rlb international report third quarter 2015

7/23/2019 Rlb International Report Third Quarter 2015

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THIRD QUARTER 2015

CONSTRUCTIONMARKETINTELLIGENCE

INTERNATIONALREPORT



Disclaimer: While the information in this publication is believed to be correct at the time of publishing, no responsibility is accepted for its accuracy.Persons desiring to utilise any information appearing in the publication should verify its applicability to their specific circumstances. Cost information in thispublication is indicative and for general guidance only and is based on rates as at September 2015.

Cover: Barangaroo, Sydney, Australia

The strength of Rider Levett Bucknall, the largest independent and most geographically prevalent construction cost

consultancy of its kind in the world, is that it has the most foremost construction intelligence available to it. We collect

and collate current construction data and forecast trends on a global, regional, country, city and sector basis. Rider

Levett Bucknall publish key industry intelligence publications throughout each year. For more detailed sector and city/country information than is published within the International Report please review our regional or country specific

publications located at rlb.com.

SOURCES OF INFORMATION – INTERNATIONAL REPORT

Information contained within this report has been compiled from numerous global sources and RLB offices.

Certain text and data contained within the report has been compiled from information published by the following

organisations.

International Monetary Fund – Regional Economic Outlooks imf.org

World Bank worldbank.org

Asian Development Bank adb.org

The Economist economist.com

Reserve Bank of Australia rba.gov.au

Reserve Bank of New Zealand rbnz.govt.nz

Further information can be found on their websites.

INDEPENDENT CONSULTANTS, LOCAL KNOWLEDGEAND EXPERTISE, GLOBAL NETWORK

RLB promotes a sustainable environment.Printed by Mercedes Waratah using the Ecoclean Chemical Recycling Process on Maine Recycled. This stock consists of 60% certified recycled (PCW)and 40% certified virgin fibre sourced from responsibly managed forests. Certified carbon neutral by The Carbon Neutral Company, Maine Recycled ismanufactured process chlorine free and produced in a facility that operates under world's best practice ISO 14001 Environment Management System.



Rider Levett Bucknall | International Report – Third Quarter 2015 3

The Rider Levett Bucknall International Report provides a half-yearly

snapshot of construction market conditions and price movements

around the world, via commentaries and analysis from RLB directors in

key locations.

The RLB International Construction Cost Relativity Index is shown on

page 6, with each location placed in its ranking spot in respect of all the

other locations in the study.

A broad overview of global construction economic issues is provided

on page 4 followed by a table of historical and forecasted movements in

RLB’s Tender Price Index for 53 key cities on page 7.Key regional statistics are highlighted on pages 14 & 15. This data

describes the historical and projected economic conditions in which the

construction industry functions within those regions or countries.

Pages 10 to 13 consider the wider issue of the construction activity

cycle for seven building market sectors, in each location, using the

RLB Construction Activity Cycle Model to provide an insight into each

cities construction sectors position in the market cycle.

Pages 8 and 9 feature Construction Rate Ranges for different key

building types in cities within each region, providing an easy cost

comparison between locations.

From pages 17 to 53, RLB directors provide market intelligence

commentary, highlighting the key issues that are impacting on the

construction industry in major global cities together with providing

information relating to current construction price movements.

Construction Cost Ranges, RLB's Tender Price Index and International

Construction Cost Relativities can be found in the RLB Intelligence

Smartphone App and via the RLB Desktop WebApp. Further information

can be found at rlbintelligence.com

INTERNATIONALREPORT

To download our free App visit

rlb.com/app or scan the QR code.



Rider Levett Bucknall | International Report – Third Quarter 20154

GLOBAL SUMMARY

The global growth remains quite sluggish, a state of the continuing lack of

performance in some nations together with an ongoing structural realignment in

others. Softer economic outcomes are being seen across much of East Asia and

Latin America, slowing of growth in China and the lack of growth momentum in

India, are all contributing to slower global growth. These economies have been

the main engine room of output increases in recent years. According to the World

Bank, global growth is forecast to grow at 2.8% for 2015, up 0.2% from 2014 and

down 0.2% from the January 2015 forecast.

Much of the uncertainty surrounding the outlook is

focussed on China. The world’s second largest economy

still remains a global outperformer in GDP terms. The

forecasted 2015 growth of 6.8% is still considerably higher

than the USA at 3.1%, the Euro Area at (0.5%) and Japan

at 1.1%. Only India, amongst the larger economies of the

world has a higher forecasted GDP at 7.5% for 2015. The

moderating trend in China’s growth and its reduced

need for both commodities and manufactured goods are

affecting the economies of its trading partners. China’s

recent large equity market sell-off has added another

layer of uncertainty to an already less buoyant outlook.

Growth in many of the world’s major commodity

exporting countries has also slowed. For many ofthese countries, Canada and Australia for example, the

transition from being a commodity led economy is being

morphed to highlight the importance of the consumer

and housing-related sectors, which are being underpinned

by generally favourable employment and stable

investment conditions.

Although commodity prices are still weak, the forecast of

increased prices, albeit small, will have a positive effect

on the global economy. Non-oil based commodity prices

have fallen in excess of 30% since 2012, with small rises

forecast in 2016 and 2017 of 1.2% and 1.3% respectively. Oil

has fallen about 40% since 2012 of which 32% has beenin 2015. For 2016 and 2017 increases of 4.9% and 4.7% are

forecasted. There remains a concern that the stable but

lower commodity prices will continue to place downward

pressure on the growth of the emerging countries’

economies.

In the East Asia and Pacific region, growth is expected

to ease to 6.7% in 2015 and remain stable over the next

two years. This reflects a continued slowdown in China

that is offset by a modest pickup in the rest of the region.

With the region a net importer of oil, most economies are

expected to benefit from the lower fuel prices, although

the major commodity exporters, Indonesia and Malaysia,

will face pressures from the lack of significant growth

in the prices of oil, gas, coal, palm oil, and rubber into

the future. Growth in China is set to ease to 6.8% this

year, down from 7.4% in 2014. The combined growth of

the other Asian countries is projected to be 4.9% within

the region, rising to 5.4% by 2016 due to strengthening

external demand, notwithstanding the slower growth in

China. Commodity and dairy price falls have impacted

growth in both Australia and New Zealand, but to a small

degree the fall has been offset by a strong residential

housing market with significant overseas inflows.

Growth in South Asia is predicted this year to increase to

7.1%, up from 6.9% in 2014, led by the ongoing expansionof India’s economy. The fall in global oil prices has been a

major benefit for the region, being a net importer. Within

India, the introduction of new reforms have improved

business and investor confidence which in turn has

attracted new capital inflows. Growth is forecasted at

7.5% for 2015, increasing to 7.6% in 2017.

Growth in Europe and Central Asia is expected to weaken

further to 1.8% in 2015. With no outlook for significant

oil price increases and geopolitical tensions within the

region, the fall in growth predicted in 2015 will be offset

by a moderate recovery in the Euro Area, increasing

growth in 2016 to a forecasted 3.4%. In Russia, a 3.8%contraction in 2015 is expected to be followed by a

moderate recovery in 2016 supported by policies that are

shifting the economy away from the volatility of fossil

fuel pricing dependency. In Turkey, growth is projected

at 3.1% in 2015 with private spending to recover after

the June elections. Assuming a slight rise in oil prices in

2016 and 2017, stable political tensions, and a continuing

stabilisation of macroeconomic policies in the major

economies, regional growth is expected to strengthen to

3.6% in 2016 and 2017.




In Latin America and the Caribbean, growth will ease to

0.4% in 2015, as South America struggles with domestic

economic challenges, including widespread droughts,

weak investor confidence, and low commodity prices.

The slump in investment and business confidence in Brazil

is forecasted to push the economy into a contraction

this year of (1.0%). Mexico is remaining subdued but

activity is picking up, albeit at a slow pace, as a result of

lower oil prices, a weak first quarter in the United States,

and modest wage growth. For 2016 and 2017, growth

in the region is expected to increase by 2.0% and 2.8%

respectively, as South America emerges from recession

and the United States lifts activity in North and Central

America and the Caribbean.

Growth in the Middle East and North Africa is expectedto remain flat at 2.2% in 2015 but rising to 3.7% and 3.8%

in 2016 and 2017. The significance in the fall in oil prices

is of particular concern for the oil-exporting countries,

most of which also have major internal geopolitical

tensions (Iraq, Libya and Yemen) or have limited options

in offsetting the revenue falls from the weaker oil prices

(Iran and Iraq).

In Sub-Saharan Africa, the commodity-exporting

countries (Angola and Nigeria) have been effected by

lower prices for oil and other commodities. Although

South Africa is expected to be one of the main

beneficiaries of low oil prices, growth is being held backby energy shortages. Power black outs are impacting

business as mines and factories reduce output. Coupled

with weaker investor confidence amid policy uncertainty,

and by the anticipated gradual tightening of monetary

and fiscal policy, growth in the region is forecast to slow

to 4.2% in 2015, slower than previously expected. Growth

of 4.6% and 5% is predicted for the region during 2016

and 17.

RLB continue to monitor global trends across multiple

sectors throughout the property cycles within regions,

countries and cities, in order to better advise our clients

across the globe.

Rider Levett Bucknall offersindependent cost consultancy,

project management and advisory

services through its network of

120 offices and 3,500 staff

property professionals.

The Q3 2015 International Report

provides both macro and micro

insights into the construction

market conditions and tender

prices movements in key centres

across the globe originating from

RLB's extensive global office

locations.

RLB remains committed to it's

research activities by producing

a range of regional and country

based cost commentary reports,

the firm's renowned Riders Digest,

continuous enhancement of the

world's first mobile construction

cost app "RLB Intelligence" and arange of sector specific reports.

Currently RLB is leading a number

of Facilities Management (FM)

identity research initiatives,

notably IFMA's "FM in Asia"

project.




