Construction is retaining its position as one of the stronger sectors underpinned by the pipeline of large development of commercial and residential projects in Sydney and Melbourne, according to the latest Rider Levett Bucknall data.
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This was reinforced at the recent Stockland investor day, where the key themes that emerged was the group's desire to increase density across its development pipeline.
Stockland is focussed on infill opportunities, with house and land said to be only about 15 per cent of the total residential market.
According to brokers, entering the completed home and medium density markets gives entry to the remaining 85 per cent of the market.
Research analysts at Macquarie Equities said volume and margin expectations are also largely consistent with their forecast and they highlighted that with residential at about 20 per cent of group earnings, upside risk to earnings is limited.
Lend Lease held its annual general meeting on Friday, where shareholders were told the group's $6 billion Barangaroo project was on track to provide solid growth for the construction arm of the business in coming years.
In the RLB, fourth quarter 2014, Oceania Report, it says that the confidence experienced by the Sydney construction market, was underpinned by a strong pipeline of work, strong residential sales market and positive economic outlook for the state.
It's predicted this will continue for the remainder of 2014 and early 2015.
Bob Richardson, managing director NSW for RLB said NSW has the fastest annual economic growth rate in the nation, up by four per cent on a year ago.
The Sydney construction industry appears to be experiencing a period of increased activity. Multi-unit dwelling developments continue to contribute to significant activity while the non-residential sector activity has improved from levels recorded in recent years.
He said recent industry forecasts indicate that the non-residential sector will grow between 1 per cent to 2 per cent per annum for the next two years.
Aside from Barangaroo, the Circular Quay sector is set for an upgrade, as is the core of the city, triggered by the construction of the light rail along George Street.
Mirvac is also said to be looking for development and construction opportunities in Melbourne's central business district.
"Contractors operating in the non-residential sector are reporting that opportunities for new work are regularly appearing," Mr Richardson said.
He said the growth in Parramatta, where more than $2 billion of construction is earmarked, are contributing to increasing development opportunities.
Mr Richardson said his research indicated that the residential sector, particularly multi-storey apartments, continues to grow.
"The value and number of dwelling units as recorded by the ABS continues to report increased approvals in 2014 over previous years, with some month to month volatility," he said.
"Residential developers continue to report very strong pre-sale activity, with developments being 'sold out' within very short periods of time, across metropolitan Sydney.
"A significant amount of multi-unit developments is being developed by developer/builders (Meriton, Mirvac, Lend Lease etc) rather than the traditional client/builder relationship, which increases pressure on independent builders to secure projects."
