Boston, MA -- (SBWire) -- 06/27/2013 --BMI View: Canada's construction sector will continue to post strong growth, with 4.1% year-on-year real growth in construction industry value anticipated in 2013. The housing market is anticipated to experience a slowdown; however, we see infrastructure and non-residential building picking up the slack. Industrial projects in the mining and hydrocarbons sectors, combined with those in social infrastructure, will support non-residential building, whilst new projects to support resource extraction and transportation will buoy infrastructure.
As anticipated, growth in 2012 came in slower than the previous year, at an estimated 3.9%, versus the 4.1% seen in 2011. However, the slowdown was not as pronounced as anticipated, owing to the resilience of the residential construction sector, despite a number of measures to slow mortgage loan growth. These measures now appear to be taking effect, although we anticipate it will result in a slowdown in new residential construction rather than an abrupt halt. Despite this market slowing, we see the overall construction sector picking up in 2013, as the infrastructure sector is revived as a result of natural resource related demands on the existing power and transport networks.
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We also expect the non-residential segment, which weighed on growth over 2012, to pick up as a result of industry projects linked to natural resource extraction and processing as well as institutional and social infrastructure projects, for which permits were awarded over 2012.
The greatest risks to our outlook come from a sharper-than-expected decline in the housing sector, as well as slowing demand and falling prices in the commodity sector, which are forcing developers to stall new capital investment, thereby impacting supporting infrastructure and industrial projects.
Infrastructure Foundation For Growth
Infrastructure remains a fundamental element of Canada's construction industry growth, with a project pipeline in excess of US$120bn. Whilst we envisage below-trend growth in 2013 and 2014, there is significant upside to our view if projects are able to bypass regulatory red tape quickly.
One of the strongest sub-sectors over our 10-year forecast period to 2022 will be railways, where a project pipeline worth US$36bn will drive annual average industry value real growth of 4.5% between 2013 and 2022. This growth will be driven primarily by urban rail projects, including the CAD8.2bn Eglinton Crosstown Light Rail Transit project, the US$2.6bn Toronto Subway Spadina line expansion, the US$2.1bn Ottawa Light Rail project and the US$1.8bn Edmonton Light Rail project.
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