CITY Q3, 2015

LONDON EUROPE 159

BOSTON AMERICAS 151SAN FRANCISCO AMERICAS 150

CHICAGO AMERICAS 148

WASHINGTON AMERICAS 143

MACAU ASIA 135

LOS ANGELES AMERICAS 135

BRISTOL EUROPE 133

MANCHESTER EUROPE 127

BIRMINGHAM EUROPE 125

DARWIN OCEANIA 124

SYDNEY OCEANIA 121

SEATTLE AMERICAS 118

CANBERRA OCEANIA 116

PERTH OCEANIA 116

MELBOURNE OCEANIA 113

DOHA MIDDLE EAST 113

CHRISTCHURCH OCEANIA 112

SINGAPORE ASIA 110

ADELAIDE OCEANIA 109

ABU DHABI MIDDLE EAST 107

WELLINGTON OCEANIA 107

PORTLAND AMERICAS 106

TOWNSVILLE OCEANIA 106

DUBAI MIDDLE EAST 105

RIYADH MIDDLE EAST 105

DENVER AMERICAS 101

PHOENIX AMERICAS 101

AUCKLAND OCEANIA 100

BRISBANE OCEANIA 99

LAS VEGAS AMERICAS 99

BEIJING ASIA 89

SHANGHAI ASIA 87

GUANGZHOU ASIA 84

SHENZHEN ASIA 78

KUALA LUMPUR ASIA 74

HO CHI MINH CITY ASIA 66JAKARTA ASIA 57

INTERNATIONAL CONSTRUCTIONCOST RELATIVITIES




2012 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

AFRICA

CAPE TOWN NP NP 5.0 6.0 7.0 8.0 4.8

JOHANNESBURG NP NP 8.3 7.2 7.5 8.0 4.8

MAPUTO NP NP 4.0 4.0 4.0 4.0 4.0

PORT LOIUS NP NP 5.0 5.5 6.0 6.0 6.5

PRETORIA NP NP 8.3 7.2 7.5 8.0 4.8

AMERICAS

BOSTON 3.7 5.2 4.7 4.1 4.8 4.1 4.1

CHICAGO NP 4.7 4.9 4.9 4.6 4.1 4.1

DENVER 1.8 2.2 4.1 5.0 4.8 4.1 4.1

HONOLULU 3.1 7.7 13.3 11.2 7.2 5.1 4.1

LAS VEGAS 2.0 0.9 3.6 4.4 5.9 4.6 4.1

LOS ANGELES 1.0 1.8 4.9 4.6 5.4 4.1 4.1

NEW YORK 4.3 5.9 4.4 3.6 4.6 4.1 4.1

PHOENIX 2.4 2.5 3.7 4.2 5.4 4.3 4.1

PORTLAND 0.9 1.7 6.0 4.5 4.6 4.1 4.1

SAN FRANCISCO 0.9 1.8 6.1 5.5 4.3 4.1 4.1

SEATTLE 2.1 3.5 4.5 5.0 4.6 4.1 4.1

WASHINGTON 3.9 5.4 5.5 4.7 4.3 4.1 4.1

ASIA

BEIJING 0.5 1.0 2.0 (0.0) 2.0 2.0 2.0

CHENGDU NP NP 1.1 0.5 0.4 0.4 0.4

GUANGZHOU 4.1 4.1 3.0 (2.0) 2.0 2.0 2.0

HONG KONG 7.4 9.0 8.2 7.2 6.1 3.0 3.0

MACAU 7.2 9.3 10.4 7.2 4.1 3.0 3.0

SEOUL NP 2.4 1.1 0.4 1.5 1.7 1.8

SHANGHAI 3.5 2.0 (1.0) (2.5) 3.0 2.0 2.0

SHENZHEN (1.0) 3.0 1.5 (0.7) 1.5 2.0 2.0(1 .0 ) 3.0 1.5 (0 .7 ) 1.5 2.0 2.0

EUROPE

BERLIN NP NP 1.8 2.2 2.0 2.0 2.0BIRMINGHAM (0.8) 8.0 7.1 4.0 5.0 5.0 5.5

BRISTOL (2.1) 6.3 7.1 4.5 5.0 5.0 5.5

BUDAPEST NP NP NP 2.5 3.0 3.3 2.5

DUBLIN NP 4.0 5.0 8.0 9.0 9.0 9.0

LONDON 1.3 3.4 5.0 5.9 5.0 4.5 4.0

SHEFFIELD NP 6.3 7.1 4.0 5.0 5.0 5.5

WELWYN GARDEN CITY NP 5.9 4.6 4.9 4.8 4.4 4.3

WOKINGHAM NP 5.9 6.4 5.1 4.1 3.8 3.0

MADRID NP NP 0.0 (0.0) 0.1 0.8 0.1

MANCHESTER (0.8) 6.3 7.1 4.0 5.0 5.0 5.5

MOSCOW NP NP 0.0 (5.0) 0.0 1.0 1.5

WARSAW NP NP (0.8) 0.7 3.2 3.2 1.2

MIDDLE EAST

ABU DHABI 0.7 3.2 3.3 4.7 5.7 6.1 7.3

DOHA 4.0 3.2 4.5 5.0 5.5 6.0 7.0

DUBAI 1.4 3.2 3.7 4.6 3.1 2.5 2.9

RIYADH 3.0 4.4 5.0 4.8 5.0 5.0 5.0

OCEANIA

ADELAIDE 0.1 0.9 0.6 1.0 3.0 3.5 3.5

AUCKLAND 0.0 0.8 4.1 5.6 6.0 4.1 3.0

BRISBANE (0.0) (0.9) 5.1 5.9 5.1 4.1 4.1

CANBERRA (0.6) 2.2 1.6 2.0 2.2 3.0 3.0

CHRISTCHURCH 4.7 5.1 6.0 6.0 6.0 5.0 5.0

DARWIN 2.0 3.0 1.8 1.5 2.0 2.5 2.5

MELBOURNE 0.0 0.2 1.5 2.0 2.0 3.0 3.0

PERTH (2.3) 1.1 0.8 1.0 2.0 3.0 3.0

SYDNEY 1.2 2.0 3.0 4.5 4.5 4.5 4.0

TOWNSVILLE 1.0 1.3 2.0 3.0 4.0 4.0 4.0

WELLINGTON 1.5 2.0 3.4 3.0 3.0 3.0 3.0

NP: NOT PUBLISHED

MARKET DATARLB TENDER PRICE ANNUAL % CHANGE




RANGE OF COST PER M2 OF GROSS FLOOR AREA

OFFICE BUILDING RETAIL

LOCALCURRENCY

PREMIUM OFFICES GRADE A MALL STRIP SHOPPING

LOW HIGH LOW HIGH LOW HIGH LOW HIGH

AMERICAS

BAHAMAS USD 2,495 4,455 2,335 3,270 1,635 2,830 1,520 2,390

BOSTON USD 2,155 3,015 1,885 2,635 1,290 2,260 970 1,560

DENVER USD 1,505 2,420 1,075 1,615 860 1,400 700 1,345

HONOLULU USD 2,745 5,060 2,315 3,820 1,990 4,735 1,670 4,145

LAS VEGAS USD 1,505 3,070 1,130 2,045 1,240 5,165 700 1,560

LOS ANGELES USD 2,155 3,230 1,505 2,260 1,345 3,015 1,075 1,720

NEW YORK USD 2,205 3,765 1,940 2,905 1,505 2,690 1,240 1,720

PHOENIX USD 1,400 2,585 1,075 1,720 1,130 1,775 755 1,345SEATTLE USD 1,775 2,205 1,240 1,720 1,240 2,155 1,025 1,455

WASHINGTON D.C. USD 1,885 2,585 1,400 1,990 1,025 2,045 805 1,455

ASIA

BEIJING RMB 7,650 12,600 7,150 10,800 8,400 12,850 7,400 11,550

GUANGZHOU RMB 7,200 11,500 6,650 10,050 8,200 11,700 7,100 10,650

HO CHI MINH CITY VND ('000) 23,392 33,646 19,950 24,971 18,877 25,131 N/P N/P

HONG KONG HKD 22,500 33,500 19,200 26,000 22,600 28,700 19,300 25,000

JAKARTA RP ('000) 9,648 13,200 6,670 10,620 6,520 8,515 N/P N/P

KUALA LUMPUR RINGGIT 2,500 4,000 1,300 2,800 2,100 3,500 N/P N/P

MACAU MOP 18,100 26,100 15,900 22,400 19,800 24,400 16,800 21,500

MANILA PHP 32,468 44,303 26,197 35,705 27,512 31,659 20,836 23,365

SHANGHAI RMB 7,400 11,650 6,600 10,050 7,950 12,300 6,900 11,050

SINGAPORE SGD 2,700 4,000 2,100 3,000 2,200 3,400 N/P N/P

EUROPE

BERLIN EUR 1,355 1,775 990 1,150 1,145 1,460 835 1,040

BRISTOL GBP 1,960 2,580 1,580 2,370 2,700 3,800 860 1,625

DUBLIN EUR 1,800 2,000 1,600 1,800 1,900 2,100 1,000 1,200

LONDON GBP 2,396 3,120 1,975 3,077 3,195 4,491 1,026 1,922

MADRID EUR 900 1,500 800 1,150 1,900 2,600 1,400 1,900

MANCHESTER GBP 1,907 2,501 1,646 2,470 2,678 3,762 854 1,615

MOSCOW EUR 1,500 2,000 1,300 1,600 1,700 2,100 1,200 1,500

OSLO EUR 2,840 3,690 2,190 2,850 1,800 2,340 1,440 1,870

MIDDLE EAST & AFRICA

ABU DHABI AED 5,800 7,000 4,700 6,600 4,100 6,500 N/P N/P

DUBAI AED 5,800 7,000 4,700 6,600 4,100 6,500 N/P N/P

SAUDI ARABIA SAR 4,890 7,597 4,991 6,825 4,728 6,198 3,361 4,728

DOHA QAR 6,500 8,500 6,100 8,200 5,300 6,500 N/P N/P

OCEANIA

ADELAIDE AUD 2,600 3,850 2,100 3,250 1,550 2,850 1,300 1,825

AUCKLAND NZD 3,000 4,200 2,500 3,800 1,900 2,600 1,100 1,600

BRISBANE AUD 2,600 4,000 2,000 3,000 2,300 3,100 1,100 1,600

CANBERRA AUD 3,147 4,080 2,552 3,219 2,163 3,034 1,158 1,907

CHRISTCHURCH NZD 3,700 4,800 3,150 4,200 1,650 2,200 N/P N/P

DARWIN AUD 3,000 4,050 2,300 3,700 1,650 2,500 1,100 1,950

MELBOURNE AUD 3,000 3,750 2,325 2,900 2,025 3,000 1,060 1,550

PERTH AUD 3,150 4,770 2,575 3,740 2,300 2,800 1,025 2,565

SYDNEY AUD 3,100 4,350 2,300 3,250 1,700 3,550 1,350 1,700WELLINGTON NZD 2,940 3,360 2,310 2,625 1,300 1,800 N/P N/P

N/P: NOT PUBLISHED

The following data represents estimates of current construction costs in the respective market. Costs may vary

as a consequence of factors such as local market and climatic conditions, standards, specifications, site specific

circumstances etc.

MARKET DATAINTERNATIONAL CONSTRUCTION RATES




RANGE OF COST PER M2 OF GROSS FLOOR AREA

HOTELS CAR PARKING INDUSTRIALWAREHOUSE

RESIDENTIALMULTI STOREY5 STAR 3 STAR MULTI STOREY BASEMENT

LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH

AMERICAS

2,725 7,070 1,530 4,885 N/P N/P N/P N/P 1,410 2,280 1,410 4,565

2,690 4,305 1,720 2,690 645 970 860 1,185 755 1,075 1,455 3,500

1,990 3,015 1,130 1,775 430 755 645 1,025 700 1,185 700 3,820

4,950 7,160 3,120 5,220 915 1,345 1,290 2,530 1,345 2,155 1,830 7,320

3,500 5,005 1,290 2,420 540 915 645 1,615 540 1,075 755 4,305

3,230 4,845 2,155 2,960 1,025 1,240 1,185 1,670 1,025 1,720 1,615 3,335

3,445 5,115 1,990 2,850 700 1,130 915 1,345 970 1,400 1,505 3,765

2,475 4,305 1,505 1,940 430 700 645 1,075 590 1,075 970 4,3051,990 2,960 1,505 1,940 700 915 915 1,345 805 1,185 1,075 2,530

2,475 4,035 1,615 2,475 590 860 805 1,075 755 1,075 1,075 2,690

ASIA

13,000 17,200 9,700 12,450 2,250 3,050 3,750 6,550 4,350 5,500 4,050 6,150

13,000 16,800 9,600 11,700 2,100 3,000 3,700 6,400 4,150 5,150 3,800 5,700

30,418 37,252 22,867 29,583 8,528 12,742 17,537 23,963 5,845 8,849 14,985 22,719

35,100 42,800 28,900 33,400 8,800 10,400 17,100 23,800 14,800 18,700 21,100 36,500

13,670 17,420 10,410 11,875 3,460 4,450 4,450 6,190 4,650 5,680 6,430 9,986

4,800 6,500 2,500 3,800 800 1,200 1,400 3,200 1,000 1,700 1,800 4,500

30,000 37,000 24,500 28,300 N/P N/P 10,000 13,000 N/P N/P 13,650 21,700

53,507 61,599 43,190 48,854 14,666 16,892 16,083 18,510 17,397 20,533 27,209 48,450

12,600 16,600 9,400 12,000 2,050 3,000 3,900 6,450 4,000 5,150 3,650 5,800

4,300 5,600 3,300 3,700 700 1,400 1,500 2,250 1,100 1,600 2,000 3,200

EUROPE

1,985 2,755 1,355 1,770 470 680 785 1,040 365 730 990 1,407

2,250 3,000 1,300 1,740 400 800 925 1,440 360 650 1,700 2,400

2,000 2,200 1,340 1,440 400 500 600 1,000 400 560 1,400 1,600

2,526 3,400 1,706 2,191 410 820 1,090 1,760 443 799 2,008 2,785

1,950 2,600 1,350 1,800 700 900 800 1,200 600 800 700 1,000

2,042 2,793 1,292 1,719 323 646 875 1,396 354 646 1,636 2,292

2,800 3,500 1,700 2,200 430 550 800 1,000 500 600 1,200 1,500

3,920 5,090 2,960 3,850 690 880 890 1,160 1,570 2,030 2,420 3,150

MIDDLE EAST & AFRICA

9,000 12,000 6,000 8,500 1,800 3,600 2,850 4,500 1,500 2,700 4,500 6,500

9,000 12,500 6,000 8,500 2,300 3,600 3,100 4,500 1,850 2,900 4,500 6,500

8,304 10,110 5,989 7,465 920 1,220 2,265 2,845 3,312 4,046 4,576 9,647

11,500 14,500 7,500 8,500 N/P N/P 2,750 4,500 N/P N/P 6,500 7,800

OCEANIA

3,500 4,400 2,500 3,400 580 900 1,300 1,900 625 1,100 2,350 3,550

3,600 4,200 2,950 3,600 550 800 1,200 1,800 475 800 2,600 3,800

3,400 5,000 2,600 3,800 700 1,100 1,600 2,100 600 1,100 2,000 3,200

3,875 4,777 2,819 3,936 718 994 964 1,374 666 1,035 2,614 3,793

3,700 4,200 3,000 3,300 850 1,350 1,750 2,200 720 1,100 N/P N/P

3,550 4,400 2,800 3,500 750 1,250 1,150 1,500 750 1,375 2,010 2,600

3,450 4,500 3,050 3,500 655 1,060 1,110 1,365 555 1,100 2,200 3,500

3,600 4,430 2,645 3,635 750 1,000 1,850 3,100 625 1,020 2,230 3,830

3,850 5,050 2,750 3,450 650 1,000 950 1,520 640 990 2,250 4,1003,400 4,100 2,310 2,730 500 900 1,890 2,730 900 1,400 2,625 3,360

MARKET DATAINTERNATIONAL CONSTRUCTION RATES

Rates are in national currency per square metre of Gross Floor Area except as follows:

Chinese cities, Hong Kong and Macau: Rates are per square metre of Construction Floor Area, measured to outer face of external walls.

Singapore, Ho Chi Minh City, Jakarta and Kuala Lumpur: Rates are per square metre of Construction Floor Area, measured to outer face of

external walls and inclusive of covered basement and above ground parking areas.

Chinese cities, Hong Kong, Kuala Lumpur, Macau and Singapore: All hotel rates are inclusive of Furniture Fittings and Equipment (FF&E).




HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL

AFRICA

CAPE TOWN

JOHANNESBURGMAPUTO (MOZAMBIQUE)

PORT LOUIS (MAURITIUS)

PRETORIA

AMERICAS

ANGUILLA

ANTIGUA AND BARBUDA

BAHAMAS

BARBADOS

BERMUDA

BOSTON

BRITISH VIRGIN ISLANDS

CAYMAN ISLANDSCHICAGO

CUBA

DENVER

DOMINICA

DOMINICAN REPUBLIC

GRENADA

GUADALOUPE

HAITI

HONOLULU

JAMAICA

LAS VEGAS

LOS ANGELES

MARTINIQUE

MONTSERRAT

NETHERLANDS ANTILLES

NEW YORK

PHOENIX

PORTLAND

PUERTO RICO

SAN FRANCISCO

SEATTLE

ST KITTS AND NEVIS

ST LUCIA

ST VINCENT AND THE GRENADINES

TRINIDAD AND TOBAGOTURKS AND CAICOS ISLANDS

US VIRGIN ISLANDS

WASHINGTON

NP: NOT PUBLISHED

MARKET DATACONSTRUCTION SECTOR ACTIVITY

PEAK GROWTHZONE

PEAK DECLINEZONEPEAK ZONE

MID GROWTHZONE

MID DECLINEZONE

MID ZONE

TROUGHGROWTH ZONE

TROUGH DECLINEZONETROUGH ZONE

The RLB Construction Market Activity

Cycle wave graph represents thetheoretical “boom / bust” business

cycle of the construction economy.

The market activity arrows highlight the current point in the construction activity cycle of the major sectors

within each RLB office.






ASIA

BEIJING

CHENGDU

GUANGZHOU

HO CHI MINH CITY

HONG KONG

JAKARTA

KUALA LUMPUR

MACAU

MANILA

SEOUL

SHANGHAI

SHENZHEN

SINGAPORE

TOKYO

EUROPE

BERLIN

BIRMINGHAM

BRISTOL

LONDON

MADRID

MANCHESTER

MILAN

MOSCOW

SHEFFIELD

MIDDLE EAST

ABU DHABI

DOHA

DUBAI

RIYADH

OCEANIA

ADELAIDE

AUCKLAND

BRISBANE

CANBERRA

CHRISTCHURCH

DARWIN

GOLD COAST

MELBOURNE

PERTH

SYDNEY

TOWNSVILLE NP

WELLINGTON

NP: NOT PUBLISHED



Liberty Place, Sydney, Australia




RLB CONSTRUCTION MARKET ACTIVITY MODELGROWTH SECTORS VS DECLINE SECTORS

RLB CONSTRUCTION MARKET ACTIVITY MODELNO OF CITIES WITHIN ZONES

NUMBER OF CITIES

10

0

20

30

40

60

50

GROWTH DECLINE


NUMBER OF CITIES

30

10

20

0

40

50

PEAK ZONE MID ZONE TROUGH ZONE


RLB GLOBAL MARKET ACTIVITYPEAK ZONE SECTOR

RLB GLOBAL MARKET ACTIVITYMID ZONE SECTOR

RLB GLOBAL MARKET ACTIVITYTROUGH ZONE SECTOR

OFFICES 13%

INDUSTRIAL 8%

CIVIL 16%

HOUSES 13%

HOTEL 17%

RETAIL 14%

APARTMENTS 19%

OFFICES 13%INDUSTRIAL 15%

CIVIL 15%

HOUSES 19%

APARTMENTS 14%

HOTEL 12%

RETAIL 12%OFFICES 16%

INDUSTRIAL 17%

CIVIL 13%

HOUSES 10%

APARTMENTS 11%HOTEL 15%

RETAIL 18%





YEAR

AUSTRALIA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 2.1 % 2.7 % 2.8 % 3.2 % 3.1 % 3.0 %

GDP PER CAPITA – AUD $65,918 $66,901 $67,988 $69,306 $70,578 $71,782

EXCHANGE RATE (AS AT 1 JULY PER US$) 1.088 1.058 1.297 1.377 1.393 1.403PPP RATE 1.475 1.460 1.421 1.419 1.412 1.407

INFLATION 2.5 % 2.5 % 2.0 % 2.3 % 2.4 % 2.5 %

UNEMPLOYMENT 5.7 % 6.1 % 6.4 % 6.2 % 6.0 % 5.8 %

YEAR

CHINA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 7.8 % 7.4 % 6.8 % 6.3 % 6.0 % 6.1 %

GDP PER CAPITA – CNY ¥13,185 ¥14,082 ¥14,956 ¥15,816 ¥16,678 ¥17,603

EXCHANGE RATE (AS AT 1 JULY PER US$) 6.181 6.152 6.115 6.386 6.560 0.000

PPP RATE 3.627 3.619 3.635 3.595 3.569 3.569

INFLATION 2.6 % 2.0 % 1.2 % 1.5 % 2.0 % 2.5 %

UNEMPLOYMENT 4.1 % 4.1 % 4.1 % 4.1 % 4.1 % 4.1 %

YEAR

EURO AREA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 1.6 % -0.8 % -0.5 % 0.9 % 1.5 % 1.7 %

EXCHANGE RATE (AS AT 1 JULY PER US$) - EURO 0.767 0.731 0.901 0.912 0.898 0.879

PPP RATE N/A N/A N/A N/A N/A N/A

INFLATION (AVERAGE) 2.7 % 2.5 % 1.3 % 0.4 % 0.1 % 1.0 %

UNEMPLOYMENT (AVERAGE) 10.1 % 11.3 % 12.0 % 11.6 % 11.1 % 10.6 %

YEAR

NEW ZEALAND 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 2.2 % 3.2 % 2.9 % 2.7 % 2.5 % 2.5 %

GDP PER CAPITA – NZD $46,669 $47,472 $48,392 $49,327 $50,165 $51,012EXCHANGE RATE (AS AT 1 JULY PER US$) 1.293 1.142 1.473 1.515 1.887 1.754

PPP RATE 1.485 1.501 1.504 1.517 1.518 1.524

INFLATION 1.1 % 1.2 % 0.8 % 2.1 % 2.0 % 2.0 %

UNEMPLOYMENT 6.2 % 5.4 % 5.3 % 5.2 % 5.1 % 5.1 %

YEAR

SINGAPORE 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 4.4 % 2.9 % 3.0 % 3.0 % 3.2 % 3.2 %

GDP PER CAPITA – SGD $68,490 $69,580 $70,997 $72,648 $74,475 $76,374


PPP RATE 0.872 0.862 0.853 0.862 0.868 0.873

INFLATION 2.4 % 1.0 % 0.0 % 1.7 % 1.9 % 1.9 %UNEMPLOYMENT 1.9 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 %

NOTES

Forecasts for years after 2014.

