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Can construction keep its cool?

Commercial construction outpaced residential construction again this year with the value of work up almost 80 per cent on last year, however industry groups are sceptical that this growth will be sustained.

Construction in the areas of mining and infrastructure development held their own over the past 12 months, even while other areas such as apartment and house construction was squeezed due to the global credit crunch, according to the tenth annual HIA-AI Group-Reed Construction Data Construction 100 poll.

But while total non-residential construction starts grew 20 per cent on last year, a spokesperson for HIA is not convinced that this growth is sustainable into the future.

“Over the entire decade to date the number of starts has increased by 140 per cent. It is difficult, however, to view such performance as being sustainable given the current challenging climate,” said HIA chief economist, Harley Dale.

Australian Industry Group chief executive, Heather Ridout, agrees that the future may not be as bright as the past for the construction industry.

“While construction activity relating to mining and infrastructure development are holding well and there is a strong pipeline of demand, other commercial, housing and apartment activity are being squeezed by the global credit crunch. A lack of available funds, the higher cost of borrowing, and global uncertainty are putting a cap on new activity, as major constructors take a more cautious approach. These good results may not be repeated in the coming year,” she said.

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