The construction industry is one of the largest across the Australian economic sector. According to Master Builders Australia, the construction industry creates approximately 992,000 full-time jobs, which is the equivalent of 1 in 10 jobs across the economy.
Despite its size and influence, like every industry, the Australian building sector has experienced changes due to the pandemic. Let’s explore 5 ways Covid has impacted the building sector and how companies, individuals, and governments are seeking to overcome these challenges.
1 Supply Chain Breakdown
While Australia has its own timber industry, most of the construction materials used in project development come from international sources. Plumbing fixtures, electrical component parts, aluminum, and many more essential goods are sourced from abroad to keep profit margins high.
In recent years, a trend shows a growing demand for materials from China, which has surpassed the import quantities from other countries. Due to the pandemic, many factories in China shut down or paused production leading to higher costs and material scarcity. As reported in the Sydney Morning Herald, “with Australia’s building industry currently importing more than 60 percent of its annual $6 billion worth of materials from China, it faces a real supply problem in the current coronavirus crisis.” This along with the border restrictions and quarantining rules for materials further pushed out timelines.
As the cost of building materials increases, stocks run out, and production delays remain, builders and developers, find themselves asking “how can I reduce costs and maintain my timelines?”
One way to overcome these supply chain issues is by applying virtual reality (VR) technology to create virtual display suites/homes. Builders and developers can create virtual display suites in 5 weeks and at a fraction of the cost of a physical display suite.
Buyers can then experience the virtual display home using a headset or smart device of their choice as they “walk” through the property as if it was physically built. This can be done from anywhere, at any time, allowing buyers to view the display at a time that suits them and not be limited to the traditional opening times of a physical display suite. It also means buyers in any location can be viewing the display suite allowing expansions into markets who traditionally wouldn’t be able to visit the display suite.
2 Reduced Productivity
Material scarcity and supply chain breakdown are only two factors contributing to reduced productivity on construction projects. Social distancing and other requirements issued by the Australian government mandate construction companies and contractors change the way they work. Some construction companies have addressed the labour input problem by operating with split shifting, which involves splitting workers into two groups to decrease the number of people on-site at any given time, reducing personnel cross-over.
Many have turned to technology as a way to continue to connect a remote workforce, with platforms such as Zoom and Microsoft Teams becoming widely adopted by businesses across Australia. With Facebook’s recent announcement of the ‘Metaverse’, Microsoft Teams also announced that they will be going virtual in 2022, integrating virtual reality into its platform.
3 An Uncertain Future
The future is always uncertain, but the advent of the pandemic has created a sense of unease that permeates all levels of society, including the property development market. Many have experienced job loss or decreased earnings which have seen a decrease in consumer confidence and future investment.
According to a survey conducted by Master Builders Australia, 73 percent of respondents (builders and contractors) reported a significant decrease in forward work on their books with an average workload loss of 40 percent. This data supports a general trend of job loss across Australia. As reported by the Australian Bureau of Statistics, at the height of the pandemic, 72 percent of businesses reported a loss of revenue and 870,000 people lost their jobs.
While unemployment numbers are bouncing back and businesses are on the road to recovery, consumer confidence remains low, and investment insecurity high. Lower consumer confidence means buyers feel more apprehension before investing in residential construction projects and stakeholders need more guarantees. New technologies, such as EnvisionVR’s VR/AR Virtual Viewings are trying to give buyers certainty in their future design by helping them to visualise the future project more effectively. This technology takes the guesswork out of buying off-the-plan properties and gives buyers complete certainty in what the finished product will look like allowing them to explore the property in 1:1 scale as if it was already built.
The projected population growth in Australia is also uncertain due to closed borders and lower immigration rates. According to a report issued by KPMG Economics, anticipated population growth within the decade has slowed when compared to pre-pandemic numbers, which will result in a population with 1 million fewer people than forecasted. This will likely influence the residential housing market by lowering the housing demand.
While this is only one example of uncertainty within the Australian property development sector, it speaks to a pervasive sentiment that no one knows what will happen next. While uncertainty is frightening, it also sparks necessity, which is the mother of innovation.
4 Leveraging New Technologies
While the global pandemic has wreaked havoc on industries and individuals, it has also led to what some are calling “an Era of Digital Transformation”. According to a recent study conducted by the global management consultancy Mckinsey & Company, the pandemic has pushed the offering of partially or fully digital products ahead by up to 10 years.
This demonstrates that in order to stay competitive and meet the needs of consumers, businesses must leverage new technologies and apply innovative solutions to challenges created by the pandemic.
So, what does this mean for the property and construction sectors? As mentioned previously, an excellent example of successful digitisation within the building sector is the application of virtual reality (VR) and augmented reality (AR) technology. VR and AR technology is a way to sell to buyers through digital, remote channels from anywhere in the world.
Instead of visiting the physical location of a property, buyers can put on a VR headset or use a smart device such as a tablet or phone, allowing them to visit multiple off-the-plan properties without leaving their home or office. Buyers can also choose to experience a more traditional tour of the property by clicking on the screen and navigating through the digital model.
Thanks to AR technology they can also walk through the property in 1:1 scale using their smart device or for those seeking an even more immersive experience, they can put on a VR headset and experience the off-the-plan property as if they were there.
The use of new technologies is one of the silver lining outcomes of the pandemic, but there are more reasons for the building industry to feel optimistic.
5 Increased Government Stimulus and Federal Projects.
While the outlook regarding hotel, industrial and retail property development remains disappointing, the residential construction sector maintains a positive forecast. The HomeBuilder grant program provides direct support to the Australian residential construction sector and contributes to positive sentiment regarding investment. It not only encourages potential homebuyers to invest in properties but also supports current homeowners who wish to complete renovations.
In a report issued by the Property Council of Australia, 75 percent of property developers in the residential sector said the HomeBuilder grant program would have a positive impact on their businesses.
The recent release of a detailed infrastructure development plan by the Queensland Government has further sparked hope for many developers. According to Deputy Premier and Minister for Infrastructure Steven Miles, in the next 4 years, the Queensland Government will kickstart economic recovery with a $52.2 billion infrastructure investment. This program hopes to create 46,500 jobs and secure Queensland’s future as an economic success story.
Property developers across Australia can hope that the Queensland Government’s plan represents shades of things to come and a trend towards infrastructure investment throughout the country.
Let’s wrap it up.
As we look towards the future, Australia’s building industry is ready to take on new challenges and overcome the hurdles presented by the pandemic. Although job loss, supply chain disruption, increased material costs, and uncertainty about what will come have rocked 2020 and 2021, we can already see hope on the horizon.
EnvisionVR is here to offer construction companies the very best in VR/AR technology that will revolutionise how they do business and help to overcome some of the challenges faced in 2020 & 2021. Click here for more information about EnvisionVR’s offerings.