As building activity rises, architects across most of Australia are enjoying a period of improving levels of demand for their services.
Having been through a period of low work volumes and margin pressures, architecture firms throughout most of the country are seeing a recovery in demand amid a 12 per cent rise in building activity over the past two years.
Driving these gains are massive levels of investment in high-rise apartments, which have seen more multi-residential dwellings approved for construction over the past five months alone (on a seasonally adjusted basis) than were approved in the whole of calendar 2009. New projects continue to be announced in Melbourne and Sydney, with plans for almost 2,000 new apartments across seven new towers at Melbourne's Fisherman’s Bend recently gaining approval. In Brisbane, more apartment towers appear set to dot the city skyline following Brisbane City Council’s approval of a draft plan which largely does away with height limitations.
Detached housing is also strong, with ground breaking on a 10-year high of 112,230 homes around the nation last year and work expected to start on a further 110,620 in 2015.
In terms of states, meanwhile, conditions are strong in Melbourne and Sydney and improving in Brisbane and Hobart, albeit with building activity being slow in South Australia. It has peaked (but remains high, at least in home building) in Western Australia, which is seeing a glut of apartments and a soaring rate of office vacancies.
The benefits of this are spreading to the sector’s workforce. Design and architecture is literally the fastest growing sector of the jobs market in Australia, according to Seek.com - which says the number of job ads in the profession are up 102 per cent compared with the same period last year. Demand is particularly strong for skills on multi-residential homes along with project homes as employers shift their focus more toward permanent roles, according to recruitment outfit Hays. Roles such as interior designers, project design managers, ArchiCAD draftsman and colour consultants are in demand, as are skills in Revit, Building Information Modelling, ArchiCAD, 3D Max, Photoshop, and Rhino, Hays says.
Meanwhile, with the recent Free Trade Agreement with China and a three-way recognition agreement involving Australia, New Zealand and Canada, opportunities in overseas markets are opening up.
To be sure, there are negatives. The pace at which new work is coming in in non-residential building – which accounts for more than half of industry revenue - remains subdued, with building approvals in this space over the past six months actually being well down compared with previous corresponding periods in recent years. While new housing conditions are red-hot, housing renovation activity is slow.
In the booming apartment market, meanwhile, even as Brisbane wants more, there are signs Melbourne wants less. As former Planning Minister Matthew Guy went about approving a huge number of projects, concerns within the city grew about poor design, insufficient space, bad lighting, overshadowing – not to mention fears about a potential situation of looming oversupply. Furthermore, the recent discovery of use of cheap façade material imported from China following a massive fire at an apartment complex at Docklands has reinforced the dangers associated with specification of or use of materials which do not meet safety standards.
Furthermore, while the strength of the sector’s employment market is generally welcome, it could precipitate an increase in salary costs (good news for employees but not so from the perspective of architecture firms). There is, however, little chance of a blowout as conditions remain competitive in spite of the recent improvement. In one recent survey from Hays, around 37 per cent of employers across the construction, engineering and property sector anticipated growth in salaries of more than three per cent, though only one in 10 expected growth of any more than five per cent.
Going forward, however, the news is generally positive. The Australian Construction Industry Forum expects the overall dollar value of building activity to rise by just over eight per cent over the next two years. Business research firm IBIS World reckons revenue growth throughout the architectural services sector will accelerate from an annualised average of a mere 0.5 per cent over the past five years to 2.2 per cent over the five years to 2019 amid a comeback in the retail, office and entertainment and institutional sectors.
While output levels across most commercial building sectors is expected to remain modest, strong conditions are expected to persist in the residential sector, while some forms of modest growth are anticipated in commercial sectors such as tourism, retail and healthcare.
Though New South Wales and Victoria are thought to be at or around their peak, activity in these states is expected to remain strong, while that in Queensland and Tasmania is gaining momentum. Activity is also reasonably strong in the Northern Territory, and some signs of life are emerging in the public sector cutback affected Australian Capital Territory amid urban renewal efforts there.
By contrast, Western Australia has come off its peak and conditions in South Australia are expected to remain subdued.