Exchange rates are quoted as currency units per U.S. dollar.

Euro Area composed of 17 countries: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovak Republic,Slovenia, and Spain.

South America and the Carribean composed of 32 countries: Antigua and Barbuda, Argentina, The Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominica,Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, St. Kitts and Nevis, St. Lucia, St.Vincent and the Grenadines, Suriname, Trinidad and Tobago, Uruguay, and Venezuela.

Middle East and North Africa composed of 20 countries: Algeria, Bahrain, Djibouti, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia,Sudan, Syria, Tunisia, United Arab Emirates, and Yemen.

Asean-5 composed of 5 countries: Indonesia, Malaysia, Philippines, Thailand, and Vietnam.

Sources : RLB, IMF, Scotiabank

MARKET DATAKEY STATISTICS




YEAR

UNITED KINGDOM 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 1.7 % 2.6 % 2.7 % 2.3 % 2.2 % 2.2 %

GDP PER CAPITA – GBP £25,831 £26,317 £26,854 £27,291 £27,705 £28,126

EXCHANGE RATE (AS AT 1 JULY PER US$) 0.657 0.584 0.639 0.643 0.642 0.640PPP RATE 0.699 0.701 0.701 0.700 0.698 0.697

INFLATION 2.6 % 1.5 % 0.1 % 1.7 % 2.0 % 2.0 %

UNEMPLOYMENT 7.6 % 6.2 % 5.4 % 5.4 % 5.4 % 5.4 %

YEAR

USA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 2.2 % 2.4 % 3.1 % 3.1 % 2.7 % 2.4 %

GDP PER CAPITA – USD $49,600 $50,418 $51,644 $52,868 $53,913 $54,814


PPP RATE 1.000 1.000 1.000 1.000 1.000 1.000

INFLATION 1.5 % 1.6 % 0.1 % 1.5 % 2.4 % 2.5 %

UNEMPLOYMENT 7.4 % 6.2 % 5.5 % 5.2 % 5.0 % 4.9 %

YEAR

LATIN AMERICA AND THE CARRIBEAN 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 4.9 % 3.1 % 2.9 % 1.3 % 0.9 % 2.0 %

GDP PER CAPITA (INT $) 14,255 14,780 15,254 15,489 15,569 15,929

INFLATION (AVERAGE) 6.8 % 6.1 % 7.1 % N/A N/A N/A

YEAR

MIDDLE EAST & NORTH AFRICA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 4.5 % 4.9 % 2.3 % 2.4 % 2.7 % 3.7 %



YEAR

SOUTH AFRICA 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 2.2 % 1.5 % 2.0 % 2.1 % 2.4 % 2.7 %

GDP PER CAPITA – ZAR R 55,748 R 55,712 R 55,938 R 56,221 R 56,671 R 57,292


PPP RATE 5.167 5.389 5.630 5.863 6.066 6.271

INFLATION 5.8 % 6.1 % 4.5 % 5.6 % 5.5 % 5.5 %

UNEMPLOYMENT 24.7 % 25.1 % 25.1 % 24.9 % 24.8 % 24.6 %

YEAR

ASEAN-5 2013 2014 2015 (F) 2016 (F) 2017 (F) 2018 (F)

GDP 4.6 % 6.1 % 5.2 % 4.6 % 5.2 % 5.3 %



DEFINITIONS

GDP: Gross domestic product, constant prices (Annual percent change). Annual percentages of constant price GDP are year-on-year changes; the base year is country-specific.

GDP per Capita: Gross domestic product per capita, constant prices (National currency). GDP in constant national currency per person. Data derived by dividing constant price GDPby total population.

PPP rate: Purchasing Power Parity rate of exchange. Rate against the International dollar (USD), which renders purchasing power identical to the international dollar.

Inflation: Consumer Price Inflation

Unemployment: Percentage of total workforce

INT $: Hypothetical currency with the same purchasing power of goods and services in all countries

MARKET DATAKEY STATISTICS



Menlyn Maine Mixed Use Green Precinct, Pretoria, Africa




MARKET INTELLIGENCE

SUB- SAHARAN AFRICASub-Saharan Africa remains amongthe fastest growing regions in theworld, however, as monetary policyis being tightened in some countriesgrowth will be affected in the shortterm with GDP growth for 2014 at5.0% and forecast to be 4.5% in2015 and returning to 5.1% in 2016.The forecast fall for 2015 is subjectto the speed of a rise in commodityprices. Oil is down 50% from June2014 to March 2015. Iron Ore andnatural gas are down over 40% forthe same period, while coal andcotton are over 20% down.

South Africa’s growth has grownfrom 1.5% in 2014 to 2.0% in 2015and is forecast to recover slightlyin 2016 to 2.1%. The oil exportingcountries Congo Republic, Nigeria,Gabon, Cameroon and Angolawho rely heavily on oil for largepercentages of their revenue and

GDP are hardest hit by falling oilprices. GDP for the oil exporters isset to retract from 5.8% in 2014 to4.6% in and recover slightly to 5.0%in 2016. For Guinea, Liberia and

Sierra Leonne, the three countriesmost effected by the Ebola crisis,growth remains weak. All countriesin the region are experiencingdeflation in their currency addingfurther pressure to GDP.

Construction throughout the regionis being affected by confidence andreduced availability of funds, butthere appears to be an emphasison infrastructure together with an

increased focus on reducing povertythrough investment by developmentbanks, according to the IMF, who arepromoting sustainable fiscal growthpolicies throughout the region. Thisinvestment is likely to be initiallydirected towards the rectificationof the energy crisis and improvingtransportation throughout theregion by upgrading the poorerquality roads, which in turn willbolster the construction industry,

add demand for commodities andcreate jobs. These initiatives willbenefit most of the countries in theregion.

2015 FORECASTED GDP GROWTH

COUNTRY 2015 2016 2017 2018

ANGOLA 4.5 3.9 5.1 5.3

BENIN 5.5 5.4 5.5 5.6

BOTSWANA 4.2 4.0 4.1 4.1

BURKINA FASO 5.0 6.0 6.5 6.5

BURUNDI 4.8 5.0 5.2 5.4

CABO VERDE 3.0 4.0 4.0 4.0

CAMEROON 5.0 5.0 5.0 5.0

CENTRAL AFRICANREPUBLIC

5.7 5.7 5.7 5.8

CHAD 7.6 4.9 8.3 5.0

COMOROS 3.5 4.0 4.0 4.0

CÔTE D'IVOIRE 7.7 7.8 7.5 7.0

DEMOCRATIC REPUBLICOF THE CONGO

9.2 8.4 8.4 7.1

EQUATORIAL GUINEA (15.4) 3.7 (4.7) (7.0)

ERITREA 0.2 2.2 3.2 3.6

ETHIOPIA 8.6 8.5 8.0 8.0

GABON 4.4 5.5 5.6 5.7

GHANA 3.5 6.4 9.2 6.9

GUINEA (0.3) 6.5 8.3 8.4

GUINEA-BISSAU 4.5 4.0 4.0 4.0

KENYA 6.9 7.2 7.1 7.0

LESOTHO 4.0 4.4 5.6 5.7

LIBERIA (1.4) 5.0 7.8 9.1

MADAGASCAR 5.0 5.0 5.0 5.0

MALAWI 5.5 5.7 6.0 5.9

MALI 5.6 5.1 5.4 5.4

MAURITIUS 3.5 3.5 3.5 3.5

MOZAMBIQUE 6.5 8.1 7.8 8.0

NAMIBIA 5.6 6.5 5.5 5.5

NIGER 4.6 5.4 8.1 7.6

NIGERIA 4.8 5.0 5.3 5.5

REPUBLIC OF CONGO 5.2 7.5 8.6 4.2

RWANDA 7.0 7.0 7.5 7.5

SÃO TOMÉ ANDPRÍNCIPE

5.0 5.2 5.5 5.5

SENEGAL 4.6 5.1 5.6 6.2

SEYCHELLES 3.5 3.8 3.7 3.6

SIERRA LEONE (12.8) 8.4 8.9 6.0

SOUTH AFRICA 2.0 2.1 2.4 2.7

SOUTH SUDAN 3.4 20.7 5.1 1.3

SWAZILAND 1.9 1.8 1.6 1.6

TANZANIA 7.2 7.1 7.0 6.9

THE GAMBIA 5.1 8.7 6.2 5.9

TOGO 6.0 6.0 6.1 6.1

UGANDA 5.4 5.6 5.8 6.0

ZAMBIA 6.7 6.9 6.7 6.5

ZIMBABWE 2.8 2.7 3.5 3.6

RLB CONSTRUCTION MARKET ACTIVITY MODELAFRICA - GROWTH SECTORS VS DECLINE SECTORS

NUMBER OF CITIES

3

1

2

0

4

5

6

GROWTH DECLINE




LOCATION INTELLIGENCEAFRICA


CAPE TOWN

The Cape Town construction market

continues to show signs of recovery

as there has been a significant

increase in construction activity inthe Western Cape. Building costs

however are fluctuating as contractor

capacity is taken up and then

released on shorter projects.

Projects are being executed on

extremely tight margins and tend to

be smaller refurbishments with short

programmes, therefore not providing

a sustainable pipeline of work in

the property and construction

sector. The Western Cape market

remains challenged by its shortageof commercial blue chip tenants as

large vacancy rates are inhibiting

the development of new commercial

spaces.

Some of the significant projects

in the region include the V&A

Waterfront Silo Precinct, Cape Town

International Convention Centre

(CTICC) Phase II, Netcare Hospital

(Cape Town Foreshore), Century City

ongoing development, KPMG Office,

Foreshore Cape Town, Tsogo SunHotel, Strand Street Cape Town,

V & A Waterfront Dock Road Offices

(previously Shell), Citadel Office,

Claremont and Momentum Group’s

Parkade in Bellville.

There is still high volatility in the

steel reinforcement and structural

steel trades and a shortage of large

subcontractors capable of high

specification HVAC installations,

which in turn is placing upward

pressure on pricing.

Aluminium Doors, Windows and

Shopfronts trades have seen a

number of established subcontractors

close their doors in the midst of

the recession leaving a shortage

of capability. There has also been

an increase in capability of flush

glazed facade contractors. Due to

the waning capacity and the general

increase in costs, there continues to

be an emphasis on the negotiating

of contracts rather than tenderingacross the industry.

JOHANNESBURG & PRETORIA

Johannesburg and Pretoria are

enjoying favourable conditions

across their local economy. The

government has set aside R1 billion toupgrade one of the most dangerous

but heavily used roads in South

Africa, the Moloto Road just north

of Pretoria. This is only one of the

latest projects seen as investment in

infrastructure to improve access to

healthcare, education, employment

and trading opportunities.

Infrastructure spending has been high

for some time. Between the 2009

and 2014 fiscal years, the government

spent just over a R1-trillion on

infrastructure. Within its 2015

budget, the government announced

that it will spend R813 billion on

infrastructure over the next three

years. In the 2015/16 financial year,

the government’s capital expenditure

programme will come to R274

billion. Most infrastructure spending

will be on transport and logistics at

R339-billion out of the R813-billion

programme. Other heavy expenditure

items are energy, which will take up

R166-billion and water and sanitationat R117-billion over the next three

years.

Construction of the Nelson Mandela

Children's Hospital in Parktown,

Johannesburg, is going smoothly

and is expected to be completed

in February 2016. While there is

buzz around Gauteng’s new R84

billion smart mega city being built in

Modderfontein, another high-budget

development is taking place east of

Pretoria. Dubbed “The East Capital”,the Hazeldean development is a R44

billion project adopted and approved

by the Tshwane Metropolitan District.

Madiba Street, opposite the Pretoria

News offices, “No.1 on Mutual” is

gradually taking shape. The new retail

and residential development will have466 housing units, a retail component

and covered parking for 300 cars. It

is scheduled for completion in April

next year. The old Home Affairs

Department building in Pretorius

Street is being converted into a

100-unit residential complex to be

completed in August this year. It will

be known as Centrakor.

The rand continues to weaken against

most advanced economies helping

exporters compete internationally.With lower fuel prices, falling

unemployment and forecast growth

for South Africa.



LOCATION INTELLIGENCE

AFRICA


PORT LOUIS (MAURITIUS)

Mauritius will be embarking on a high-

investment period with the proposal

of 13 employment-rich megaprojects

spread over the country. Further tothe 3% contraction in 2012 and 9.4%

dip in 2013, we have witnessed a

contraction of a further 4% during

2014. With a new Government in 2015,

the vision proposed by the Minister

of Finance brought forward various

priority projects aimed at providing

better service-delivery to the public

and attracting higher Foreign Direct

Investment (FDI).

The north of the island which

comprises the districts Riviere duRempart and Pamplemousses have

undergone massive growth over the

last five years. With the village of

Grand Baie being the most popular,

the north is one of the most tourist-

orientated regions of the island.

The region counts approximately

thirty hotels, guesthouses, numerous

restaurants in addition to several

bars and night clubs, shops and now

shopping centres. The two most

significant projects in the area have

been the Grand Baie La Croissete

(MUR2 billion) and Azuri Phase one

project (MUR2.5 billion).

The vision of the Azuri project

is to create a new village in the

North-eastern corner of the island.

The completion of phase one has

delivered nearly 300 residential units

together with a hotel, school, and

restaurants, along with retail, wellness

and health facilities and a marine

club. Phase two will start in mid-2015

and is expected to deliver around

32 villas. Grand Baie La Croisette

is a new concept of urban lifestyle

in Mauritius and can be considered

the Premier shopping and leisure

destination in northern Mauritius,

including shops, restaurants, cinemas,

offices and apartments.

New development include: the

Omnicane airport city in the south-

east, St Félix Village projects in the

south, The Médine Integrated Park inthe west, Roches Noires in the north-

east, The Azuri Phase two project

in the north, The Terra project in

the north, The Highlands City in the

centre and The Richeterre Project

in the vicinity of Port Louis. Of the

13 projects, eight will be developed

along the new concept of ‘smart

cities’ whilst five will see the creation

of new technology parks. These

projects, six of which are ready for

implementation, are expected to

mobilise some MUR120 billion (USD

3.3 billion) of private and foreign

direct investments, giving a welcome

boost to the country’s construction

sector.



Port of Portland Headquarters, Long-term Parking Garage, United States of America




The growth in the United States’GDP was slightly negative in the firstquarter but is predicted to pick up inH2 2015. For the year as whole, GDP isforecasted to expand at 3.14%.

Consumer spending within the UnitedStates is growing primarily due tostrong job growth and lower oil prices.Personal consumption spending grewat 2.1% in Q1 2015 with expectationsof 3.0% in H2 2015. Most major U.S.economic indicators point to healthygrowth in the coming quarters.

Employers have added over US$1.3million net new payroll positionsthrough the first six months of theyear, suggesting that annual jobgains will be in the US$2.5 to US$3.0million range. The current pace ofgrowth helped bring the nationalunemployment rate down to 5.3%in June, from 5.7% in January. Theconstruction sector has added about140,000 jobs so far this year, pullingthe unemployment rate down to 6.3%in June for this sector from a rateof 8.2% a year ago and 9.8% in June

2013. The unemployment rate forconstruction has fallen so sharply thatlabour availability has become one ofthe most pressing concerns for theindustry.

In spite of challenging weatherconditions across major regionsof the country so far this year, theconstruction sector has performedsurprisingly well to date. Throughthe first five months, overall non-residential building activity was up16%, paced by an 18% increase in

MARKET INTELLIGENCE

AMERICAScommercial construction activity,and an unsustainable 55% increase inmanufacturing construction spending.Recent manufacturing constructionactivity is heavily concentrated inthe chemicals area, often relatedto the recent surge in domestic oiland natural gas production. Just assignificant, institutional constructionspending grew almost 5.0%,compared to the same period in2014. While the amusement andrecreation category (often sports

facilities) paced the gain, the muchlarger education and healthcaresectors also posted small gains inthe year-to-date figures.

