Construction

Outlook

Construction activity is expected to experience moderate growth over the outlook period, supported by significant defence and natural resource-related projects.

In 2021-22, the construction sector grew by 4.2% to $1.5 billion, driven by increased non-dwelling construction work. The construction sector is the fifth largest industry in the Territory, accounting for 5% of total GSP and employing about 9,400 people.

A steady pipeline of projects is expected to support growth in construction activity over the outlook period, with the continuation of significant defence spending and ongoing works as part of the Territory’s $4.1 billion infrastructure program. There are also a number of potential private sector projects, which may reach final investment decision and increase construction activity over the outlook period.

The easing of supply chain disruptions has allowed the residential construction industry to progress a back log of work created due to increased demand during COVID-19. Sentiment is largely positive in the Territory construction sector due to significant investments from the Territory and Commonwealth governments.

Chart 5: Construction work done in the Territory¹

GEMCO: Groote Eylandt Mining Company; LNG: liquefied natural gas

1 Moving annual total.

Source: ABS, Construction Work Done, Australia, Cat. No. 8755.0; Department of Treasury and Finance

The Territory Government’s commitment to deliver land to meet future growth demands will also unlock opportunities for further construction activity. Ongoing work by the Territory Government to improve the land development process through implementing recommendations of the Bringing Land to Market: An Independent Review of the Land Development Processes, Land Under Development and Titled Land report will be key to drive private sector residential dwelling construction, as well as commercial developments. Infrastructure investment will also be supported by the Territory’s $2.2 billion transport program.

For an overview of committed and proposed major projects in the Territory, all of which will require varying degrees of construction work, see Chapter 2: Economic Growth in the 2023-24 Northern Territory Economy publication.

Engineering

The value of engineering construction work done increased by 13% in 2022 to $1.9 billion. Public sector activity increased by 16.6% to $693 million, largely relating to the Territory Government’s road infrastructure program, and private sector activity increased by 25.5% to $1.4 billion as work progressed on Santos’ Barossa project (Chart 6).

Chart 6: Value of Territory engineering construction work done by type¹

1 Current prices.

Source: ABS, Engineering Construction Activity, Australia, Cat. No. 8762.0

Defence-related projects continue to contribute a significant amount of work to engineering construction activity in the Territory. Ongoing works, amounting to $1.1 billion, are expected to continue at RAAF Base Tindal until 2027. These works include runway extensions and construction of new fuel storage facilities. Training area upgrades, redevelopment of Larrakeyah Barracks and HMAS Coonawarra facility upgrades will also contribute over the medium term. The anticipated commencement of construction of the Territory Government’s Darwin ship lift facility and marine industry project at East Arm will complement the Commonwealth’s defence investment in the Territory.

The return to service of Manton Dam and future Adelaide River off-stream water storage, part of the Darwin Region Water Supply Infrastructure program jointly funded by the Territory and Commonwealth governments, will involve significant investment in water infrastructure, with the first stage expected to be completed in mid 2026.

Significant rehabilitation works are anticipated to occur over the outlook period at the site of the old Rum Jungle uranium mine, with funding split between Territory and Commonwealth governments. Initial works include preliminary roadworks and bulk earthworks are anticipated over the short to mid term. Additionally, rehabilitation works continue at the Ranger Uranium Mine, with works expected to continue to at least 2028.

Private sector mining and gas-related projects are expected to contribute a significant amount to engineering construction activity over the outlook period. The Tanami Expansion 2 project is expected to be completed in the first half of 2024, extending the lifetime of the Granites gold mine beyond 2040. Considerable progress has been made on Santos’ Barossa project, although suspension of work in the third quarter of 2022 following a Federal Court decision has paused drilling activities.

Over the long term, development of the Middle Arm Sustainable Development Precinct will aim to attract new industries including hydrogen, carbon capture, advanced manufacturing and minerals processing. This aligns with the Commonwealth’s commitment of $2.6 billion in infrastructure investment under its Energy Security and Regional Development plan, released as part of its 2022-23 Budget.

Non-residential

The value of non-residential building work done in the Territory increased by 9.7% in 2022 to $555 million, with public sector activity increasing by 16.2% to $358 million and private sector activity decreasing by 0.5% to $198 million.

