Your guide to understanding the trends, challenges and opportunities shaping construction in 2025
2025 will be a year of moderate growth for the construction industry, with the Australian Construction Industry Forum predicting just 0.9 per cent growth. This forecast reflects slowing economic conditions, cost and inflationary pressure and continued challenges around the availability of skilled labour.
“Ultimately, 2025 will see a shift in several key trends that shape construction. Critically, we are seeing a compositional shift in investment focus, creating new challenges and opportunities across the industry,” says James Lawrence, Group Manager – Customer & Markets at Coates.
This industry outlook explores some of the trends that will define the year ahead and highlights how the rental industry can ease pressure on construction businesses as they navigate the changing landscape.
Growth in engineering construction
Despite slight deceleration in building construction, demand remains strong in engineering construction as the industry moves into a utilities-driven cycle. Investment in large-scale renewable energy infrastructure will drive demand for accommodation, amenities and regional development to support these major projects.
“As the engineering construction boom for long road and rail infrastructure nears its peak, the next phase of growth in renewables, utilities and resources is ramping up,” says James. “The push towards net zero is driving a surge in energy transition investment, with large-scale renewable energy generation, transmission and storage projects being constructed across the country.”
“With equipment, solutions and expertise that align with the growing activity in these sectors, Coates is well-placed to support construction businesses in exploiting these opportunities. This shift will be a core strength for Coates and its customers in 2025,” says James.
Key takeaways:
- With a forecasted six-fold increase in renewable energy construction over the next 5 years, 1.
- This growth is shaping state-based demand, with particularly strong growth forecast for QLD and WA over the next five years.
- Bolstered by a mining rebound, economists also predict that WA will surpass NSW to become the
Shifting building activity
The commercial and industrial building sectors will experience a decline in growth in 2025. So too will the residential construction sector, with Australia’s population-driven housing boom yet to arrive.
“Lingering sentiment in the Australian economy is causing some stagnation to remain, particularly around private investment in building construction. Once this sentiment lifts, the market will start to grow again,” says James. “Declining activity in these construction markets is expected to be offset by growth in the health, utilities and institutional sectors, including defence projects.”
Changing project geography
A shift in major project location from metro to regional areas is another trend currently shaping the construction industry. “During the decade-long transport infrastructure boom, Coates supported many of the country’s largest metro-based capital works projects, including Metronet in WA; West Gate Tunnel in Victoria; and the M7-M12 integration in NSW,” says James. “As focus shifts towards building large-scale renewable energy infrastructure, we are supporting a growing number of projects in regional and remote locations across the country.”
Workforce challenges
Labour shortages will continue to challenge construction businesses in 2025, exacerbated by historically slow productivity gains. “Coates is focused on helping customers to improve productivity and efficiency,” says James. “Our turnkey solutions can ease workforce pressures and help customers to transfer some of the risk.”
How can equipment rental support the construction industry amid challenges?
“While the sharp spike in construction material prices has moderated, costs remain high due to tight infrastructure market capacity, increased public debt, and challenges related to the cost of living and wages,” says James. “Hiring equipment presents a strategic solution for businesses looking to reduce capex, manage costs, and scale up or down quickly as needed.”
Reducing capex, improving cash flow
With rising construction costs, it’s often more cost-effective for businesses to allocate capital to renting instead of purchasing construction equipment. “By hiring equipment, customers avoid having to make loan repayments or front the full cost of purchased equipment,” says James. “This approach also creates a more predictable and manageable cost structure to support accelerated decision-making.”
Additional benefits of hiring construction equipment, include:
- Mitigating the risk and liability of owned assets
- Shifting the cost and responsibility for maintenance, servicing and insurance to the hire company
- Avoiding the depreciation of owned assets
- Preventing the cost and inconvenience of reselling and/or replacing end-of-life equipment
Circularity and emissions reduction
To deliver major projects, businesses must be able to meet the growing sustainability provisions in construction contracts. Among a wide range of considerations, in 2025 there will be greater focus on circular construction practices and reducing Scope 3 emissions, the indirect greenhouse gas emissions (GHG) that occur in a company’s value chain.
“Choosing to hire construction equipment is inherently circular, as the equipment is deployed to multiple projects throughout its lifecycle, improving efficiency and utilisation,” says James. “Hire equipment also gives customers access to the latest technology and innovation to improve utilisation, inform hire choices and work more sustainably and efficiently.”
Coates is uniquely placed to support customers in reducing their GHG emissions with its Greener Choices range of battery electric, hybrid, solar, low pollutant engines and biofuel-compatible equipment across categories including Access, Materials Handling and Lighting.
“Lighting is a key category on the way to decarbonisation, together with increasing hybridisation of power generation with multiple benefits including reduced noise and particulate pollution,” says James. “We are also tackling temporary site accommodation, typically one of the highest energy users on project sites, with a range of more energy-efficient solutions, augmented by renewables and hybrid power sources.”
With Australia’s largest fleet, a national branch network and a deep understanding of what it takes to support the delivery of major projects nationwide, Coates looks forward to supporting customers as they navigate 2025.
For support and advice on your next construction project, reach out to Coates today.
SOURCES:
1 Haver Analytics / Oxford Economics: Australia: Engineering Construction in Australia – Q4 2024 Update
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