The Australian construction sector is heading into 2025 with a mix of optimism and caution, as industry figures weigh up government-backed infrastructure, a shifting residential market and the growing role of technology.  

Leaders speaking at BCI’s Construction Outlook – Australia panel identified advancements in technology and emerging sectors as opportunities for cautious optimism and growth. 

Panellists included Eliza Suffren, Director at Cox Architecture; David Caputo, Director at Kapitol Group; Miles Cope-Summerfield, Commercial Solution Specialist at Procore; and Ashleigh Pattison, Director of Project Content APAC at BCI Central.  

The panel coincided with the release of the latest Construction Outlook Report, offering a detailed analysis of key trends shaping the industry. Drawing from BCI’s national project data, industry surveys and expert contributions, the report highlights opportunities and challenges across the commercial, residential, community, infrastructure and resources sectors. 

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Sentiment: Hopeful, But Not Out of the Woods 

High inflation and rising costs have slowed growth, with GDP rising by just 1% year-on-year by mid-2024. Government spending has provided some stability and early-stage project numbers showed positive movement through 2024, offering a steadier foundation heading into 2025.  

Despite this, economic pressures remain a challenge, particularly in Victoria, where feasibility issues and planning delays continue to stall development. 

Melbourne’s pipeline remains sluggish, according to Cox Architecture’s Eliza Suffren, who said planning approvals are a major bottleneck. “We just really hustle in times like this. We are working through feasibilities that go beyond the alphabet just to make things work, support our staff, and get projects live”, she said.  

“It’s about having a keen awareness of the current market. It’s exciting to see staff recognise these moments, step up and showcase their skill sets.” 

With staffing challenges persisting, developers and builders are refining retention strategies, ensuring viable projects keep staff engaged. 

Builder’s View: Rising Costs, Labour Gaps and Market Shifts 

Kapitol Group Director David Caputo said while 2024 was a strong year, 2025 looks even busier. The market is shifting rapidly, with developers pivoting back to build-to-sell models as rental yields stagnate.  

He highlighted that the data centre sector continues to boom as AI takes off, alongside private school and hospitality investments. 

“Remaining diversified is key heading into 2025 and 2026—there’s no single sector driving construction, but data centres are absolutely going bonkers”, Caputo said. “At the same time, build-to-sell towers, private school upgrades and hospitality investments are gaining traction.” 

Despite the momentum, productivity remains a concern. Labour shortages, particularly in key trades like electrical and mechanical work, are driving up costs.  

Modular construction is emerging as a potential solution, though Caputo said government incentives for skilled migration will be crucial in addressing workforce shortages. 

Technology: Adapt or Get Left Behind 

Procore’s Miles Cope-Summerfield emphasised the need for flexibility in 2025, warning that firms slow to embrace tech-led efficiency measures risk being overtaken.  

With construction starts increasing, businesses are focusing on risk management and operational streamlining over outright expansion. AI is proving transformative but remains underutilised due to inadequate data frameworks and training in many firms. 

“What was once a time-consuming process undertaken by a CA, a project manager and a legal team could soon be completed in minutes with AI”, Cope-Summerfield said. 

“By analysing past subcontractor performance, pulling real-time financial and legal data and generating a risk rating with suggested alternatives, AI agents have the potential to transform decision-making and streamline operations.” 

Kapitol Group is already pushing AI beyond admin tasks, using it to refine specifications, improve training and mitigate risk. Caputo noted that the goal is to double productivity without increasing headcount, focusing on eliminating inefficiencies rather than replacing jobs. 

Sustainability: The Cost Barrier Myth 

Despite mounting pressure to reduce carbon footprints, Australian construction lags behind global sustainability leaders. Suffren said the mindset that sustainability is too expensive needs to change, arguing that integrating it from the outset drives long-term value.  

A fragmented regulatory framework is another barrier, with multiple rating systems like Green Star and NABERS lacking a unified approach. 

“We need rules. They need to be mandated”, Suffren said. “Right now, sustainability often feels like an add-on rather than business as usual.”  

Ashleigh Pattison said that BCI Central data from the recent Outlook Report revealed an uptick in Green Star-certified projects, particularly in office and residential developments.  

While Victoria leads in project volume, NSW and WA dominate in total project value. Sustainability is becoming a commercial advantage, with higher-rated buildings securing premium rents and stronger investor interest. 

“Sustainable measures have become essential for leading developers, architects and builders increasingly using sustainability as a powerful marketing tool, signalling their commitment to responsible practices and enhancing their market positioning”, Pattison said. 

Government’s Role: Policy Uncertainty Remains a Barrier 

Despite ongoing housing shortages and sustainability challenges, government oversight of the built environment remains inconsistent, with short-term policies and high costs stifling private sector investment. 

Caputo argues that high fees and levies discourage private investment. “The government is doing a terrible job—at every level, down to councils”, he said. 

“When it comes to residential construction, the simplest fix is clear: incentivise the private sector”, Caputo added.  

“The government can’t deliver housing at scale efficiently and they’d likely spend more trying to roll it out than offering the right incentives. The private sector wants to build—it just can’t afford to do it at a loss.” 

Suffren highlighted inconsistencies in government incentives for sustainability. While small-scale benefits like solar rebates exist, broader support—such as green financing—remains lacking.  

“The government’s agenda shifts with political cycles rather than a long-term plan. While there are sustainability incentives for homeowners, broader support for developers is lacking. We need affordability measures—stamp duty reductions, levy adjustments and buyer incentives”, Suffren said. 

Explore the latest pipeline data and industry insights in the Construction Outlook Report. Take a deeper dive by downloading the report now.