Bruce Constantineau
Sun
Soaring investment in heavy engineering projects in B.C. will drive the total value of non-residential construction in the province from $9.7 billion last year to a record $13.9 billion by 2007, according to a Credit Union Central of B.C. forecast.
The report said spending in civil and industrial projects — especially those in the transportation sector — will grow from $7.5 billion in 2005 to $9.2 billion in 2007.
(Spending in the residential construction sector is expected to grow from $13 billion in 2004 to $20 billion by 2007.)
Credit Union Central economist David Hobden said much of the spending in heavy engineering will focus on pipeline construction, airport and seaport expansions, highway improvements and the Canada Line rapid transit link from Richmond to downtown Vancouver. He said spending related to the 2010 Olympics is a significant factor but not the biggest factor driving non-residential construction spending.
“The biggest factors are the investment climate for real estate being so good right now, with low interest rates and strong GDP growth in B.C.,” Hobden said in an interview. “Strong resource prices and government spending on transportation projects also play big roles.”
The forecast said investment growth in non-residential construction will more than triple between 2005 and 2007 — rising to a real growth rate of 7.3 per cent from 2.4 per cent between 2002 and 2004.
Growing demand for labour and materials, including steel and concrete, is expected to drive non-residential construction costs up by 7.5 per cent this year, following an 8.6-per-cent hike in 2004.
The report many B.C. communities have experienced strong retail, commercial and industrial real estate markets, which has attracted significant investment for new buildings. The total investment for new commercial, industrial and government buildings is forecast to rise from $2.8 billion in 2004 to $4.2 billion in 2007.
Investment in new hotel properties has occurred as the provincial hotel occupancy rate has risen from 58 per cent in 2003 to 64 per cent this year, its highest level since 1997.
© The Vancouver Sun 2005