Public sector activity continues to support non-residential activity largely through ongoing defence-related projects and progress on the Darwin Education and Community Precinct, with a significant amount of work in the pipeline on the horizon (Chart 7). Construction of the Northern Territory Art Gallery and Darwin Education and Community Precinct, components of the Territory and Commonwealth governments’ Darwin City Deal, are anticipated to be completed in 2024. Refurbishments and works at Alice Springs and Royal Darwin hospitals are progressing, with construction of the new Mental Health Inpatient Unit at Royal Darwin Hospital expected to be completed in mid 2024.

Chart 7: Value of non-residential work yet to be done in the Territory, quarterly

Source: ABS, Building Approvals, Australia, Cat. No. 8731.0

Non-residential work in the regions will be supported through various funding agreements between the Commonwealth and Territory governments. The Barkly Regional Deal, a 10-year commitment to 2029 of $84.7 million by the Territory, Commonwealth and Barkly Regional Council, aims to improve productivity and liveability in the region by developing social infrastructure, and a mining and energy services hub to support private industry. Construction of the Jabiru Health Centre, part of the Territory governments Jabiru Futures Package aimed at redeveloping Jabiru into a tourism and services centre, is anticipated to be completed in late 2023.

Additionally, ongoing defence-related projects will contribute to non-residential construction activity over the outlook period including redevelopment of Darwin and Tindal RAAF bases, and the Robertson Barracks base improvements project.

The expected development of the Darwin Convention Centre Hotel, the first stage in the redesigned Darwin Waterfront Masterplan, will add 200 to 250 rooms of new accommodation options for corporate and leisure visitors to the Darwin Waterfront. The process of selecting a private sector proponent to build, own and operate the hotel is underway.

Completion of the Darwin-Jakarta-Singapore Cable in mid 2023, the Territory’s first direct international fibre cable, will promote investment in digital infrastructure in the Territory. Construction of NextDC’s D1 data centre in Darwin is expected to commence in late 2023 with land already secured for a second centre. Additionally, DCI Data Centers has also obtained land for its planned DRW01 data centre. Planned construction of the Asia Connect Cable System (ACC-1) and HyperOne is anticipated to further support and attract private digital investment in the Territory.

Residential

The value of residential building work done in the Territory decreased by 7.0% to $327 million in 2022, with private sector activity decreasing by 5.1% to $251 million and public sector activity decreasing by 12.7% to $76 million.

Both demand and supply factors have contributed to the steady decline in residential construction activity over the past year. The ending of government incentives in mid 2021, and increasing interest rates and input costs have hampered demand for the construction of new builds, while labour shortages constrained the construction industry in progressing the backlog of builds as a result of increased demand over the first half of 2021 (Chart 8).

Chart 8: Value of residential construction work in the pipeline, quarterly

Source: ABS, Building Activity, Australia, Cat. No. 8752.0; Department of Treasury and Finance

Despite this moderation, progress is being made on several residential construction projects including development approval for an 8-storey, 72-room accommodation block in Darwin city to house international students on completion of the Darwin Education and Community Precinct; construction expected to commence on the 24-unit LUXE apartment complex; work progressing on Sunbuild’s 92-unit Seabreeze apartment block; and completion of the first two towers of the John Stokes Square redevelopment, which includes 78 public housing dwellings across three residential towers.

The upcoming titling of new residential land across various developments such as Lee Point, Mirawood, Parkside Berrimah, Northcrest, Zuccoli and Kilgariff will provide a steady supply of land for residential construction work over the coming years.

The Territory Government is also progressing its regional accelerated accommodation project, aiming to deliver 180 and 240 dwellings in Alice Springs and Katherine, respectively, with half of these dwellings to be used to accommodate key government workers. Construction of these dwellings is scheduled to start in 2023-24, ready for occupation by 2024-25.

Additionally, significant investment in remote community housing under the Territory and Commonwealth governments’ Remote Housing Investment Package will continue over the next couple of years, with the program having built 1,000 new homes since 2016.

For the latest data on the construction sector, refer to the Territory Economy website.