revised its tender pricing forecast for the Gold Coast down from growth of three per cent to 2.5 per cent this year.

RLB Gold Coast director Jim Krebs said the cut to the forecast is a direct result of a reduced volume of new projects on the drawing board leading to subcontractors shifting their attention to smaller-scale developments under $50 million.

“This will lead to more competition in that $50 million range and that will result in better value for developers,” he said.

Condev Construction has the contract to build the Rydges Airport Hotel at Gold Coast Airport. Photo: Supplied

The tender pricing forecast for next year, of three per cent growth, remains unchanged.

Condev Construction managing director Steve Marais, who heads up one of the city’s largest builders, said RLB’s assessment was “spot on”.

“Big unit developments are going to be the exception (rather than the rule),” he said.

Condev undertakes commercial and residential projects, mostly in the $1 million to $35 million range, and employs more than 100 staff.

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It has secured more than $200 million in forward work this financial year.

Mr Marais said structural trades, which include concreters and formworkers, have had to shift their sights from massive projects, such as the $1.4 billion Jewel towers, to smaller jobs.

Steve and Tracy Marais, of Condev Construction, at their office in Robina. Photo: Tertius Pickard.

“We have found our structural trades’ pricing, post completion of the Jewel structure, has become very competitive and we have found rates have dropped.

“The trades that are first to complete their cycles in a multi-level high rise are now looking for work for the remainder of the year … and they are having to reassess and go into the smaller-scale unit projects.”

He said Sunland’s Magnoli Apartments in Palm Beach was one example.

“There are a number of towers going up in Palm Beach but they are all small-scale targeted at end users.”

He said the finishing trades, such as cabinet makers and painters, will follow the same trend as the structural trades when the larger projects are completed.

“The contractors that have secured work and are looking for finishing trades in six months’ time will be well placed.

“When the market softens the builders that have procured work do a bit better than what they expected. Their margins might improve by one or two per cent … which is not insignificant. The trick is to have secured the work already.”

An example of the changing pipeline of work includes the 192-room Rydges Airport Hotel at Gold Coast Airport, which Condev is due to start work on early this year.

The build, worth about $45 million, is one of the biggest projects coming up in the construction sector.

Ground has also recently been broken for the 53-storey Star Residences and Dorsett Hotel at The Star Gold Coast and Sunland’s $250 million Hedges Ave tower at Mermaid Beach.