Latin America and the Caribbean faceparticularly challenging outlooks.Growth is projected to decline for afifth consecutive year in 2015, fallingto less than 0.8% for the region asa whole, before staging a moderaterecovery in 2016. South America’scommodity exporters are seeingfalling global commodity pricesimpacting their domestic recovery

efforts. Growth is predicted to benegative in three of the largest SouthAmerican economies during 2015.Argentina (0.3%), Brazil (1.0%), andVenezuela (7.0%), while Chile andPeru are projected to see a pickup ingrowth. By contrast, most of CentralAmerica, the Caribbean and Mexicoare forecast to achieve steady orstronger growth, supported by thelower oil price and the strongereconomic recovery in the US assistingthe tourism sector.

USA CONSTRUCTION COST RELATIVITIES

Q3, 2015

HONOLULU 182

NEW YORK 178

BOSTON 151

SAN FRANCISCO 150

CHICAGO 148

WASHINGTON 143

LOS ANGELES 135

SEATTLE 118

PORTLAND 106

DENVER 101

PHOENIX 101LAS VEGAS 99

NUMBER OF CITIES

15

5

0

10

20

30

25

GROWTH DECLINE


RLB CONSTRUCTION MARKET ACTIVITY MODELTHE AMERICAS - GROWTH SECTORS VS DECLINE SECTORS


COUNTRY 2015 2016 2017 2018

NORTH AMERICA

CANADA 2.2 2.0 2.0 1.9

MEXICO 3.0 3.3 3.5 3.8

UNITED STATES 3.1 3.1 2.7 2.4

SOUTH AMERICA

ARGENTINA (0.3) 0.1 0.3 0.4

BOLIVIA 4.3 4.3 4.1 4.0

BRAZIL (1.0) 1.0 2.3 2.3

CHILE 2.7 3.3 3.6 3.7COLOMBIA 3.4 3.7 4.0 4.2

ECUADOR 1.9 3.6 4.5 4.0

GUYANA 3.8 4.4 4.0 4.0

PARAGUAY 4.0 4.0 4.0 4.0

PERU 3.8 5.0 5.5 4.8

SURINAME 2.7 3.8 4.5 4.8

URUGUAY 2.8 2.9 3.0 3.3

VENEZUELA (7.0) (4.0) (2.5) (1.5)

CENTRAL AMERICA

BELIZE 2.0 3.0 2.7 2.6

COSTA RICA 3.8 4.4 4.5 4.4

EL SALVADOR 2.5 2.6 2.6 2.3

GUATEMALA 4.0 3.9 3.9 3.9HONDURAS 3.3 3.4 3.6 3.8

NICARAGUA 4.6 4.3 4.0 4.0

PANAMA 6.1 6.4 6.7 7.1

THE CARIBBEAN

ANTIGUA ANDBARBUDA

1.9 2.3 2.7 2.7

BARBADOS 0.8 1.4 1.5 1.8

DOMINICA 2.4 2.9 1.6 1.8

DOMINICAN REPUBLIC 5.1 4.5 4.0 4.0

GRENADA 1.5 2.0 2.0 2.4

HAITI 3.3 3.8 3.8 3.8

JAMAICA 1.7 2.3 2.5 2.7

ST. KITTS AND NEVIS 3.5 3.0 2.5 2.5

ST. LUCIA 1.8 1.4 1.8 2.0

ST. VINCENT ANDTHE GRENADINES 2.1 3.1 3.2 3.2

THE BAHAMAS 2.3 2.8 1.8 1.7

TRINIDAD ANDTOBAGO

1.2 1.5 1.6 1.7



LOCATION INTELLIGENCEAMERICAS


HONOLULU

Hawaii’s economic climate is steadily

improving with the labour market

continuing to show year-on-year

improvement. In the last year,Hawaii’s employment growth has

increased 1.6% and risen 4.4% higher

than the same period peak levels

which occurred in 2007. Hawaii’s

unemployment rate is ranked the

7th lowest in the nation, currently

standing at 4.4%, the lowest June

rate since 2007. Consistent with an

improving economy, visitor arrivals

and time spent in Hawaii have

increased by 6.1% while expenditures

by these visitors have risen 4.4%.

In correlation with the increased

employment and increased tourism

dollars, the state tax revenue

has increased a dramatic 20.3%

compared to last year. These are all

positive signs of Hawaii’s regularly

improving economic situation.

The surge in Hawaii’s economic

performance corresponds with the

growth of the construction market.

This is demonstrated by a total of

US$318.8 million worth of private

building permits being issued in

June 2015, which is a staggering

16.1% higher than June of last year.

New developments in up–and-

coming areas, such as Kaka’ako and

renovations in Waikiki and Ala Moana,

have kept the construction industry

busy. In addition, new landmark

projects such as the HART rail project

will hopefully keep the growth steady.

Notable construction projects in

Honolulu include the Park Lane

Residential Development at Ala

Moana Shopping Centre, OahuSequel at the Hilton Hawaiian

Village, the new NICU-PICU tower at

Kapiolani Medical Centre for Women

and Children, Howard Hughes

Corporation’s Waiea (Water of Life)

and Anaha (Reflection of Light)

residential towers at Ward Village,

Symphony Honolulu’s condominium

project and the new International

Market Place in Waikiki.

Tourism related projects and retail

development state-wide have beenthe primary causes of this surge in

activity. However, it seems that the

growth is cooling down with some

original construction start dates of

the residential projects being pushed

back. There will likely be some

slower growth over the next two

years; undoubtedly non-residential

construction has accounted for the

major activity in the past few years,

but with its eventual decline, and

assuming positive resolution to the

Koa Ridge and Hoopili developments,

single family residential construction

will likely begin to pick up over the

next few years.

LOS ANGELES

In southern California since 2010,

new housing building permits had

been rising steadily after the peak in

2006 and the rapid decline in 2009.With levels projected to rise and

continue their recovery, the outlook

for on-site residential work in 2016

and 2017 seems positive. In addition,

rising home prices, employment,

income and population growth will

all assist in the growth of new home

construction. This is likely to stretch

over many years.

With an unemployment rate of 7.1%,

an overall drop of approximately

0.7% within the past year, LosAngeles County remains below the

national construction unemployment

rate of 8.4%. Over the past year,

construction employment in Los

Angeles rose 6.6%, adding 7,800

employees to the industry. This

6.6% increase represents the largest

percentage growth in any industry for

the County. Although construction is

a highly cyclical industry, the long-

term outlook is optimistic.

Residential construction remainsstrong in both, the apartment and

condominium markets with significant

projects under construction in Playa

Vista and projects proposed in

Beverly Hills. There are approximately

13,635 residential units in the

pipeline for downtown Los Angeles

alone. Residential developments

are leading the increase in crane

counts. Buyers are signing deals to

reserve units in multiple new high-

end projects. In Los Angeles, 40-plus

high-rise condominiums have begun

construction after a 22-story project

that started last year sold out within

weeks.




AMERICAS


The hotel market is also on the rise

in downtown Los Angeles as the city

pushes for more hotel construction

near the convention centre. Last year,the area experienced the opening

of the new Marriott Courtyard/

Residence Inn in South Park and the

announcement that InterContinental

Hotels, will operate the 900 room

hotel, currently under construction

in the US$1 billion Wilshire Grand

project, currently the largest non-

infrastructure project in the country.

Since 2008 over 700 new

restaurants, bars, and retail stores

have opened in downtown LosAngeles. The US$160 million

renovation of The BLOC, which

includes an upgraded Macy’s and a

new slate of stores on three levels, is

in full swing. Approximately 1.2 million

ft2 of retail space is currently under

construction. The retail sector has

had some improvement in the H1 of

2015, with positive net absorption,

albeit at a slower pace than in recent

years. The sale of shopping centres

has slowed recently, but prices have

increased and improving market

fundamentals may support additional

investment activity in the near future.

PHOENIX

Arizona's economic recovery

continues, as indicated by a growing

local labour market, which has

expanded by an average of 50,000 jobs per year since 2012. During the

next three years, the state is forecast

to add nearly 200,000 net new jobs.

Many of those new jobs will be in the

service-providing sectors, particularly

professional and business services,

education and health services, trade,

transportation and utilities and the

leisure and hospitality sectors. These

four sectors alone are expected to

account for over 70% of net job

growth in Arizona. Construction

is forecast to generate increased

employment, as the housing sector

improves. Manufacturing jobs are

predicted to remain stable, as is

government employment.

Key construction projects in the

Phoenix-Metro area include State

Farm’s two million ft2 project along

Tempe Town Lake. The 20-acre,

US$600 million mixed-use site will

include five office buildings leased

by State Farm, retail amenities, and

a 10-acre plaza to be completed

by 2017. Another major project

in the same vicinity is Arizona

State University’s US$256 million

renovation of their existing 71,706-

seat Sun Devil Football Stadium.

The renovation work, combined with

the construction of a new Student

Athlete Performance Centre, is being

undertaken in three phases with

completion of the project proposed

by mid-2017.

The housing market in Arizona has

significantly improved over the last

12-month period. Housing permits in

June 2015 were up 46% from June

of last year and are up almost 36%

year-to-date. New home closings are

up 24% from the same month last

year and are up over 9.0% year-to-

date. This dynamic change suggests

that the overall housing market

performance for 2015 will be stronger

than originally forecasted.

The Phoenix-Metro office market has

recovered while supply growth has

been minimal. Recently the office

market has recorded an increasein net absorption, stable vacancy,

and continued rent increases. Office

vacancy levels have begun to level off

after improving steadily from 2012-

2014 levels and, while the first half of

2015 trended along the same path

as much of last year, the long-term

outlook suggests greater volatility,

as new projects are completed and

vacated spaces come online to be

backfilled.

Recently, industrial vacancies haveremained fairly stable. However, the

pace of development has begun to

slow, following a very active 2014 and

first half of 2015. Despite the recent

slowdown in activity, conditions are

expected to improve by the end of

the year, particularly as the delivery

of new industrial space slows. Within

the retail sector, there has been

some improvement in the first half

of 2015 with positive net absorption,

albeit at a slower pace than in recent

years. The sale of shopping centers

has slowed recently, but prices have

increased and improving market

fundamentals may support additional

investment activity in the near future.

Ongoing improvement in many of

Arizona’s major real estate market

sectors will most likely have a direct

impact on construction costs as

Arizona still suffers from a significant

loss of both skilled and unskilled

labor.



LOCATION INTELLIGENCEAMERICAS


PORTLAND

Oregon’s economy continues to

strengthen, as the state’s gross

domestic product has increased

over 5% from last year - the sixthhighest growth rates among all

states. Jobs (and incomes) in Oregon

are increasing at a rate similar to

the mid-2000s, ranking as the 13th

fastest population growth in the

nation last year and forecast to reach

4.35 million by 2022. As of May 2015

construction employment stood at

its highest in seven years at 81,300

jobs, representing a gain of 1.4% since

May 2014. The construction market

remains buoyant in most sectors.

The office market shows continued

growth with an increase in “trophy”

buildings whereby prominent

class A properties offer premium

enhancements or upgrades to attract

top rents. There is a lot of activity

in the suburbs of Portland with

notable projects such as the Nike

Campus additions. The condominium

and apartment market continues to

flourish with several new mid-rises

under construction in and around

the Pearl district as well as the

Oregon Square high rise residential

development in North East Portland.

The healthcare sector has several

new projects under design such

as OHSU and Providence as

well as the pending VA Portland

Seismic upgrade. Several major

educational projects are now well

into construction for school districts

such as Portland Public Schools and

Beaverton School District with many

more projects under design and at

feasibility stage. Several community

college projects are also anticipated

to break ground early next year.

The hotel sector remains active with

several boutique hotels as well as a

convention center hotel development.

The Oregon legislature surprised

many by deciding to shelve the

Oregon State Capital Seismic

renovation project as well as failingto pass a large transportation funding

package. The new Multnomah

Courthouse, however, has full

approval and is now under the

early stages of design. Industrial/

manufacturing work should see less

activity, primarily due to the oil and

gas industries lower energy costs

impacting investment. Projects such

as the Intel Campus are now winding

down to completion.




AMERICAS


Meanwhile, as business continues

to grow, so does the demand of

the hospitality sector. Uniquely, the

city has to meet both the demandof increased business and leisure

clientele. In years past, the average

daily room rate could not offset the

premium to build in San Francisco,

along with the union demands of

operating a hotel. However, with

occupancy rates consistently residing

at 84.1% and the average daily rate

increasing 9% annually over the

past 4 years, the returns on hotel

investments are starting to add up.

A number of new build projects are

in development, including a new

Highgate Hotel off of Union Square,

and upcoming projects for both

Eaton and Stanford Hotels.

SAN FRANCISCO

San Francisco is experiencing

continued growth in the job market,

with their unemployment rate at

4.2%, down 1.0% from this time lastyear. With the job market continuing

to prosper, housing stock in the city

and around the Bay Area bear the

burden of stifled long-term growth.

San Francisco's home sale prices

have increased 12.7% over the past

year. The total number of multifamily

units is growing over 2.0% annually in

the City, which is outpaced by 3.2%

job growth, further supporting the

burden of a city struggling to meet

the housing demand of its rampant

growth. Current projects contributing

to housing supply include 1545 Pine

Street, Lumina, and The Rockwell.

Within the office sector, leasable

office space has decreased over

6.0% while the subleasing market

continues to expand. Although there

is some debate as to whether this is

a cause for concern, a recent study

found this trend to be best explained

by companies having outgrown their

current leases and or planning for

future growth by leasing an excess

of space subleasing in the interim.

Despite the high demand for office

development, Proposition M limits the

amount of office development that

can be approved annually; the current

amount of proposed developments

submitted to the city is tenfold the

permitted amount. The city has

assembled a selection committee to

review each submission and award

entitlements according to the needs

of the neighbourhood.



Holiday Inn Express Clarke Quay, Singapore




Growth within Asia is forecast tocontinue through 2015 and 2016.India and most member economiesof the Association of SoutheastAsian Nations (ASEAN) arehelping achieve growth numbers,compensating for the slowdownbeing seen in China. GDP inChina is being carefully plannedby the Central Government toachieve sustainable and moderategrowth through economic reformthroughout China. The growth inChina during 2014 of 7.4% is forecastto reduce through 2015 and 2016 to6.8% and 6.3% respectively.

China is benefiting from strongdomestic demand as a key driverto growth. Construction continuesto benefit from domestic demandand is seeing a boost to realincomes and strong labour marketconditions. Japan, although stagnant

for the past year is forecast toexperience growth of 1.0% for both2015 and 2016. Terms of trade forthe likes of Indonesia and Malaysiahave put downward pressures ongrowth, however this is forecast tostabilise in the short term.

MARKET INTELLIGENCE

ASIAFor the 10 ASEAN economies, theforecast growth for 2015 is 4.9% upfrom 4.4% in 2014. 2016 is forecastto see further growth to 5.3%.Thailand is adding to the increasein growth, as is Indonesia despitethe resultant pressure from terms oftrade. Notwithstanding the potentialrisks associated with the effectsfrom recoveries of other advancedeconomies and the possibilities ofupward volatility in commoditiesthe region is currently stable andforecast to continue that way. Whileexpansion has moderated sincethe global financial crisis, Asia isprojected to remain a global growthleader in the medium term.

ASIA CONSTRUCTION COST RELATIVITIES

Q3, 2015

SINGAPORE 110

BEIJING 89

SHANGHAI 87

GUANGZHOU 84

SHENZHEN 78

KUALA LUMPUR 74

HO CHI MINH CITY 66

JAKARTA 57

RLB CONSTRUCTION MARKET ACTIVITY MODEL

ASIA - GROWTH SECTORS VS DECLINE SECTORS

NUMBER OF CITIES

6

2

0

4

8

12

10

GROWTH DECLINE



COUNTRY 2015 2016 2017 2018

BANGLADESH 6.3 6.8 7.0 7.0

BHUTAN 7.6 8.2 8.6 11.5

BRUNEI DARUSSALAM (0.5) 2.8 3.4 6.5

CAMBODIA 7.2 7.2 7.3 7.4

CHINA 6.8 6.3 6.0 6.1

HONG KONG SAR 2.8 3.1 3.4 3.4

INDIA 7.5 7.5 7.6 7.7

INDONESIA 5.2 5.5 5.8 6.0

JAPAN 1.0 1.2 0.4 0.7

KOREA 3.3 3.5 3.7 3.7

LAO P.D.R. 7.3 7.8 7.7 7.4

MALAYSIA 4.8 4.9 5.0 5.0

MONGOLIA 4.4 4.2 3.8 6.2

MYANMAR 8.3 8.5 8.3 8.0

NEPAL 5.0 5.0 4.5 4.5

PHILIPPINES 6.7 6.3 6.0 6.0

SINGAPORE 3.0 3.0 3.2 3.2

SRI LANKA 6.5 6.5 6.5 6.5

TAIWAN PROVINCEOF CHINA 3.8 4.1 4.1 4.2

THAILAND 3.7 4.0 4.1 4.0

VIETNAM 6.0 5.8 5.9 6.0



LOCATION INTELLIGENCEASIA


BEIJING

Beijing’s GDP growth rate slid to 6.8%

year-on year in Q1 2015, 0.5% less

than that in Q4 2014. Consumer Price

Index recorded a mild increase of1.5% year-on-year. Beijing’s economy

continues to lose momentum

despite several incentive polices

being announced by the Central

Government in Q1 2015 to shore up

the economy. The People’s Bank of

China (PBOC) further cut interest

rates and bank reserve requirements.

