CORONAVIRUS COVID-19 PANDEMICGENERAL PROPERTY

Sydney construction shutdown will cost $2.5bn

Photo: Note Viriyarat (Australian Property Journal)
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WITH construction work in Sydney will come to a hard stop, the sector will see a $2.5 billion decrease in activity for the third quarter, while more than a quarter of a million construction workers will be impacted.

The New South Wales state government has announced a two week pause for all construction work ending 31 July 2021, in an effort to contain the spread of the Delta variant of COVID-19.

The restrictions will be cover the entire Sydney region, including the Central Coast and Illawarra.

According to BIS Oxford Economics, the ceasing of activity will reduce total construction work for Q3 by 15% or $2.5 billion, according to provisional reviews and assuming the pause ends as scheduled.

“With a sizeable major project pipeline, the Sydney region is currently responsible for a quarter of the national construction task, so the two week shutdown will be significant,” said Timothy Hibbert, principal economist for BIS Oxford Economics.

The intervention will be stricter than that in Melbourne throughout its July-October lockdown, stopping all works in exclusion of critical maintenance and repairs.

While this is the strictest restriction for the sector seen in the country so far since the onset of the global pandemic, similar pauses were introduced in other comparable countries, such as New Zealand. In these countries there was a significant fall in activity throughout the halts to works.

280,000 construction sector workers will be directly impacted by the measures, with further workers in sectors such as transport, manufacturing and wholesale to be indirectly effected.

BIS Oxford Economics currently anticipates the measures will wrap up at the scheduled July end date and will be replaced with more targeted restrictions for a further four weeks.

It is also estimated that the impact will be short lived, with the industry more than likely catching up on interrupted works by Q4 2021 through to Q1 2022. The limits to supply in materials and labour may however slow down the sectors recovery.

Meanwhile the South Australian government yesterday announced a seven-day lockdown to curb the spread of COVID.

The National Retailers Association said SA retailers stand to lose $250 million over the period.

At the same time, CEO Dominique Lamb said each week Victoria is in lockdown, retailers will lose a combined $1 billion in sales.

“Victorian small businesses have been hit harder than any other following five lockdowns in 16 months. Retailers across the state who have been forced to close or severely limit their business operations are going to need support or jobs will be lost.

“Add to the fact that Melbourne is one of Australia’s biggest economic centres and its clear the pain from further lockdowns can easily spread across the broader economy.”

“Even a short, sharp and successful lockdown can have a giant impact on businesses forced to close. Not only do they forgo revenue for the days they’re unable to trade, but reopening is not like flicking on a light switch – rosters need to be organised, stock needs to be ordered, and protocols need to be implemented.” Lamb said.

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