Boston, MA -- (SBWIRE) -- 09/30/2013 -- BMI View: We have revised down our full-year construction growth forecasts for 2013 to 2.6% (previously 3.0%) as Q113 construction data has disappointed, but maintained our 2014 forecasts at 3.3%. That said, we still believe that construction activity in Australia could improve from levels seen in 2012 over the nearterm.

This is because of the conducive monetary conditions for construction, a sustained recovery in homebuilding activity, the potential for greater public fixed investment and the infrastructure plans at a state level. However, the upcoming federal elections, the impending slowdown in China's economy, limited upside in housing demand, investor caution for commodity and commodity-related projects, and the poor fiscal positions of some state governments will prevent the sector growth from reaching the highs seen in the previous decade.

Key developments in the sector:

- In July 2013, the government of Melbourne invited expressions of Interest for participation in the project to build the first stage of a new East-West link. Companies have until Q114 to submit a proposal, with the contract expected to be awarded by the close of 2014, with construction to begin immediately upon award. Work on the traffic link is expected to be completed by 2020.
- In June 2013, the New South Wales (NSW) state government announced that it plans to privatise the operating lease for the state-owned port of Newcastle, the world's largest coal export port. The sale of the 99-year lease for the Newcastle Port is expected to raise at least AUD700mn (US$643mn), with AUD340mn of the proceeds to go towards revitalising the city of Newcastle. This revitalisation project would include the development of a light rail system (initially between Wickham and Newcastle), with the government contributing an addition AUD120mn from other sources into the project. The sale is expected to proceed if the feasibility study proves favourable to the sale.
- In June 2013, the NSW state government announced a new financing structure to develop the 33km WestConnex toll road in Sydney. The entire WestConnex project is estimated to cost between AUD10-13bn (US$9-12bn) and involves capacity improvements on existing roads and the construction of new roads. At present, the NSW Treasury is finalising the business case for WestConnex. Once completed, the toll road would provide a link between Sydney's western suburbs and key transport hubs in south-eastern Sydney - namely the Sydney international airport and the Botany port.

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