State of the Non-Residential Building Market in Victoria: A 2024 Overview and 2025 Outlook

Melbourne, Victoria – As 2024 draws to a close, the non-residential building market in Victoria is showing signs of resilience and some growth. Despite the challenges posed by the COVID-19 pandemic and subsequent economic downturns, the sector has managed and adapted to the challenges, and is poised for expansion in the coming year.

Current State of the Market

The non-residential building sector in Victoria has experienced a reasonable recovery over the past year. According to recent data, the value of non-residential building work has increased by 11.5% in 2024, reaching $5.30 billion¹. This growth has been driven by retail and commercial projects, which have seen continued investment and development.

Retail and commercial buildings have been performers, with projects such as new shopping centers, office buildings, and mixed-use developments contributing to the sector’s growth. Additionally, social, community, and recreation buildings have also seen increased activity, reflecting the state’s commitment to enhancing public infrastructure and community facilities².

Key Drivers of Growth

Several factors have contributed to the positive trajectory of the non-residential building market in Victoria:

1. Economic Recovery: The broader economic recovery has boosted business confidence, leading to increased investment in non-residential projects.
2. Government Initiatives: State and federal government initiatives aimed at stimulating the construction sector have provided much-needed support.
3. Population Growth: Victoria’s population growth, particularly in urban areas, has driven demand for new commercial and community infrastructure.

Challenges and Opportunities

While the market has shown resilience, it is not without its challenges. Rising construction costs, labor shortages, and supply chain disruptions continue to pose risks to project timelines and budgets. However, these challenges also present opportunities for innovation and efficiency improvements within the industry.

Outlook for 2025

Looking ahead to 2025, the non-residential building market in Victoria is expected to continue its upward trend. Forecasts indicate that the sector will experience modest yet consistent growth, with the total value of non-residential building activity projected to reach $18.50 billion by 2026².

Key areas of growth are expected to include:

• Retail and Commercial Projects: Continued investment in retail and commercial spaces will drive the sector’s expansion.
• Industrial Buildings: While industrial building activity may see some fluctuations, it is anticipated to remain a significant contributor to the market.
• Social and Community Infrastructure: Ongoing government investment in social and community projects will support the sector’s growth.

In conclusion, the non-residential building market in Victoria is on a positive trajectory, with strong growth prospects for 2025. As the state continues to recover and adapt to new economic realities, the construction sector will play a crucial role in supporting Victoria’s development and prosperity.

¹: Australian Bureau of Statistics ²: Master Builders Australia