The latest research by IBISWorld predicts a growing demand for architectural industry services in Australia.
A new report reveals that the demand will be driven by commercial and residential investment with revenue estimated to rise by an annualised 0.4 per cent over the five years through 2013-14, corresponding with a slump in the value of total building construction.
The architectural services industry has endured a challenging five years due to a prolonged downturn in the construction market with the slowing of educational building investment and weak housing construction.
IBISWorld's report explores the last five years of divergent market trends across education, housing and construction in general.
Across non residential, the industry has benefited from the injection of federal funding ($16.2 billion) for school refurbishment under the nation-wide Building the Educational Revolution (BER) Program.
BER was announced in 2009 and to date has completed approximately 24,000 projects in government, independent and catholic schools across Australia.
The report, however, predicts a further slump for commercial and industrial buildings, attributing the fall to the global financial crisis.
While architects have continued to face subdued conditions in the new housing market, particularly across traditional-single use houses, the rise of multi-residential and townhouse projects is set to offset this.
According to IBISWorld, in 2013-14, the industry is forecast to generate revenue of $6.4 billion, rising 2.1 per cent from the previous year. Rising housing investment is expected in the single and multi-unit sectors, due to record low interest rates and an expected recovery in economic growth.
This forecast is supported by current tower proposals and approvals across the country. There are currently 50 multi-residential or residential mixed use towers of 60 metres or higher under construction across Australia, with a further 97 projects proposed according to data from the Council on Tall Buildings and Urban Habitat.
In further research, the report found the architectural industry has been facing growing competition from vertically integrated firms in the building construction and engineering consultancy industries over the past five years.
“Clients are growing towards more integrated service offerings, and architecture firms have to improve links with construction firms or even offer their own range of services to compete,” said IBISWorld industry analyst Sebastian Chia. “This is difficult due to the nature of the industry, which has a fragmented structure with few large-scale national players and many small-scale firms that operate in narrow regional markets. These trends are forecast to grow over the next five years."
This research is evident through the increased arrivals of international architecture firms and mergers in Australia.
Late last year, Rice Daubney merged with US firm HDR, which currently provides architecture, engineering, consulting and construction services. Additionally, the world's largest architecture firm, Gensler opened its first Australian office in Sydney last month and has already hinted has hinted at the possibility of opening more offices in Brisbane, Melbourne and Perth.
Chia said that "despite growing competition, demand conditions are forecast to strengthen over the next five years due to improved investment in the commercial and residential building markets.”