Skip to Content
View site list


Pre-Bid Projects

Pre-Bid Projects

Click here to see Canada’s most comprehensive listing of projects in conceptual and planning stages

Economic, US News

RICS survey finds mixed expectations for recovery

Don Wall
RICS survey finds mixed expectations for recovery

Recovery in the construction sector will be splintered, with builders in the residential and infrastructure sectors expected to recover from losses suffered during the shutdown days of the COVID-19 pandemic but other non-residential constructors facing tougher times, suggests the latest survey from the Royal Institution of Chartered Surveyors (RICS).

The report from RICS, in partnership with the Association for the Advancement of Cost Engineering and the Canadian Institute of Quantity Surveyors, offers a snapshot of views on the effects of the pandemic from chartered surveyors around the world including a contingent of Canadians.

Asked about their expectations for the next year, the respondents said infrastructure should drive recovery in Canada, and private residential workloads are expected to remain even over the next 12 months, but forecasts for non-residential construction outside of public works was described as “a little more downbeat.”

RICS chief economist Simon Rubinsohn noted the results, released Aug. 17, incorporate survey responses that were submitted between June 10 and July 23, when many sectors of the construction sector were in the initial stages of emerging from a shutdown, and so respondents might not be as negative now as they were then.

“The expectations of the next 12 months are mixed, with some parts of the sector not necessarily firing on all cylinders,” said Rubinsohn, suggesting it is important to disaggregate construction sectors to understand the diverging trends within non-residential.

“In many parts of world, there is a whole change in the way we engage in real estate. Retail is the obvious example. Will there be a pickup in demand for retail development? How will we relate to the office environment going forward? Will there be a material pickup in office-related development? Clearly there will be some but there are structural changes going on.”

The structural issues are compounded by the cyclical issues, Rubinsohn said, which is not typical of a usual recession.

“What you are seeing is diverse trends coming through this time. It is more stark and has the potential to be more enduring than in the past, simply because there is that comparison between the structural and the cyclical…that may have lasting implications for private non-residential.”

RICS indices of Canadian attitudes towards prospects over the next 12 months gave private non-residential a score of minus 18, reflecting significant pessimism. Private residential was minus three and infrastructure was plus 39, with government spending on infrastructure projects expected to provide a major boost to the sector and the economy.

“I don’t imagine there are many developers out there looking to invest in big shopping centres in the current environment,” said Rubinsohn.

The survey found that Canadian respondents believe hiring is likely to pick up over the next 12 months, with responses registering a plus four on the RICS index.

Skills shortages are still perceived to be a problem for the sector, with 44 per cent of Canadian respondents identifying it as an issue. That is down from the fourth quarter of 2019, when 63 per cent said skills shortages were an issue.

For the coming year, profit margins are likely to be reduced, the report said, with costs expected to rise four per cent while tender prices would only increase one per cent.

Productivity on Canadian jobs is being impacted by the coronavirus but Rubinsohn suggested the loss is proving to be less than originally feared. Close to half the responses expect the loss of productivity to be in the zero to 10 per cent range, around one-quarter see the impact being in the 10 to 20 per cent range and 15 per cent do not anticipate any loss in productivity in the changed circumstances.

“Businesses have adapted, and while it is reasonable to conclude that productivity isn’t quite where it might have been, the drop has been nowhere near what was expected,” Rubinsohn said.

Respondents said the first two factors holding back activity are financial constraints and insufficient demand.

“On the finance side, there is the pain of so many developers in the midst of a crisis,” said Rubinsohn. “That can relate to the cost of money, that can relate to access to money. It is a bit of a catch-all because it can relate to internal finance constraints. Clearly that was one of the factors businesses were mindful of, that their own financial position was something they were concerned about.”

Recent Comments

comments for this post are closed

You might also like