Boston, MA -- (SBWIRE) -- 06/11/2014 -- The recovery in Australian construction growth has so far failed to meet our expectations. In our opinion, this poor performance suggests that downside pressures to construction activity could be stronger than we had anticipated. These downside pressures are: the poor macroeconomic fundamentals for construction, the obstacles preventing Australian governments from raising sufficient funds for their infrastructure plans, and the growing lack of competitiveness in Australia's construction sector.
Key developments in the sector:
- In March 2014, the NSW state government named a consortium consisting of France's Bouygues Construction and Australia's Lend Lease as the preferred bidder for the contract to design and build the AUD3.0bn NorthConnex motorway in Sydney. The motorway comprises of twin 9km tunnels that will connect the southern end of the M1 Motorway at Wahroonga to the Hills M2 Motorway at its Pennant Hills Road interchange. Australia's toll road operator Transurban Group is managing the project, having approached the NSW government to design, build, operate and finance the link in 2012. The project is expected to be funded through toll charges with a contribution from the NSW state and Australian federal governments. The project is expected to start construction works in 2015 and be completed in 2019.
- In March 2014, the NSW state government formally issued a request for proposals (RfP) to deliver and operate a 12km light railway line in Sydney. The RfP was send to three shortlisted consortiums - SydneyConnect, iLinQ and Connecting Sydney. SydneyConnect is formed by Serco, John Holland and Plenary Group. iLinQ comprises Keolis Downer, Balfour Beatty, McConnell Dowell, Bombardier and Macquarie Capital, while Transdev, Alstom Transport Australia and Capella Capital formed the Connecting Sydney consortium. The AUD1.6bn light rail project is expected to run from Circular Quay to Sydney Central station and subsequently divide to serve the Prince of Wales hospital at Randwick and the University of NSW in Kingsford. The consortium that wins the contract will also operate and maintain the expanded Inner West Light Rail network. The NSW government is expected to appoint a preferred bidder by end 2014. The deal is likely to include the government's conditional debt pay-down structure.
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