Rider Levett Bucknall's recently released International Report confirms a renewed optimism in the Adelaide market with developers commencing to re-examine stalled opportunities.
Prepared by RLB Research and Development, the bi-annual International Report (IR) uses global cost data to derive indexed measures of relative costs of construction within and between 33 key global and local markets.
Rider Levett Bucknall's report indicates that as at October 2009, New York, London and Darwin were the three most costly cities in the global analysis in which to build.
Since January 2009, Rider Levett Bucknall found that two-third of the global cities surveyed had experienced a contraction in construction costs. Adelaide's construction costs contracted by 3% during this period, whilst the key construction markets of Macau, Dubai and Las Vegas contracted 12%, 15.9% and 8.9% respectively in cost.
Mr Stephen Knight, Managing Director RLB South Australia commented, "The majority of global construction markets peaked in the third quarter of 2008 and one year on, we are seeing growth moderating and even contracting in some markets.'
"Whilst recording a decrease in construction costs, Adelaide is coming off a very high base, having experienced substantial inflation in tender prices for many years', he said.
"Planned activity levels have decreased for the city, particularly in the commercial and industrial sectors. Non-residential construction with its dependence on finance and risk modelling has suffered significantly as a consequence of the GFC. Late 2008 and into 2009, contractors slashed their margins within a highly competitive tender environment in a bid to replenish workbooks from rapidly diminishing construction opportunities,' he said.
Locally, Adelaide ranked as the 4th most costly city in Australia in which to build a project. Darwin ranked as most costly, followed by Perth, Sydney, then Adelaide, Canberra, Melbourne and Brisbane.
The RLB report found that although the commercial sector is well down from 2008 levels, optimism and confidence in the future is growing with the BER Stimulus Package continuing well into 2010, key large infrastructure projects such as the Desalination Plant and a number of transport projects coming into play in 2010.
Mr Knight continued, "Developers with existing sites are commencing to re-examine stalled projects and options, including residential apartments, to identify feasible development opportunities but finance remains a major hurdle. Banks are generally prepared to fund smaller projects with high pre-sales which minimises their risk exposure in terms of security, funding and duration.'