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Canada Infrastructure Report Q1 2014 - New Market Report

New Construction market report from Business Monitor International: "Canada Infrastructure Report Q1 2014"

 
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Boston, MA -- (SBWIRE) -- 01/01/2014 -- We have further downgraded our immediate growth outlook for Canada's construction industry value, with 1.6% and 2.2% expected in 2013 and 2014 respectively. While infrastructure continues to post strong and stable growth in line with our expectations, a surge in non-residential permits has failed to translate into activity on the ground, and despite a rebound in the housing market, this has not translated into the new build market to the extent anticipated. Over the medium term we expect infrastructure to remain the driving force behind industry growth.

Below trend construction industry data has prompted us to downgrade our 2013 forecast for industry growth. While we remain positive over the infrastructure and broader construction sector in Canada over the medium term, we expect a weaker output over the near term as a result of weakness in the residential and non-residential building sector. Following a market correction in 2013 and 2014, we expect overall construction sector growth to return to trend, with annual average growth of 3.2% anticipated between 2015 and 2022 (compared to 3.4% experienced on average between 2003 and 2012).

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Infrastructure Foundation For Growth

Infrastructure remains a fundamental element of Canada's construction industry growth, with a project pipeline in excess of US$120bn. Infrastructure growth should remain stable and solid, at around 4.5% over the medium term. There remains upside potential from major pipeline projects.

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 5.5% between 2013 and 2027. 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.

There is further upside potential to our forecast from freight rail projects, however, with the CAD5bn Cote Nord rail project in Quebec temporarily suspended in February 2013 due to weak demand, we have seen verification for our decision to withhold these projects from our forecast. In November 2012, a CAD8.6bn railway project to transport crude from Alberta's oil sands to Alaska moved forward. The project has support from First Nations groups and is seeking financing to produce a feasibility study.

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