The sales volume of residential units

has rebounded in response to the

relaxation measures. Residential

prices are expected to stabilise in the

remaining months of 2015.

The Beijing office market remained

stable in Q1 2015, despite a tight

vacancy rate and strong competition

for space as there is abundant supply

in the pipeline. Rents for retail space

also remain stable, thanks to Beijing’s

growing middle class, which provides

support to the retail market.

A coordinated development plan

for the Beijing-Tianjin-Hebei bloc

was announced last year, aimingto relieve the economic and social

pressure on the Capital and to boost

development in its surrounding

regions. The construction of Beijing

Daxing International Airport or Beijing

Capital Second International Airport,

finally commenced in Q4 2014.

The Beijing Universal Studios will

start construction in Q3 2015 with

completion targeted in 2019. The

park is situated in Tongzhou district

with an area of 1.2 km2 and a totalinvestment of more than ¥20 billion.

Tender prices in Beijing have

decreased slightly by 0.5% in the last

two quarters. Material prices have

continued to decline, especially the

price of reinforcement bars which has

fallen to a record low since 2003.

CHENGDU

Chengdu’s total GDP in Q1 2015 was

¥246.23 billion, an increase of 7.4%

compared to Q1 2014 year and 0.4%

higher than the national GDP growthrate. The Consumer Price Index

increased 1.3% year-on-year, which

was the same compared with the

same period last year.

In Q1 2015, a total of ¥51.19 billion was

invested in the local real estate, an

increase of 20.2% year-on-year while

a total of ¥25.54 billion was invested

in Tianfu Xinqu, a decrease of 8.7%

year-on-year. In March to April, 2015,

the Central and Sichuan Governments

announced a series of measures toloosen the limit of down payment for

a second home along with a change

to the period of free transaction tax

for housing ownership from five years

to two years. These new measures

reflect the government’s objective

of creating a stable housing market

within the region.

Due to the weakening economy,

construction activities in Chengdu

have been declining, but the fall was

lower than the national trend. Therewere few new projects commencing

in Q1 2015. Labour costs increased

by 2.68% in Q1 2015 compared with

end of 2014. The prices of concrete

and steel decreased 2.47% and

9.27% respectively. The price of

flat glass has also been decreasing

continuously. On the other hand,

the prices of ceramic, wall finishes

and stone finishes have been rising

moderately. Overall, material costs

have slightly decreased comparing

with the end of 2014. Tender prices in

2015 are expected to remain flat.

GUANGZHOU

Guangzhou's economic growth,

mirroring the national trend, slowed

down to 7.5% year-on-year in Q1 2015.

Consumer price inflation eased to1.4% in Q1 2015 compared with 2.3% in

end 2014.

The Central Government has

reacted quickly to the economic

contraction since late last year by

slashing interest rates and the bank

reserve requirement ratios a number

of times. Liquidity and investment

sentiment in both the private and

public sectors are set to improve on

the back of such moves. The Central

Government is aiming to meet the 7%annual GDP growth target and is very

likely to continue to roll out growth-

supportive measures as is necessary.

The property market has experienced

a downturn since 2014 after a

string of government cooling

measures were introduced to curb

the then overheated market. Major

projects under construction or in

the pipeline, as identified by the

municipal government, were mostly

infrastructures in the public sectorsuch as underground railways,

highways, site development and

facilitating works for earmarked

development zones.

The construction sector suffered as

a result of developers’ cautiousness

in the current economic conditions.

Nevertheless, the construction

industry growth has remained stable,

thanks to the volume of public

works including infrastructure and

affordable housing projects nowunder construction. Tender prices

have remained relatively flat since the

beginning of 2015 and are forecast to

remain stable or to decline marginally

in the H2 2015.




ASIA


HO CHI MINH CITY

Vietnam continued its economic

recovery from 2014 as its gross

domestic product (GDP) expanded

6.0% in Q1 2015. This growth wassupported by continued lower

commodities prices, well-performing

foreign direct investment (FDI)

enterprises and higher demand in

export markets. Average consumer

price index (CPI) in Q1 2015 rose 0.7%

compared to the figure of the same

period in 2014. This is the lowest

growth for the last 10 years. The

total investment in real estate in the

January-May period was US$461.5

million and governmental statistics

reported that 66.5% of the total

investment in the property sector

was contributed by foreign direct

investments (FDI).

The government is expecting GDP

growth to reach an annual rate of

6.5% for 2015, higher than the initial

target of 6.2%. The World Bank

projects growth to be 6.0% in 2015

before expanding to 6.2% and 6.5% in

2016 and 2017 respectively.

Building works for Ho Chi Minh City’sfirst Metro Line has been accelerated

to an anticipated completion date

of 2019, with the first trains to be

fully operational by 2020. The

construction industry expanded 4.4%

in Q1 2015, as compared to 3.4% for

Q1 2014. Domestic steel consumption

surged 17.0% over last year to 2.7

million tonnes where more than half

of the steel consumed (1.29 million

tonnes) was construction steel,

marking a 10.5% y-o-y increase.

Barring any unforeseen market

conditions, building tender prices in

Ho Chi Minh City are anticipated to

increase by 3.0% to 6.0% for 2015.

HONG KONG

Hong Kong’s economy grew

moderately at 2.1% year-on-year,

in real terms, in the first quarter of

2015. According to the CompositeConsumer Price Index, overall

consumer prices rose by 3.1% in

June 2015 over the same month a

year earlier, slightly higher than the

corresponding increase (3.0%) in

May 2015. The seasonally adjusted

unemployment rate stood at 3.2% in

April to June 2015, the same as March

to May 2015. The underemployment

rate stood at 1.4% in April to June

2015, the same as March to May 2015.

There is a concern that Hong Kong‘seconomy will weaken in the coming

months as both the number of

tourists and volume of retail sales

have been declining. As the Hong

Kong dollar is pegged to the US

dollar, the latter’s rise against all

major currencies will likely result in

imported deflation in the medium

term.

The construction industry is still being

dominated by major infrastructure

projects such as the Shatin CentralLink of the Mass Transit Railway, the

High Speed Rail and Hong Kong-

Zhuhai-Macau Bridge. Construction

output in Hong Kong remains very

high, but any further increase will be

constrained by the shortage of skilled

labour. The delay in completion of

some of the infrastructure projects

may ease the heavy demand on

skilled labour as construction work

will be more evenly spread out.

There was an increase of 2.0% intender prices in the first quarter of

2015. On a year-on-year basis, the

increase was 6.4%. With a rather

stable materials market, the rate of

increase in tender prices since early

2015 has been slowing down and

this trend is likely to continue in the

coming months.

JAKARTAIndonesia’s economy grew 5.0% for the

Q1 2015 on a year-on-year basis. The

economy weakened further by 0.2%

from the preceding quarter. Based onthe latest data from Statistics Indonesia

(BPS), annual headline inflation peaked

in May at 7.2% year-on-year mainly due

to rising food, tobacco and electricity

prices. The consumer price index (CPI)

increased 0.5% in May from April. Bank

Indonesia expects inflation to reach

between 3.0% - 5.0% by end of 2015.

Jakarta’s first subway development, the

North-South line, is being constructed

while an East-West line is being studied.

The North- South line, which will be

constructed in two phases, connectsKampung Bandan (in North Jakarta)

to Lebak Bulus (South Jakarta), over a

distance of 23.3 km. The first phase of

the Jakarta MRT is anticipated to open

to the public in 2018. The total cost

of the project is estimated to cost at

least US$1.7 billion and should be fully

completed by 2027.

Another government initiative is the

construction of a new port at Tanjung

Priok in North Jakarta. When fully

operational in 2023, this New Priok

Port (also known as Kalibaru Port) is

expected to handle more than triple the

annual capacity of the current Tanjung

Priok. The construction industry,

through public private partnerships

(PPPs) is expected to continue to

expand at an annual rate of 6.9% over

the next five years (2015-2019). The

focus on infrastructure, including road

works, energy and maritime works

will continue to drive growth, on the

back of a rising population, greater

urbanization and increasing disposableincome.

On the lowest end of the real estate

spectrum, the nation currently faces a

backlog of 15 million dwellings for its

low-income citizens. Plans are already

underway to build 10 million houses

and apartment units between 2015 and

2019. Launched on 30 April 2015, the

“One Million Houses Program” is part

of President Widodo’s nine priorities

agenda called “Nawa Cita”. State-

owned housing developer Perumnas

has been tasked with the constructionof these 10 million houses. Barring any

unforeseen market changes, building

tender prices are anticipated to

increase by 3.0% - 5.0% for 2015.



LOCATION INTELLIGENCEASIA


KUALA LUMPUR

Malaysia’s gross domestic product

(GDP) grew to a four-year high of

6.0% in 2014. The economy in Q1 2015

remained resilient with a growth of5.6% on a year-on-year basis. The

consumer price index (CPI) was

significantly lower at 0.7% in Q1 2015

against 2.8% in Q4 2014. The central

bank, Bank Negara Malaysia (BNM)

projects inflation to remain relatively

stable at an average of 2.0%-3.0% for

2015. The World Bank forecasts the

Malaysian economy to slow to 4.7%

in 2015, before rising to 5.0% for both

2016 and 2017.

Public transport operator PrasaranaMalaysia Bhd is looking to start the

construction of the RM9 billion light

rail transit line 3 (LRT3) by Q1 2016.

Expected to be completed by 31

August 2020, the 35km rail line will

link Bandar Utama to Johan Setia in

Klang.

Bandar Malaysia, a 197 hectare

(1.97km2) transport transit is

proposed under the 1Malaysia

Development Berhad (1MDB). Sited

on 1MDB owned land and 3km fromKL's financial district, it is expected

to begin construction in 2017. The

development will span between 20 to

30 years before fully completed.

The highly-anticipated Kuala Lumpur-

Singapore high speed rail, which is

330km long, aims to cut down travel

time between the two cities to just

90 minutes. The rail alignment is

expected to run through Nusajaya,

Muar, Batu Pahat, Malacca, Seremban

and Putrajaya.

The total value of construction work

done in Q1 2015 recorded a growth

of 15.1% year-on-year to RM28.74

billion, reflecting an increase of 6.1%

quarter-on-quarter as compared to

the previous quarter. Overall, the

Malaysian construction industry is

expected to remain strong in year

2015. Barring any unforeseen market

conditions, building tender prices

in Kuala Lumpur are anticipated to

increase by about 3.5%-4.0% in 2015.

SHANGHAI

From the beginning of 2015,

Shanghai’s economy grew modestly,

with both industrial production and

private consumption growing slowlyand steadily. The Consumer Price

Index increased modestly. Shanghai's

GDP amounted to ¥581.579 billion

in Q1 2015, a year-on-year growth of

6.6%, but a drop of 0.4% compared

to the same period last year.

In the first four months of 2015,

real estate investment in Shanghai

amounted to ¥95.041 billion, a

year-on-year growth of 15%, which

represents 62.4% of total investment

in fixed assets in Shanghai. Theincrease of investment in the

commercial sector was significantly

higher than the residential and official

sectors.

The total floor area under

construction was 124.3 million m2,

a year-on-year growth of 4.4%.

The total floor area of residential

development under construction

was 69.9 million m2, a drop of 1.1%.

The total floor area of new projects

commenced was 6.1 million m2, a dropof 17.5%.

Projects under construction include

Hongqiao Transportation Centre

with exhibition centre, official and

commercial areas and a Disneyland

development. New projects include

QianTan development centre; XuHui

Central Urban Complex development.

Tender prices in Shanghai have been

on a downward trend since Q3 2014.

The prices of major construction

materials (such as steel, cement,

concrete and sand) have been falling

for two consecutive years. It is

expected that the downward trend

of tender prices will continue in the

remaining months of 2015.

MACAU

Macau’s GDP for the first quarter of

2015 decreased by 24.5% on a year-

on-year bases in real terms, which

was a reflection of the decline ofgaming revenue. The unemployment

rate for February to April 2015 stood

at 1.7%, same as that in January

to March 2015. The average daily

wage of construction workers was

MOP704 in the second quarter of

2015, which is a decrease by 3.0%

on a quarter-to-quarter basis. The

average daily wages of skilled and

semi-skilled workers decreased

by 3.3% to MOP707 and that of

unskilled workers increased by 3.1% to

MOP405.

Major projects under construction

include the expansion of the six

major gaming resorts, which will be

completed this year and in 2016. The

Light Rapid Transit (LRT) System

commenced construction in 2012 and

has a target completion of phase one

in 2016. Other than these projects,

there have not been many significant

projects commencing work since

early 2015.

With the gradual completion of major

resort projects during 2015 and 2016

and the uncertainty of any further

expansion plans amid the current

weak gaming industry, construction

costs in Macau are likely to fall

gradually towards the end of 2015.




ASIA


SHENZHEN

Shenzhen's GDP growth in Q1 2015

decelerated to 7.8% year-on-year

from 8.8% in 2014. Fixed-asset

investment expanded by 16.8% fromthe same period last year, up from

13.6% recorded in Q4 2014. The

Consumer Price Index in Q1 2015 rose

moderately by 1.4%.

Despite signs of economic slowdown,

it is unlikely further slowdown will be

significant on the back of the Central

Government's pro-growth efforts

recently.

Ping An Finance Centre, more than

600m tall and one of the tallest

towers in China, topped out in May

2015 with full opening targeted in

mid-2016. The adjacent ancillary

tower comprising the Park Hyatt

hotel and serviced apartments is

anticipated to be completed by

the end of 2017. Many mixed use

developments in Qianhai and the

redevelopment of the existing old

areas are also underway.

The prices of some construction

materials went down significantly in

the first half of the year as a result

of overcapacity. There have only

been moderate fluctuations in tender

pieces since the end of 2014 and

this trend is expected to continue

throughout 2015.

SINGAPORE

The Singapore economy grew 2.1%

in Q4 2014 on the back of a stable

services sector, before expanding

2.6% year-on-year in Q1 2015. Theconstruction sector improved to 3.1%

year-on-year in Q1 2015, from 0.7% in

the previous quarter, supported by a

pick-up in private sector construction

activities. As global growth is

expected to improve marginally

from 2014, the Ministry of Trade and

Industry (MTI) maintains Singapore's

GDP growth forecast to increase

from 2.0% to 4.0% for 2015.

The CPI-All Items inflation inched

up to -0.4% in May from -0.5% inApril, which mainly reflects the cost

escalation of private road transport,

while core inflation was reported at

1.0% in May, compared to 0.4% in

the previous month. For 2015, The

Monetary Authority of Singapore

(MAS) Core Inflation and CPI-All

Items inflation are projected to

average between 0.5% to 1.5% and

-0.5% to 0.5% respectively, before

rising towards the end of the year

and into 2016.

After a record S$37.7 billion worth

of construction demand in 2014, the

Building and Construction Authority

expects to achieve S$29 billion to

S$36 billion worth of contracts in

2015, with the public sector taking the

lead.

Total supply of housing infrastructure

in Singapore is expected to upsurge

by about 11.0% over the next three

years (2016 – 2018) with the addition

of more than 100,000 public flats,45,000 executive condominiums

(EC), and 67,000 private non-landed

units.

In view of the overall housing supply

backlog, HDB will be constructing

new public homes at a slower pace in

2015. The supply for public housinghas been reduced to 16,900 in 2015

from 22,455 in 2014.

In addition, HDB will be raising the

income ceilings, likely in August 2015

for the second time since 2011, for

Build-To-Order (BTO) flats and ECs

in a bid to divert some demand from

the HDB resale and private property

market and encourage transactional

activity for mass market homes.

The government aims to maintain

the foreign share of Singapore's

workforce at a third of the total

workforce. The annual foreign

workforce growth has moderated to

34,000 in 2014, down from a high of

144,500 in 2007.

