Architects Ride Apartment Boom to Greater Prosperity

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Wednesday, September 23rd, 2015
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As the boom in apartment construction roles on, architecture practices and their staff throughout Australia are enjoying a significant improvement in operating conditions.

By all means, the significance of the uplift in new housing construction cannot be understated. All up, the Housing Industry Association reckons ground will break on more than 100,000 new units, flats, townhouses and apartments in the current calendar year – up by almost three times when compared with the most recent low in 2009.

Detached housing is up as well; compared with the same period in 2014, the number of stand-alone houses approved for construction throughout the country in the first seven months of this year increased by more than 40 per cent.

All this is flowing through into demand for skilled labour: compared with 12 months ago, employment vacancy numbers for architects and landscape architects, interior designers and urban and regional planners are up 27 per cent, 37 per cent and 25 per cent respectively. Demand for skills in a number of areas is on the rise, recruitment provider Hays says, including those with Revit and Building Information Modelling capabilities (especially those with commercial and multi-residential experience) along with design architects with experience in one-off high-end housing and mid-level project architects (for work on multi-residential roles). Salaries, too, are on the rise.

To be sure, there are challenges. Outside of hotels and accommodation – where growth is being driven by a recovery in tourism – the outlook for activity levels is subdued across most segments of the non-residential building market. Indeed, in the first seven months of this year, the dollar value of non-residential building approved for construction throughout the country was down by almost a fifth compared to two years earlier.

Even the booming multi-residential market faces challenges amid the potential for Chinese investors to pull back amid a slowing economy in China and the likelihood of a more general pull-back as tighter lending conditions take hold. Markets such as Perth face potential oversupply following several years of strong building activity as demand falters there. In Melbourne, the imposition of temporary limits to building heights might well see a slowdown in high-rise developments, as might the movement of the market into a position of modest oversupply. More broadly, the national shortage of housing appears to be shrinking, and according to BIS Shrapnel has mostly evaporated outside of Sydney and New South Wales.

Aside from this, the profession is undergoing challenges and change on a number of fronts. As demand for skills picks up, practices are finding they need to set themselves apart as an employer of choice in order to attract and retain talent. While the Free Trade Agreement with China offers opportunities for Australians in that nation, it will also most likely lead to a rise in the level of competition here in Australia. Crowdfunding, meanwhile, is expanding the range of options architects have at their disposal in terms of raising money to get designs off the drawing board.

Critical areas of opportunity are as follows:

Multi-residential construction

With ground expected to break on more than 100,000 new units and apartments in 2015, the pace at which new work is coming in in multi-residential construction is up by almost two-thirds compared with three years ago and almost three times compared with calendar 2009.

Although forecasts suggest starts will drop back after peaking this year, they are expected to remain at historically elevated levels over the foreseeable future, with historically elevated commencement numbers anticipated across almost all states except for the Australian Capital Territory.

Stand-alone housing

Another area which is performing well at the moment, the number of stand-alone houses under commencement rose by 18 per cent in 2014 to reach decade highs of 112,690, and is expected to remain at respectable levels until at least 2017. Queensland, where HIA expects the number of stand-alone dwelling commencements to rise by nearly one third over the three years to 2017, looks to be one of the best areas of opportunity. Activity also appears set to remain at elevated levels in New South Wales, where a significant albeit shrinking shortage of stock remains in place.

Hotels and Accommodation

Although not large in terms of dollar value, accommodation is the only segment of the commercial building market which is expected to experience a long-term trajectory of growth as the sector benefits from a resurgence in tourism and an undersupply of quality facilities.

Thanks to developments like the $4.2 billion Acquis Great Barrier Reef Resort in Cairns as well as the $900 million Jewel Mixed Use Development at Surfers Paradise, the $600 million Capricorn Integrated Resort development in Yeppon near Rockhampton, the $600 billion Linderman Island resort redevelopment on Linderman Island in the Whitsundays and the revitalisation of the Great Keppel Island resort off the coast near Rockhampton, the Gold Coast and Tropical North Queensland are the hot areas for development.

High occupancy levels should create conditions which are conducive to investment in Sydney and Melbourne, meanwhile, while activity is also expected to be reasonably buoyant in Brisbane.

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