Australia is the land where dreams come true. It has everything from a scintillating skyline, unspoilt beaches, and thrilling adventures to succulent dining options and the ultimate art scene. However, one thing that captures the attention of every onlooker is the towering buildings which are speckled across the metropolitan cities. These humungous facades are massive structures built ostentatiously and display the highly urbanised and modern lifestyle of the country.
Designed exquisitely and maintained with style, these soaring buildings are an arresting feature of the popular cities like Melbourne, Brisbane and Sydney. With a GDP of $1.69 trillion in 2017, Australia is a thriving economy with high disposable incomes and purchasing power. The population is also increasing steadily while the urban areas are becoming concentrated with more and more people. Being a developed nation with an annual growth rate of 3.4%, it is going from strength to strength. As expected, every sector is gaining from this boom. The property domain is also moving forward, which has made commercial property for sale in Australia a hot selling proposition.
The total construction work in the country is increasing by 2% every quarter which means builders are innovating and utilising modern building materials and techniques to create human-made wonders. As it is evident, the costs of construction are soaring in Australia and have outpaced the rest of the world. In fact, Sydney has been ranked among the five most expensive cities across the globe.
It does not matter whether you are planning to build a hotel, an apartment building or a commercial structure - all of them are being built at exorbitant rates. Other social structures are not far behind either, such as the Gold Coast University Hospital and the Royal Adelaide Hospital which are among the most expensive buildings in the world.
The costs also rise with the height of the building. For example, for a high-rise that goes beyond the normal limit, the steel ropes in the elevators are prone to snapping. Thus the architects have thought about a more strong carbon fibre alternative which can extend easily to reach greater heights without any risk. The use of cranes during winds also needs attentive planning to comply with the health and safety guidelines.
Going by the recent updates, the tallest skyscraper in Australia is in the pipeline and will be completed by 2020. The groundbreaking design of the construction has won the International Design Competition and will look like a twisting, tree-covered edifice located on the Southbank in Melbourne. It will be 30 meters higher than the current tallest building in Australia, the Q1 located in Surfer’s Paradise, Queensland. The Q1 was built at a massive cost of $255 million while the Southbank structure is expected to cost around $2 billion.
Admittedly, the skyscrapers are the talk of the town and have pushed the prices. The rise in labour costs and insufficient collaborative efforts made by the stakeholders are the primary reason behind the increase in costs of construction in the metropolitan cities. An understanding of the commercial property market of Australia will give you a better insight into the rising prices. Typically, the construction of a high-rise commercial building in a city like Sydney can cost somewhere around $3998 per square meter.
There are many building cost calculators available online which can help you in finding the average cost by providing an indicative figure. With the rising population in the urban areas and new development projects coming up, the cities are geared up for real estate expansion. A lot is riding on these projects as the government has invested billions of dollars in infrastructure improvement in the past ten years.
A more substantial chunk of the skilled worker’s population is shifting base to the highly urbanised areas in search of a better lifestyle and higher standard of living. These people are equipped with decent amounts of cash which they are willing to spend on improving their quality of life. Consequently, big global conglomerates are setting up their headquarters in these cities to entice these high net worth individuals. Thus the need for commercial properties is touching the rooftops.
According to the Arcadis International Construction Costs report 2018, three Australian cities are among 50 of the major global cities which are considered costliest for construction. Unsurprisingly, the cities are Sydney, Melbourne and Brisbane. As per the index, in most of these cities, the demand for construction is much higher than the availability of the skilled labour to complete the task. The report also states that the stable performance of the global economy will trigger the demand further.
Foreign investment is also propelling the need for the social and economic development of the three most favoured cities in Australia. Additionally, low-interest rates and the declining Australian Dollar have resulted in a surge in private investment. Among the foreign investors, the Chinese continue to dominate the market by investing huge sums of money in the built assets.
Also, labour costs have amplified in the past few years, and the shortage of skilled labour is further accelerating the demand. The construction of commercial buildings is all set to grow to 7.8% in 2018 and by 5.8% in 2019 fuelled by private and public-sector investments. The residential construction costs are not far behind either with prices of $1475 per square meter in Brisbane and Sydney and around $1545 per square meter in Melbourne.
The construction costs will keep spiralling in the near future as the industry is in no mood to change the current status. The rise in labour costs and burgeoning demand will boost the expenses. The utilisation of advanced technology can help in enhancing the productivity of the structures and make them more suited for sustaining the high-rise edifice. Naturally, commercial real estate for sale in Australia will be gaining momentum in the wake of the rising prices.
Sophie Barrett is an experienced real estate marketing professional with a specialisation in commercial property market. She has a Masters degree in marketing from the esteemed Melbourne Business School and has several property management certificates to her credit. Her shrewd marketing policies and business acumen have led to the most rewarding property deals in the major capital cities of Melbourne, Sydney and Perth. She is a popular name in the real estate market and has been serving the industry for almost two decades now. CommercialProperty2Sell is proud to partner with her for some astute discussions and advice on the booming sector.
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