Australia and New Zealand market intelligence: data centres a bright spot
Our latest report highlights a persistent shortage of skilled labour within the Australian and New Zealand construction industry. The competition for skilled workers has driven up wages, contributing to increased construction costs.
Across the region, higher interest rates and reduced affordability have also resulted in a softening demand in the residential sector. In contrast, sectors such as data centres have demonstrated resilience and continue to be a source of strength for the private sector, albeit unevenly amongst the states and territories.
Public projects continue to drive activity
Australia's construction sector is currently navigating a complex landscape. While the overall market remains stable, there are notable variations across different states and sectors.
Public sector investments continue to be the driving force behind construction activity, and this trend is expected to continue in the near term, with significant projects in transport, renewable energy, housing and social infrastructure dominating the pipeline.
The private sector is experiencing a general softening due to higher interest rates, rising construction costs and slowing market demand. Despite these challenges, the data centre sector remains resilient and continues to be a bright spot for the private sector, with international firms expanding their presence in Australia.
Opportunities for new investment despite cautious outlook
New Zealand's construction sector is also facing challenges, with a slowdown driven by a weakening economy, high migrant departures and subdued market confidence. Government investment uncertainty has further contributed to a softer project pipeline.
While the outlook for New Zealand is cautious, easing borrowing costs and potential price improvements in the construction sector could provide opportunities for new investment. Like Australia, data centres continue to be a strong performer for the private sector, with global technology firms exploring opportunities in the region.
However, skilled labour shortages remain a key challenge, particularly for specialised skills associated with high-tech industries. The departure of technical skilled workers is exacerbating this issue, as they are attracted to Australia for more stable and higher-paid opportunities.
Read the report
