Commercial, industrial and multi-unit construction soars as Leighton Holdings tops list of 100 biggest construction groups

The mining sector might be fuelling Australia’s latest construction boom, but commercial, industrial and multi-unit construction also rebounded strongly in 2010-11, according to new figures from the Housing Industry Association.

The HIA-Cordell Construction list of the top 100 construction groups for 2010-11 shows total construction activity completed by the largest 100 groups increased 25% to $96.6 billion.

While mining contracts accounted for 46.1% of this total, and the value of mining contracts nearly doubled to $44.5 billion, some of the strongest growth occurred in non-mining construction.

The value of commercial construction surged 68% to $10.2 billion, multi-unit construction (which includes apartment buildings) climbed 57% to $8.4 billion and industrial construction jumped 54% to $5.6 billion.

HIA chief economist Harley Dale says the growth does reflect some signs of a recovery in those sectors, but he is wary of getting too excited.

“Some of those large construction companies have clearly had some successes winning some good contracts in those areas, but I think we also need to be mindful that we are seeing some recovery off what was a very low base,” Dale says.

The multi-unit construction figures were also boosted by the Federal Government’s social housing initiative, which spilled into the second half of 2011.

Despite the strong rise in construction activity, Dale is cautious about the outlook for a sector that, like much of economy, is being driven by the mining boom.

“The inherent story of non-residential construction isn’t quite as healthy as the Construction 100 implies,” he says.

“This was a good year in its own right but there is still considerable uncertainty around what happens in 2011-12.”

While Dale says investment intentions are relatively strong, “how much of that comes through sooner rather than later and how much isn’t directly tied to mining and state infrastructure programs, there is a question mark over that”.

Leighton Contractors easily took the title as Australia’s biggest construction group, with $15.9 billion of contracts, well ahead of Laing O’Rourke (BMC), with $8.6 billion worth of contracts and Thiess Macdow with $7.8 billion of contracts.

Dale says the list highlights that in the construction sector, bigger is clearly better: the largest 10 companies accounted for 63% of work won by the 100 largest companies, while the largest 20 companies accounted for 75% of work won.