In the midst of a moderating

construction market, construction

costs remain competitive, while

enduring pressures from the effects

of regulatory fees and foreign

manpower shortages. The RLB

Tender Price Index (TPI) remained

relatively flat from Q4 2014 to Q1 2015

but is anticipated to expand about

1.0% to 2.0% for the whole of 2015.



Headingley Carnegie Stadium, United Kingdom




The European Union is forecastinga pickup in GDP from 2014 levelsin 2015 and 2016. The IMF isforecasting GDP growth of 1.8% and2.0 % respectively, up from 1.4% in2014.

The outlook for the Europeanregion is forecast to continuerecovering albeit moderately. Withthe depreciation of the Euro in June2014, the Euro area has progressed

somewhat faster than previouslyexpected and is likely to continue.With increased confidence fromlower oil prices, consumer spendingis likely to increase, as will corporateprofits.

The UK is forecast to remain slightlydown from the recent high of 2.6%in 2014 to 2.7% in 2015 and 2.2%in 2016. The UK recovery remainson track despite slightly weakerthan expected construction andmanufacturing activity in Q1 2015.There was slowdown in private

MARKET INTELLIGENCE

EUROPEinvestment across much of Europewith the exception of Ireland, Spain,and Germany. Ireland howevercontinues to report and forecast thehighest growth of 4.8% in 2014 butdeclining to 3.9% in 2015 and 3.3%in 2016.

The Commonwealth of IndependentStates (CIS) are expected tocontract in 2015 with ongoingconflict in the region as well

as sanctions on Russia. CIS hasrecorded slightly under 1.0% growthfor 2014 with a further reduction to(2.55%) in 2015 and (2.57%) in 2016.Russia had 0.6% growth in 2014and is forecast for (3.8%) in 2015and 1.1% in 2016. Lack of confidenceis contributing to any recoveryprocess, due to the debt crisis inGreece, sanctions and tensions inRussia and Ukraine and slower thanexpected recovery in some of the

advanced economies.

EUROPE CONSTRUCTION COST RELATIVITIES

Q3, 2015

LONDON 159

BRISTOL 133

MANCHESTER 127

BIRMINGHAM 125


EUROPE - GROWTH SECTORS VS DECLINE SECTORS

NUMBER OF CITIES

5

2

1

0

3

4

6

9

7

8

GROWTH DECLINE



COUNTRY 2015 2016 2017 2018

AUSTRIA 0.9 1.6 1.4 1.2

BELGIUM 1.3 1.5 1.5 1.5

BOSNIA ANDHERZEGOVINA

2.3 3.1 3.6 3.8

BULGARIA 1.2 1.5 1.8 2.0

CROATIA 0.5 1.0 1.7 2.1

CYPRUS 0.2 1.4 2.0 2.2

CZECH REPUBLIC 2.5 2.7 2.5 2.2

DENMARK 1.6 2.0 2.1 2.2

ESTONIA 2.5 3.4 3.4 3.4

FINLAND 0.8 1.4 1.5 1.7

FRANCE 1.2 1.5 1.7 1.8

FYR MACEDONIA 3.8 3.9 4.0 4.0

GERMANY 1.6 1.7 1.5 1.3

GREECE 2.5 3.7 3.2 3.2

HUNGARY 2.7 2.3 2.2 2.1

ICELAND 3.5 3.2 2.7 2.7

IRELAND 3.9 3.3 2.8 2.5

ITALY 0.5 1.1 1.1 1.1KOSOVO 3.3 3.5 3.5 3.5

LATVIA 2.3 3.3 3.7 3.9

LITHUANIA 2.8 3.2 3.4 3.6

LUXEMBOURG 2.5 2.3 2.3 2.2

MALTA 3.2 2.7 2.6 2.6

MONTENEGRO 4.7 3.5 2.7 1.6

NETHERLANDS 1.6 1.6 1.7 1.7

NORWAY 1.0 1.5 1.8 1.9

POLAND 3.5 3.5 3.6 3.6

PORTUGAL 1.6 1.5 1.4 1.3

ROMANIA 2.7 2.9 3.4 3.5

SAN MARINO 1.0 1.1 1.2 1.3

SERBIA (0.5) 1.5 2.0 3.5

SLOVAK REPUBLIC 2.9 3.3 3.2 3.1

SLOVENIA 2.1 1.9 1.8 1.8SPAIN 2.5 2.0 1.8 1.7

SWEDEN 2.7 2.8 2.7 2.5

SWITZERLAND 0.8 1.2 1.5 1.9

TURKEY 3.1 3.6 3.6 3.5

UNITED KINGDOM 2.7 2.3 2.2 2.2

COMMONWEALTH OF INDEPENDENT STATES

ARMENIA (1.0) 0.0 1.5 2.5

AZERBAIJAN 0.6 2.5 2.6 3.6

BELARUS (2.3) (0.1) 0.2 0.4

GEORGIA 2.0 3.0 4.5 5.0

KAZAKHSTAN 2.0 3.2 4.8 4.6

KYRGYZ REPUBLIC 1.7 3.4 5.2 5.2

MOLDOVA (1.0) 3.0 3.5 3.8

RUSSIA (3.8) (1.1) 1.0 1.5TAJIKISTAN 3.0 4.1 5.0 5.0

TURKMENISTAN 9.0 9.2 9.6 8.6

UKRAINE (5.5) 2.0 3.5 4.0

UZBEKISTAN 6.2 6.5 6.5 6.5



LOCATION INTELLIGENCEEUROPE


BERLIN

Ongoing global, political and

economic upheavals continue to

dampen the previously high levels

of economic growth and exports.Never-the-less Germany commenced

2015 with growth of 0.7% versus

the Eurozone average of 0.3%.

Berlin continues to attract domestic

investment, particularly in property.

The area around Berlin main station

(Hauptbahnhof) is seeing significant

construction activity. Several hotels

and office buildings are under

construction or planned, among

which is the John F Kennedy House,

a ¤70 million office block due forcompletion in 2015. A new 33-storey

tower building ¤250 million "Upper

West" near Zoo Station has been

started this year and is scheduled

for completion in 2016. A new

Entertainment Centre at Mercedes

Platz, adjacent to the Mercedes

Arena in Friedrichshain comprising

65,500m2 of cinemas, bowling and an

auditorium, 20,000m2 of basement

parking, offices and two hotels, is also

due to commence construction in late

2015.

The overall rate of inflation in

Germany is still very low. Stagnating

at present at under 1.0%. Construction

costs however, have been rising more

strongly, at around 1.8% and may well

reach 2.0% by the end of 2015. Fit-out

trades continue at around 2.2–2.5%,

while shell & core trades are at much

lower levels of around 0.7 %.

BIRMINGHAM

The Midlands area is continuing to

show signs of recovery. Although

patchy, many schemes need to be

underpinned with pre-lets. The regionis seeing increased activity from

overseas investors, as funds and

developers are looking for projects

and deals outside of London. City

centre residential schemes are

coming back to the market, with the

Private Rented Sector seeing growing

activity. The prime areas of activity

for new build offices are Paradise

Circus, Snowhill 3 and Arena Central.

The retail market shows signs of

growing confidence with manyschemes being resurrected. The

changes in retail habits are having

an impact on the style and mix of

uses being developed with more

stringent agreements. Flexibility is

being considered, with a greater

emphasis on mixed use, together

with the utilisation of other sectors

being used to springboard the retail

developments. Small churn and

micro developments continue to be

developed to maximise and improve

current assets. Several retail schemes

are on the drawing board, as either

new ventures or previously shelved

schemes are being resurrected.

The university and education sectors

continue to develop their campus

facilities to feed the increasing

demand (including student housing,

teaching, sports and leisure and

research facilities). The Universities

in and around Birmingham have or

are in the process of major project

delivery. Warwick University with

JLR & TMETC have underpinned the

development of a 33,000m2 research

facility, with works now having

commenced. Aston University has

recently resurrected a redevelopment

where a tower scheme and student

accommodation blocks are under

consideration.

The pressure on sourcing skilled

resources continues to increase, due

primarily to the increased demand,

which were depleted during therecession. This is now driving inflation

in the professional and contractor's

staff costs. Tender price inflation that

is expected to continue to climb into

2015 and 2016 due to this resource

shortage.

With more work available in the

region, contractor's appetite to

expose themselves to riskier projects

and lengthy single stage tender

processes is waning. Residential

biased trades were driving earliergrowth out of the recession, whereas

more mainstream building and MEP

trades are rapidly catching up.




EUROPE


BRISTOL

The South West market activity is

continuing to increase. The Design

and Construction industries in Bristol

are showing a continuing trend ofincreased demand for their services.

Management consultancies are still

seeing very competitive fee levels

with margins being squeezed.

Overall the South West is set to see

an increase in activity with some

suggesting it will outperform the

other areas of the UK in the next two

to three years.

Although EDF has put a pause on

works at Hinkley Power Station, with

many hundreds of people losing their jobs, it is anticipated the project

will be reactivated within the next

6 to 12 months. Bristol Airport, the

University of Bristol and University

of the West of England are still

proposing significant projects. There

are significant increases in residential

projects throughout the South West,

both in small scale isolated sites and

very large housing developments. In

the near future, Plymouth City Centre

is expected to undergo re-appraisal

of the current master plan.

The major themes in the South West

are the shortage of construction

personnel, increased lead-in times,

inflation, market pressure cost

increases and people changing

companies, which in turn affects

project continuity. The residential

market is the main sector soaking

up the available labour and skills

shortages are a constant discussion

in all arenas. The short to medium

term forecast is for the market to

further increase in activity with a

corresponding pressures on pricing

and labour markets.

LONDON

London continues to experience

an increase in construction market

activity across most sectors. The

greatest upsurge has been witnessedin the commercial office and new-

build residential sectors and the

increase for the demand for housing

continues.

Examples of the increased activity

in the commercial sector include

the Land Securities continued re-

development of the Victoria area.

In addition to 600,000 ft2 of new

office area, Nova Victoria is billed

as becoming the most innovative

restaurant quarter in London.

The capital continues to benefit from

overseas investment, highlighted by a

staggering 250 proposed tall towers.

As well as on-going construction and

infrastructure projects, new major

projects continue to be announced in

the city; many of which could change

the face of London.

The £1.5 billion redevelopment of

the famous Elephant and Castle

Heygate Estate continues. The

scheme will contain 3,000 new

residential properties and 160,000

ft2 of retail space. The Kings Cross

area continues to benefit from

regeneration, with a major boost

emerging from Google’s plans to

develop their new 950,000 ft2.

London headquarters in the area.

With the flurry of new buildings,

re-generation of formally

underdeveloped areas and forecasted

population growth in London, therequirement for further infrastructure

is becoming crucial. Plans are moving

forward for the £16 billion Crossrail

2 project. If the new London line

from north-east to south-west is

given the go-ahead, contracts could

be awarded in 2019. To service the

Nine Elms redevelopment, plans are

progressing for the £600 million

Battersea Northern line extension.

As construction activity continues to

rise in London, it is not a surprise thatconstruction costs are following suit.

With the order books of the supply

chain following an upward trend,

coupled with pressures on adequate

levels of both manpower and material

production, some elements are

reaching premium levels. Tender

prices are forecast to increase by

5.0% in 2015 and 5.25% in each of

2016 and 2017.



Snowhill Development, Birmingham, United Kingdom




EUROPE


MADRID

The last months of 2014 saw

residential construction in Spain grow

for the first time since the beginning

of the 2008 financial crisis. Due to itsimportance, this is pushing different

investments in the industrial, retail,

offices and hospitality sectors.

Construction represents around

5.0% of Spain’s GDP. Most of the

construction activity in Madrid can

be attributed to the market’s focus

on developing and commencing

developments, which were delayed

or stopped years ago. Official figures

show growth of 0.6% in the first

quarter, while annual GDP for the12 months ending in March 2015

reached 1.9%. For the year ending

2015 government and economic

bodies are forecasting 3.0% growth

in GDP. This economic conditions

show a sustainable internal demand,

supported additionally by large

international investment.

Current projects for the area

are the Wanda Hotel in Madrid

Centre, Banco Popular Data

Centre and headquarters, BBVABank Headquarters and the new

commercial centre in Puerta del Sol.

Construction activity is concentrated

predominantly in the two main cities,

Madrid and Barcelona with projects

such as the FC Barcelona Nou Camp

Stadium, Real Madrid Stadium

(delayed) and the new Atletico de

Madrid stadium.

MANCHESTER

Led by the city regions of Leeds,

Liverpool, Manchester, Newcastle and

Sheffield, the ‘One North’ proposition

reflects the critical importance oftransport for vibrant, sustainable

economic growth across the North.

Led in response to the development

of HS2, One North aims to develop

a coherent strategic transport plan,

integrating HS2 with the existing rail

network, transforming connectivity

across the North. In addition, the

UK Government’s commitment to

the Northern Powerhouse, with

Manchester at its centre, is also

driving massive investment in

transport and infrastructure. This is

delivering wider dividends through

attracting further investment into

the City and wider regions across all

construction and property sectors.

Indeed, Manchester is now the

primary destination for investment

in the UK outside of London. The

Northern Powerhouse is becoming

a reality and beginning to deliver

on the Government’s long term

economic plan to reduce the

decades-old gap between north andsouth, London and the rest.

Manchester is currently benefitting

from a revival across all sectors,

driven by increasing international

investment in the City and significant

improvements in local and regional

transport links. As part of the £1.4

billion programme to triple the size

of the City’s Metrolink tram system,

including the critical ‘Second City

Crossing’ development, Transport for

Greater Manchester are transformingthe heart of the city and providing

additional links to major transport

hubs including Manchester Victoria

Rail station and Manchester Airport.

In addition, Network Rail’s £100

million ‘Ordsall Chord’ project will

improve rail travel in the North,

through the construction of a new

viaduct to connect Manchester’s

Victoria, Oxford Road and Piccadilly

stations. This project is shifting the

emphasis on further developmentin the City Centre, increasing the

appeal in the south and west of the

City Centre adjacent to Salford City

Centre.

Muse Development, Scarborough

Developments, Allied London and

Bruntwood are investing upwards

of £1 billion in major mixed usedevelopments including New Bailey,

Salford Central, Middlewood Locks

and the redevelopment of the

former ITV/Granada site, all within

the vicinity of Salford Central Rail

station, one of the key beneficiaries

of the Ordsall Chord Scheme.

Manchester Airport Group continues

to expand and work continues

on the £800 million Airport City

development, which includes new

offices, hotels and distribution

space. The airport has also recently

announced the ‘Manchester Airport

Transformation Programme’, which

will see a complete overhaul of the

airport’s offering to customers,

whilst increasing their air passenger

capacity significantly over the next 10

years. This £825 million programme

of work aims to secure Manchester’s

place at the heart of the Northern

Powerhouse.

As construction activity continues

to rise in Manchester, it is not a

surprise that construction costs are

also beginning to accelerate. The

contracting market is beginning

to overheat; labour supply cannot

cope with demand. This is leading

to increasingly accelerating tender

prices and in some instances difficulty

in securing competitive tenders

for more complex, less profitable

schemes. The key challenge for the

region over the coming years will be

finding and training new supply fastenough to meet the growing demand.



LOCATION INTELLIGENCEEUROPE


MILAN

The Italian property market is still

struggling to restart after the 2008

crisis and the Milan market is no

exception, although there is clearevidence that the international

investors are returning. The 2015

Milan EXPO has provided some work

to local companies sub-contracting to

specialised international corporations.

Current opportunities still include

mainly retail and hospitality projects

funded by foreign investors, as

well as office refurbishments for

some international corporations.

It is doubtful, though, that these

developments will provide enoughstimulus to restart the local

construction sector.

The planned Westfield development

in Milan appears stalled, although it is

not clear if this is intentional or due to

exterior factors. Other large shopping

centre developments appear to be on

hold due to political indecision and

discontent.

The CityLife development in the

former city fairgrounds site is

progressing slowly. With the housing

completed some time ago, the first

tower by Isosaki opened recently

and the Hadid tower remains under

construction. The new metro line 5 is

open as of 1 May 2015 and connects

the stadium and CityFife to the main

railway lines and other underground

trains.

General observations are leading to

the conclusion that prices are quite

unstable at the moment and difficult

to predict. The lengthy downturn in

the sector is leading some to resort

to desperate measures and willing to

undercut market prices in order to

move forward until times are better.

This results in very unstable and

erratic pricing, making it difficult to

predict.

