New Construction market report from Business Monitor International: "Canada Infrastructure Report Q4 2012"
Boston, MA -- (SBWIRE) -- 12/11/2012 -- BMI View: Canada remains our developed market construction sector outperformer. Despite the potential threat from an overheating housing market, commodity price weakness and an underperforming commercial building segment, we believe the country's construction industry growth will outperform its developed market peers over the near term. Whilst residential construction continues to post impressive growth, infrastructure is the segment underlying our outlook, with a sustainable growth trajectory driven by rail and electricity projects creating the basis for growth.
Data for the first five months of the year is in line with our estimates for growth in 2012, and therefore we are maintaining our forecast for at 3.2% real growth year-on-year (y-o-y). Indeed, our subsector expectations of 3% for residential and non-residential building and 3.6% for infrastructure are also on track. There is heightened downside risk if the residential construction sector unravels more rapidly than anticipated, however this is not our core view.
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Rail And Electricity Sustain Infrastructure Growth
Infrastructure remains a fundamental element of Canada's construction industry growth, with a project pipeline in excess of US$80bn. However, we are anticipating the sector to decline overall in 2012 to 3.6% y-o-y (compared to 6.4% in 2011), as below trend first five month data. However, this slowdown will not be felt across the board, with some sectors outperforming the overall trend.
One of the strongest sectors will be railways infrastructure, where a project pipeline worth US$21bn will drive annual average industry value real growth to 5.1% between 2012 and 2016. This is comprised 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.
The other booming sector is electricity, where we see US$35bn worth of projects under way or in planning. Huge generating stations are under construction, including the US$6.2bn Lower Churchill Hydropower Project, the US$2.6bn Lower Mattagami Hydropower Project, the 918MW Eastmain-1-A/ Sarcelle/Rupert Project, as well as extensive transmission line projects including the 1,380km US$3.3bn Bipole III transmission line and the US$1.6bn Eastern Alberta and US$1.4bn Western Alberta transmission lines. Wind power projects are also being developed across the country, although regulatory uncertainty is hitting the future project pipeline. These projects are guiding our forecast for 5.5% average real growth per year between 2012 and 2016 for the power plants and transmission grids sub-sector.
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