The BTY Group recently released their Q4-2011 Market Intelligence Report, providing an in-depth forecast of construction trends and cost estimates across Canada. Nationwide, the BTY Group is predicting steady construction workloads in combination with low cost escalations over the coming year. The modest construction cost escalations described in the report are driven by high oil prices, strong immigration (spurring housing starts) and sustained infrastructure spending. On the other hand, downward pressures on costs include slow economic growth, declining commodity prices and a strong Canadian dollar (decreasing the cost of imported materials). Construction workload trends (commercial, residential, infrastructure, energy, mining etc.) vary provincially, and are driven by both the private and public sectors.
In British Columbia, residential construction and private investment in sizable commercial projects are moderately increasing construction activity. The moderate increase in construction activity correlates with moderate cost escalations of 1-2% in 2012. These moderate increases stand in stark contrast to the years leading up to the subprime financial crisis. Between 2005 and 2007, year-over-year cost escalations could be seen in the 5-10% range. In terms of project budgeting and mortgage underwriting, yearly cost escalations of say 10% can result in drastic budget overruns if project delays occur. With moderate escalations predicted for the coming years, lenders and developers alike will certainly appreciate some budget stability moving forward.
To read the full BTY Report, including a breakdown of major provincial projects and a comparison of construction costs for various project categories, click here. &nb...
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