MOSCOW

The Russian economy is forecast to

contract by around 3.0% in 2015. The

currency is now worth around 60% of

its value from one year ago. GeneralRouble inflation is running at around

17%, as economic sanctions take

effect. Partially due to the ongoing

conflict with Ukraine, some projects

have stopped and western investors

are making no new commitments

into Russia. The price of construction

has significantly increased, in terms

of the Rouble, whereas the cost of

construction has decreased, helped

by the reduction in the cost of some

local materials.

The Skolkovo Innovation Centre

continues to be under development.

Despite the current crisis, the Russian

Government is continuing to fund the

massive project, which is located in

the outskirts of Moscow and includes

a technological centre for start-up

companies, a university, office and

residential facilities and a transport

hub.

There are other key ongoing projects

in various cities that are hosting thefootball World Cup in 2018, including

new stadia, hotel accommodation

and associated infrastructure works.

With so much fluctuation in the

exchange rate between the US$ and

the Rouble, not knowing how long

the sanctions will remain in force, nor

the next steps in the conflict with

Ukraine, it is impossible to accurately

forecast future movements in the

tender price index. The fact that

there is a reduction in the volume ofconstruction, suggests that there will

be no significant upward movement

in tender prices for the foreseeable

future, as contractors margins will

inevitably decrease, as the market

becomes more competitive.




EUROPE


There has been an increase in the

sector following the general trends

of the economy. This has led to full

order books for main contractors,causing difficulties in compilation of

tender lists. Sub-contractors have

also seen a steep rise in workload,

resulting in difficulties in creating

competitive tender processes. This

increase in workload has also seen

a number of sub-contractors being

liquidated, due to difficulties in

delivery of work with minimal staff

numbers and increased labour rates.

Professional fees are starting to

rise throughout the private sector,although many consultants are

committed to historical framework

rates in the public sector, whilst

seeing wages rise. Contractors are

facing difficulties in the procurement

of steelwork, cladding and facing

brickwork. Some brickwork factories

quoting 44 weeks lead in, has led to

alternative specifications and delivery

vehicles.

SHEFFIELD

Different cities within the Yorkshire

& Humber region have recovered

from the recession at differing

speeds. Leeds, part of the "NorthernPowerhouse" has seen development

increase dramatically over the last

12 months. Currently, there are a

number of speculative Grade A

office developments in the pipeline

and the private residential market

is making a significant comeback.

The development of Leeds Arena in

the city centre has seen an increase

in demand for hotel bedrooms and

leisure space.

Sheffield, Bradford, York and Hullare recovering at a slower pace

but are showing signs of the

economic recovery. Development

is still somewhat dominated by

the Universities, with strong new

build projects both directly for the

Universities and with private sector

partners such as Rolls Royce and

Boeing. Retail is increasing, with a

long planned major development in

Bradford commencing and the Retail

Quarter in Sheffield tendering for

development partners.

Key projects recently completed

include the Leeds Arena in the centre

of Leeds, which is now hosting

concerts and sporting events. Further

projects have been developed at the

Advanced Manufacturing Research

Centre (AMRC) on the border of

Sheffield/Rotherham, a joint venture

between University of Sheffield, Rolls

Royce and Boeing. Across from the

AMRC, the former Orgreave Open

Cast Mine is being developed into

a new suburb, Waverley, which will

eventually provide 10,000 houses and

ancillary facilities. Numerous housing

developers have completed schemes,

which will eventually include a

terminus to the tram network. The

Children’s Hospital in Sheffield is

undergoing a major multi million

pound extension with an associated

multi storey car park.



Gemstone Business Bay Tower, Dubai, UAE




Growth in the Middle East andNorth Africa is likely to increaseduring 2015 with forecast growthat 2.4% rising in 2016 to 2.7%. Theoil exporting developing economiesare likely to experience above theregional growth to 3.0% and for oilexporting high income economies,

it is forecast to be below. Oilexporting economies are forecastedto be slightly above the region’sgrowth rate by the end of 2016, at3.7%.

Continuing security risks, which areescalating within the region andlower oil prices, are impacting thegrowth of the region. Yemen sawgrowth of 0.3% in 2014 and facesa forecasted contraction in 2015to (2.2%) and recovering to 3.4%in 2016, if conflicts subside. Withthe rise of various armed groups inIraq, Syria and conflicting factionsin Libya, oil installations are seenas a strategic target for insurgents.Negative growth in Libya of -24.0%and in Iraq of -0.5% for 2014highlight the impact of instabilityand uncertainty on their economies.

MARKET INTELLIGENCE

MIDDLE EAST

& NORTH AFRICAFor the high income oil exportingcountries in the region, growth isstable at 3.8% for both 2014 and2015 with a slight drop to 3.5%for 2016. With the impact of U.S.oil production, OPEC have nottightened supply, which is havingthe effect of stable supply and lower

prices worldwide. Iran saw 3.7%growth in 2014 and is forecast todecline to 0.6% in 2015 reboundingslightly to 1.3% in 2016. Amid boththe social and political upheavalsseen within Egypt, the economycontinues to perform well withstrong growth forecasted in 2015 at4.0% and 4.3% in 2016.

MIDDLE EAST CONSTRUCTIONCOST RELATIVITIES

Q3, 2015

DOHA 113

ABU DHABI 107

DUBAI 105

RIYADH 105

NUMBER OF CITIES

2

1

0

3

4

GROWTH DECLINE



MIDDLE EAST - GROWTH SECTORS VS DECLINE SECTORS


COUNTRY 2015 2016 2017 2018

AFGHANISTAN 3.5 4.9 6.0 5.6

ALGERIA 2.6 3.9 4.0 3.9

BAHRAIN 2.7 2.4 2.4 2.8

DJIBOUTI 6.5 7.0 7.1 7.1

EGYPT 4.0 4.3 4.5 4.7

IRAQ 1.3 7.6 8.9 8.3

ISLAMIC REPUBLICOF IRAN

0.6 1.3 1.5 1.8

ISRAEL 3.5 3.3 3.0 3.0

JORDAN 3.8 4.5 4.5 4.5

KUWAIT 1.7 1.8 3.1 3.1

LEBANON 2.5 2.5 3.0 3.0

LIBYA 4.6 17.7 32.1 6.7

MAURITANIA 5.5 6.7 4.8 5.0

MOROCCO 4.4 5.0 5.3 5.4

OMAN 4.6 3.1 2.3 1.7

PAKISTAN 4.3 4.7 4.8 5.0

QATAR 7.1 6.5 5.6 4.5

SAUDI ARABIA 3.0 2.7 3.1 3.1

SUDAN 3.3 3.9 4.9 4.8

SYRIA N/A N/A N/A N/A

TUNISIA 3.0 3.8 4.5 5.0

UNITED ARABEMIRATES 3.2 3.2 3.4 3.7

YEMEN (2.2) 3.6 4.0 5.2



The Address Residence Fountain Views, Dubai, UAE




MIDDLE EAST & NORTH AFRICA


ABU DHABIConstruction activity in Abu Dhabi

is very flat, with numerous projects

being suspended and put on hold.

This cycle is likely to continue untiloil prices climb above US$80/barrel.

Construction prices are unlikely to

increase in 2015, in fact they may

decline, as contractors compete in a

declining market.

Notwithstanding the lower oil prices,

construction work continued across

the education, healthcare, and

infrastructure sectors.

Projects currently under construction

include office developments such

as Al Hilal Bank building, Al MaryahIsland and ADGM Square (FZ). Office

demand in Abu Dhabi can further be

strengthened through continuous

spending on the city's infrastructure,

in order to make it an appealing

destination for private investment.

RIYADHThe construction industry in Saudi

Arabia will remain among the fastest

growing in the world, supported

by investment in buildings andinfrastructure to diversify the

economy. The drop in oil prices could

impact on the viability of new energy

projects. However, the country’s fiscal

position is robust and thus public

investment plans are not expected to

be greatly affected.

According to the Central Department

of Statistics and Information, the

Saudi Arabian construction industry's

contribution to GDP increased from

4.3% in 2011 to 4.8% in 2013. As part

of the country's economic goals ofdiversification and job creation, the

government has allocated significant

funds for the development of

healthcare, infrastructure, education

and social services. The 10th five-year

development plan for 2015-2019 will

focus on economic development and

raising living standards through a

number of welfare activities.

Current projects within the region

include: The Kingdom Tower, Madinah

City Masterplan, Madinah Charity CityMasterplan and KAFD (King Abdullah

Financial District). Other key projects

in the Kingdom are Riyadh and

Jeddah Metros, Knowledge Economic

City, Jeddah Economic City, Old

Airport Development (Emaar) and

King Abdullah Economic City.

The market in the Kingdom of Saudi

Arabia remains strong with current

projects and a good pipeline of future

projects at the early stages in pre-

concept design. In comparison to the

troughs and peaks of the other MiddleEast countries, the Kingdom remains

steady, as reflected in the historic

data, and this is proposed to be the

same going forward. The oil price has

played a factor in decision making in

the construction industry regarding

projects and spending, but the overall

pipeline of projects remains strong.

Core materials such as steel, copper,

aluminium and nickel, each of these

has seen a drop in price at the start

of 2015, but a steady growth back to

'generally' where they were prior tothe Q1 2015 drop off. Other materials

such as concrete has seen a growth at

inflationary levels, but nothing beyond

that.

DUBAIUAE’s market is showing signs

of recovery, Dubai’s position as

the central hub in the Middle East

continues to remain strong and asa result continues to impact the

construction industry growth.

There are numerous substantial

projects being undertaken. Fountain

Views, the Opera House, Skyviews

and others are part of the continuous

development of the Burj Khalifa

precinct. Around the marina area,

there is The Bluewaters Island

development, which includes retail,

residential and hospitality offerings.

Other developments continue on Palm

Jumeirah, where numerous hospitality

and retail projects are underway.

Expectations for a major acceleration

underpinned by Expo 2020 are still

to be fully realised in terms of explicit

projects, but with a large portion of

current developments underway, is

at least partly focused on providing

accommodation, offerings and

services for the Expo.

While tenders are generally being

returned with favourable pricing,a definite swing has been noticed

in terms of Contractor eagerness.

Mechanical electrical and plumbing

contractors are starting to fill order

books and offer regrets on projects.

Main contractors are starting to

display more selectivity in terms of the

projects they are tendering on and the

clients they are tendering for.



Barangaroo, Sydney, Australia

Images supplied by Lendlease 2015




The Oceania region remainsrelatively stable with Australia’sgrowth in 2014 at 2.7% and forecastto increase to 2.9% in 2015 and to3.2% in 2016. As an oil importingregion, the lower oil prices are setto provide additional support todomestic spending. The effects ofthe fall in commodity prices hasbeen in part offset by Australia’sdepreciating currency and softeroil prices. The Reserve Bank ofAustralia reports that dwellinginvestment has grown strongly overthe past year. Interest rates remainon hold and continue to support theresidential construction sector.

New Zealand’s growth is nowsoftening. The Canterbury rebuildhas peaked and world prices forNew Zealand dairy exports havefallen over the past 12 months. Dairyprices have fallen -23.8% since June

2015 and are likely at the bottomof the market and forecast to turnupwards. This is seen in forecastedGDP decreasing to 2.9% in 2015 and2.8% in 2016.

MARKET INTELLIGENCE

OCEANIAAustralia and New Zealand arecontinuing with record levels ofresidential construction. This ishelping stabilise the Australianlabour market as within the miningsector, the labour force is reducing.The talk of the property bubble inSydney and Melbourne during theQ2 2015 seems to have lost somemomentum, while property pricescontinued to rise through Q2 2015and supply continued to meetdemand. The economic outlook forAustralia remains positive. Australiaand New Zealand will be affectedby any volatility in China and areadjusting to the moderate slowdowncurrently forecast for China.

RLB CONSTRUCTION MARKET ACTIVITY MODELOCEANIA - GROWTH SECTORS VS DECLINE SECTORS

NUMBER OF CITIES

5

1

2

3

4

0

6

7

8

9

GROWTH DECLINE


OCEANIA CONSTRUCTION COST RELATIVITIES

Q3, 2015

DARWIN 124

SYDNEY 121

CANBERRA 116

PERTH 116

MELBOURNE 113

CHRISTCHURCH 112

ADELAIDE 109

WELLINGTON 107

TOWNSVILLE 106

AUCKLAND 100

BRISBANE 99


COUNTRY 2015 2016 2017 2018

AUSTRALIA 2.8 3.2 3.1 3.0

NEW ZEALAND 2.9 2.7 2.5 2.5

PACIFIC ISLANDS

FIJI 3.3 3.0 2.9 2.9

KIRIBATI 2.9 1.5 1.9 2.0

MALDIVES 5.0 3.9 4.2 4.4

MARSHALL ISLANDS 1.7 2.2 1.8 1.8

MICRONESIA 0.3 1.0 1.0 0.9

PALAU 2.2 2.7 2.5 2.2

PAPUA NEW GUINEA 19.3 3.3 3.5 3.5

SAMOA 2.8 1.4 (1.0) 0.8

SOLOMON ISLANDS 3.3 3.0 3.5 3.4

TIMOR-LESTE 6.8 6.9 7.0 7.2

TONGA 2.7 2.4 2.0 2.5

TUVALU 2.5 2.5 1.9 2.0

VANUATU (4.0) 5.0 4.5 3.5



LOCATION INTELLIGENCEOCEANIA


ADELAIDE

All trade contractors continue to

remain very competitive and actively

seeking new work. The tender market

continues to be very strong. Limitednew projects have been generated

from both the Private and Public

sector to feed trade and head

contractors, and the outlook still

remains slow. Larger contractors are

still pricing smaller projects to ensure

that they maintain work flow. Tertiary

Institutions remain active with large

projects being tendered to Tier 1

companies, though no new major

projects have been released into

the market in the last quarter. Both

the retail and the apartments/hotel

sector continue to show signs of

growth with new project work – these

projects are being very competitively

tendered.

Enterprise Bargaining Agreement

(EBA) negotiations continue with

some trade contractors maintaining

nil adjustments for this year as a

reflection of the lack of work in the

current market. It is anticipated that

this may be common with many

trades. There has been a slight

price increase in the supply of cost

for material, where the materials

have been imported from overseas

– mainly affecting mechanical

plant items, foreign lighting, tiles,

etc., however, the supply cost of

reinforcement has come down in

recent months reflecting the drop in

cost of salvaged / recycle steelwork.

With this potential volume of

work, along with other significant

construction projects in Christchurch,

there will likely be industry capacityissues requiring significant industry

investment. Key commercial projects

in the planning for Auckland in

the short to medium term, include

the proposed new International

Convention Centre, the Precinct

Downtown redevelopment and the

City Rail Loop.

The increased construction

activity has seen an increase in

main contractor margins and

subcontractor pricing, includingincreased labour costs. This has been

concentrated in structural trades, but

is now being seen across the board in

building services and finishing trades.

Should construction activity continue

to grow as expected, then we will

see a volatile market and tender

prices. The falling New Zealand dollar

will also affect imports and building

material costs. Going forward,

construction cost escalation will

need to be considered as a key risk

element of project feasibility models.

AUCKLAND

The New Zealand economy continues

to perform strongly, with strong

residential construction activity

being a key contributor to GDPgrowth, which is driven by house

building demand in Auckland and

Canterbury. There are some risks

to the New Zealand economy with

slowing growth in Australia and

China and weak dairy prices. The

Reserve Bank of New Zealand

recently lowered interest rates

and the NZ$ has dropped to a

recent low. The Auckland economy

however, is still strong, driven by

population, job growth and a strong

housing market with the demand

outstripping supply. Residential

building activity is increasing with

high density residential developments

making a strong comeback and

retirement villages sprouting up

all over Auckland. This increased

level of activity is affecting resource

and supply chain capacity and is

ultimately increasing labour and

material costs. The strong residential

market and demand has provided

strong work flows through the civiland infrastructure sectors, with new

land zoning opening up areas of new

residential development, particularly

in the north west and south of

Auckland, where new Town Centres

such as Westgate and Ormiston are

currently being developed.

Non-residential construction activity

has increased steadily over the

year and has highlighted capacity

issues within the industry with long

lead times for off-site prefabricatedproducts and labour shortages on

structural trades. This is of concern,

given that whilst construction activity

has increased, the current volume of

work is not yet significant.




OCEANIA


BRISBANE

The Queensland Government

handed down its budget in July

2015 and it included a AU$10.1 billion

commitment for infrastructureincluding the Toowoomba 2nd Range

Crossing and upgrade of a section

of the Gateway Motorway north of

Brisbane. However, these projects are

not new and construction contracts

have been awarded. There was also

a commitment of AU$180m for the

expansion of four regional hospitals.

However, the State Government's

capital expenditure is limited by the

State debt and a commitment to

return the budget to surplus.

Building construction volumes are

at a four year high, driven by private

sector residential construction,

which has increased 18% over the

year ending 31 March 2015 compared

to the corresponding period of

the previous year. Non-residential

construction declined 2.0% for

the year ending 31 March 2015 in

the same period due to a fall in

Government spending, offsetting a

10.0% increase in private sector non-

residential activity. Notwithstanding

the high-level of activity in the

residential sector, population growth

remains low with the net population

growth in 2014 being the lowest since

2001. Jobs are the key to sustainable

growth and unemployment is

currently 6.5%. The budget forecasts

that this rate will be maintained

through to 2017 indicating jobs

growth will be sluggish.

The long-awaited decision regarding

the successful proponent for the

Queens Wharf Precinct in Brisbane

has been made and this project will

result in a AU$2 billion to AU$3 billion

investment in development of an

integrated Casino, Hotel, Residential,

Entertainment and Retail Resort with

considerable investment in the urban

realm, including public spaces and

a new pedestrian bridge linking the

resort to Southbank.

CANBERRA

The Australian Capital Territory

(ACT) market, following a period of

subdued market sentiment due to

the impact of Federal Governmentcuts, appears to be turning a corner.

A recent survey by ANZ and the

Property Council of Australia showed

a slight increase in confidence in

the property sector for the coming

quarter. However, the release of

the 2015/16 ACT Budget did not

bring any new major project or

infrastructure commitments for

the coming years. Indicators show

that residential approvals increased

marginally over the last quarter.

Ongoing planning continues for major

projects:

• The new University of Canberra

Public Hospital short listed tenders

have closed and will commence

construction prior to the end of the

year providing 140 new beds in a

sub-acute unit.

• Construction is well underway

for phase one of the CSIRO ACT

consolidation with planning for

phase two to commence towards

the end of the year.

• Both shortlisted consortia for the

Capital Metro and ACT Supreme

Courts are in a tender process at

the moment with both projects

planning to commence in 2016.

We expect a modest rise in housing

activity to rise over the coming

quarter. As the market slowly

recovers, we forecast a rise in the

tender price index line, with inflationfor 2015 of 2.0%.

Major projects expected to

commence in the second half

of 2015 include the Myer Centre

Redevelopment, Brisbane Skytowerand Jewel on the Gold Coast as well

as the expansion of Hotel facilities at

Jupiters Casino. The sectors that are

performing strongest, other than the

residential sector, are retail, industrial

and defence.

The increase in residential

construction activity has seen an

increase in the cost of a number of

trades that have a heavy involvement

with residential construction.

Trades that have been particularlyaffected include formwork, tiling and

mechanical services. We anticipate

further increases in plasterboard,

partitions and ceilings trades over the

next period. The weaker Australian

dollar has seen the cost of imported

manufactured materials rise, although

the lower commodity prices has

offset part of this increase. There is

an opportunity for new entrants into

the Queensland market, particularly in

the formwork trade.





CHRISTCHURCH

Canterbury construction levels

have been at record highs, although

there are now signs that growth

is flattening. In the year to May2015, 4,274 consents were issued

in Christchurch, an all-time record,

although the monthly figures for

March, April and May 2015 were

lower than those for the equivalent

period in 2014. Recent months

have continued to see an increased

number of tower cranes evident in

Christchurch as major construction

projects continue. In the coming

year, a number of CBD commercial

developments are due for completion

and occupation, which are expected

to bring more earthquake displaced

workers back into the central city.

There are indications that Residential

post-earthquake recovery has peaked

with Residential Building Consents

reducing in number as the rapid

domestic construction in the suburbs

and City outskirts begins to slow.

While the focus in recent periods has

been on rebuilding in the Victoria

Street precinct, the emphasis is

now moving further towards the

central city with a number of large

and medium size commercial

projects at various points of

construction. The Burwood Hospital

redevelopment project is now well

through the construction programme

and Christchurch Hospital has

commenced the foundation works

package in preparation for the major

redevelopment planned for later

this year. Christchurch Council has

recently committed to the NZ$127million Town Hall redevelopment.

The University of Canterbury, while

continuing earthquake repairs, have

awarded contracts for two major new

developments.

DARWIN

The Northern Territory government

policy is directed at the ongoing

infrastructure development of

the North and the provision ofan affordable housing market. To

these ends, a number of large road,

marine, mining and gas projects are

under consideration, exploration and

evaluation. This emphasis has given

rise to a buoyant industrial sector

servicing these economic drivers

as well as a very active housing

construction market on the back

of an increased release of land for

housing.

The INPEX gas project continues tobe the primary focus of construction

and engineering activity in the

Top End in 2015 and 2016. The

construction market remains

otherwise flat, with only a handful

of medium/high density apartment

projects under construction.

Residential housing development is

strong as is industrial development,

especially those associated with

the oil, gas, transport and logistics

sectors. Retail and hospitality are

showing very weak signs of recovery.

A number of projects remain in

planning, undergoing feasibility and

awaiting demand through population

and visitor increase.

The construction market remains

very competitive with an increasing

number of bidders vying for the few

projects on offer. Labour availability

is not an issue and labour prices

are stable and very competitive,

yielding considerable benefits to

those projects under way. Demand

for construction output remains low

with slow take up rates leading to

greater lead times between projects

development. The slow pace of such

developments and current market

conditions will ensure price stability

during the rest of this year.

The Ministry of Justice, The

Christchurch City Council, Ministry

of Education, Lyttleton Port and

Lincoln University are among othermajor institutions that also have

considerable building programmes

at various stages of planning and

development. While several of the

rebuild anchor projects such as the

Convention Centre and Metro Sport

have delayed start dates at present,

recent announcements include the

NZ$800 million East Frame housing

project awarded to Fletcher Living,

which has an 8-9 year programme.

Supply and demand continue to bethe key market factors in Canterbury

with regard to TPI. The NZ$ dollar

has recently been affected by the

impact of interest rate changes

and global reaction to the Greek

financial situation. Construction

cost escalation continues to be seen

on a trade by trade and project by

project basis and the market reacting

to risk and project complexity.

Certain trades with resource and

capacity issues are seeing the highest

increases, but even within these

trades there are fluctuations as the

demand wave rises and falls.




OCEANIA


MELBOURNE

The Victorian economy is gathering

pace, up by 2.9% for Q2 2015

on a year on year basis, through

population growth and housingactivity. Victoria now has the

strongest annual population growth,

with population 1.75% higher than

a year ago and a growth rate that

is 2.2% higher than the ‘normal’ or

decade-average level.

The findings reinforce data released

by the Real Estate Institute of

Victoria (REIV) which showed that

over the June quarter, Melbourne

median house prices rose strongly to

AU$706,000. This is an increase of5.2% over the quarter, and 6.3% for

the year.

Residential activity is providing

a solid base for the construction

industry with more multi-residential

dwelling developments approved in

H1 2015 than were issued for the same

period in the years 2010 to 2014.

Non-residential work is contracting

with the exception of the retail

sector with significant works being

commenced and planned for

Chadstone, Eastland and The Glen

among others. Both the commercial

and health sectors are slowing down

with significant projects nearing or

achieving completion. The recently

announced AU$200 million Joan

Kirner Women’s and Children’s

Hospital will give a much needed

boost to the health sector with the

Peter MacCallum Cancer Centre

nearing completion. Commercial

projects planned but not yetcommenced construction are QIC’s

80 Collins Street, Cbus’s 447 Collins

Street multi use project, Mirvac’s

477 Collins Street, ISPT’s 271 Spring

Street and Leighton Properties’ 130

Lonsdale Street.

With the residential sector continuing

to perform at record levels and the

non-residential sector holding its

own, considerable pressure is beingput on the availability of trades such

as formwork and concrete, glazed

curtain walls and joinery, while falling

exchange rates are putting pressure

on imported goods and materials.

Head contractors are indicating that

trade coverage is starting to become

an issue when tender pricing, but this

is being offset by the requirement for

work continuity. Tender Pricing is still

very keen with uplifts anticipated at a

forecasted level of 2.0% for 2015.

GOLD COAST

There has been an uplift in offshore

investment on the Gold Coast in both

development sites and apartments

due to the success of the Light Rail,the drop in the Australian dollar and a

significant pick up in interest by Asian

developers, particularly the Chinese.

There has been an increase in

residential selling prices in the order

of 10% that has seen renewed interest

in residential development sites. The

fringe areas of the Gold Coast and

Surfers Paradise are the strongest

markets.

It is the sheer size of the new

developments in the pipeline thathas taken the Gold Coast by surprise,

with more than 6 developments in

excess of AU$1 billion currently being

considered. The commencement of

the AU$1 billion “Jewel Project” at

Surfers Paradise, the AU$400 million

2018 Commonwealth Games Village

at Parklands and the continued

construction of the AU$500

million redevelopment of Pacific

Fair Shopping Centre are the main

projects that continue to drive the

market.

With the increase in construction

activity, we are starting to see an

increase in the cost of a number of

trades including formwork, tiling,

plasterboard partitions and ceilings.

We are also seeing the influence

of the lower Australian dollar on

the cost of imported materials and

equipment with trades such as lifts,

mechanical, aluminium windows and

doors and white goods.



The Adelaide Oval Redevelopment





PERTH

The Western Australian economy

continues to struggle through its

own, delayed version of the Global

Financial Crisis where raw materialprices have shown flashes of recovery

only to sink lower again.

Work is now progressing on the new

Perth Stadium with the successful

Brookfield Multiplex consortium

in possession of the site and

construction work underway. The

design for the pedestrian bridge

linking back to the CBD side of the

river has been publicly announced

and in the meanwhile, PTA are

proceeding with their plans for thenew rail station. Work on Capital

Square is progressing with the

podium and the first (of three) towers

is emerging from the ground. The first

two (of four) new office buildings at

Kings Square are nearing completion

and the site infrastructure works

at Elizabeth Quays is continuing.

The refurbished Old Treasury

development (now renamed the

State Buildings) is nearing completion

and will be the first of a number of

planned new hotels in Perth. Over

the river, on the Burswood Casino

site, the structure of the new Crown

Hotel development is progressing

quickly. There are a number of major

shopping centre expansions in design

phase at present, as the next round

of competitive redevelopment of the

major centres approaches.

The Western Australian construction

market remains flat with very

competitive tendering across all

sectors. Supply continues to exceed

demand and consequently there has

been no growth in pricing. There has

been a number of business failures

on both main contractor and sub-

contractor levels as the depressed

pricing takes its toll. There has also

been an increase in litigation and

disputes, particularly in the resources

sector as the promise of 'future work'

ceases to be available as an incentive

to settle disputes.

SYDNEY

The NSW economy is relatively

strong position, however the State’s

growth has not been consistent, nor

sustained across all segments ofits economy. The major issue that

continues to dominate discussions

and is the subject of continual

speculation, is that Sydney has

entered into housing bubble. A closer

examination of the issue is that this

housing bubble term should be

referred to as a “residential pricing

bubble for the sale of property”.

Certainly, residential real estate sales

continue to report a strong demand

for existing property and premiumprices are being obtained for all types

of residential property. This strong

demand has been reinforced by new

developments, where premium sites

report pre-sales being fulfilled in very

short time periods. Strong activity for

these types of presales continue to

provide developers with confidence

to commence construction as quickly

as possible. Alternative delivery

systems to the traditional lump sum

methods are being explored, to bring

projects to market and construction

stage, prior to any downturn in

the market that my occur, due to

changed economic or commercial

trading conditions.

Whilst commenters continue to

question residential sales rates, an

examination of Australian Bureau

of Statistics Building Approvals are

yet to indicate an oversupply of

new residential developments. Q1

2015 Building Approval are some

30% above the similar period for

2014. However, approvals for the

second quarter to date are variable,

compared to recent reports that may

indicate the prospects of oversupply

may not eventuate.

The tender pricing of residential

developments remains within

expectations as subcontractors

and contractors seek work inthe residential sector to offset

opportunities in the non-residential

sector.

It is becoming evident that

opportunities in the non-residential

sector are below expectations.

It has been observed in recent

tenders, that contractors advise the

availability of staff for the immediate

commencement of projects, such

occurrences indicate contractors are

experiencing difficulties in securing asteady workload.

The progress of commercial

developments continue to be

positive, despite increased industrial

action as CFMEU seek increased

wages for the renewal of Enterprise

Bargaining Agreements (EBA).

Features of the new agreements are

the inclusion of site allowances for

various types of projects, which will

be a cost risk to both contractors and

clients.

Progress on the Barangaroo South

site continues to attract attention

as to the speed of construction.

Completion and tenant occupation of

the first tower will be obtained in the

Q3 2015. The project is on or ahead

of programme for the remaining

commercial towers, residential

component and public domain works

for Q4 2015 and early 2016.

An analysis of industry forecasts

notes that construction activity for

commercial and retail developments

has peaked and it is likely future

activity for these sectors will be at

levels similar to 2012 and 2013.




OCEANIA


Major contractors have commenced

to adjust their focus on major

infrastructure and health projects

following the re-election of theState Government. The subsequent

approval to commence a number of

significant projects across the state

has been granted.

Small to medium sized contractors

are experiencing reduced

opportunities in the education sector,

however, this fall in the short term

is offset by new opportunities in the

entertainment, recreation and aged

care sectors.

Contractors report, price pressures

are emerging on structural trades,

due to significant increases in

material costs such as concrete

supply, bricklaying rates and wage

rises reflecting the 8% to 10% of

wage increases agreed to in EBAs.

In addition trades that are subject to

currency fluctuation such as curtain

wall and engineering services are now

experiencing price increases, due

to the declining currency exchange

rates of the AU$ to US$.

There are concerns that cost

increases will rise at a faster rate than

current forecast escalation rates of

4.0% to 5.0% per annum.

In order to reduce the impact

of higher prices, clients and

contractors are negotiating an

increased responsibility for design

and coordination issues to be

the contractor’s responsibility.

As a part of this increased

responsibility contractors are seeking

subcontractor involvement in design

issues prior to contract award so that

the most economical design solution

is obtained and price certainty is

gained at an earlier stage, together

with a reduced construction period as

contractors seek efficiencies through

solving design issues at an earlier

stage than would be the case under a

traditional lump sum delivery method.

WELLINGTON

The Wellington region construction

levels continue to improve with a mix

of good sized projects underway and

a pipeline of other work in late designor consent stages. Signs remain

good for increasing development

across all sectors including offices,

infrastructure/civil, leisure and

community based activities.

Strengthening of existing buildings

still remains a key construction

component in the region, and this

continues to drive much needed fit

out upgrade works at the same time.

The Lower North Island regional

centres continue to experience weakconstruction activity, although a

number of potential projects are

being discussed and it is possible that

some good activity gains will be seen

later this year.

Victoria University projects, Gateway

and Rutherford House extensions,

are now well underway and will

continue through 2015, as will the

airport terminal extension works and

some large office refurbishments

for Government ministries - Health,Social Development and Education. A

number of smaller public and private

fit out works are also underway and

more are set to get underway soon.

Transmission Gully and other major

civil road works on the Kapiti Coast

are progressing well and will lead

to greater accessibility, providing

a boost to local communities for

residential and commercial activity

gains.

Two new office towers close to

the Waterfront are planned. The

demolition of an existing tower is

currently underway on one site andplanning discussions continue with

the second tower site. Upgrade of

existing Social Housing complexes in

Wellington is also a focus for the City

Council, who are midway through a

15 year renewal programme totalling

over NZ$300 million.

Cost escalation remains at low levels

compared with other centres around

New Zealand, but we are starting

to see some movement locally,

particularly with material prices.Subcontract resources remains an

issue as more projects come to

market. Overall, the market remains

competitive and should do so for the

remainder of the year. The Wellington

region, whilst improving, remains a

distant third or fourth behind the

other major centres of Auckland and

Christchurch in terms of work put in

place.



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Darwin

Gold Coast

Melbourne

Newcastle

Northern NSW

Perth

Sunshine Coast

Sydney

Townsville

NEW ZEALAND

Auckland

ChristchurchHamilton

Palmerston North

Queenstown

Tauranga

Wellington



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rlb international report third quarter 2015

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