Chch building construction optimism fades, rest of NZ lifts

23 July 2012

Christchurch building construction optimism fades while the rest of New Zealand lifts

Building construction workload optimism for the Christchurch rebuild has dropped from an average of 85 percent during 2011 to 63 percent, according to the May 2012 building construction sentiment survey by Davis Langdon, an AECOM company.

The survey is based on the views of 600 building construction industry decision makers including consultants, contractors, financiers, agents, developers and others from across the public and private sectors.

Davis Langdon’s New Zealand regional director, Chris Sutherland, says the outlook in Christchurch remains consistent with the trend observed over the last year.

“Frustration with the protracted Christchurch Central City Blueprint process is adding to the uncertainty for investors.”

“One respondent described the impasse between commercial developers and prospective tenants as a ‘stalemate’ caused by the inability to commit to new projects while the Christchurch CBD remained ‘little more than a construction site’.”

Mr Sutherland says while current conditions are still fairly poor, there is evidence of a positive upswing in the industry’s outlook for the coming year.

“Eighty five percent of New Zealand construction industry decision makers anticipate stable or increasing workloads over the next 12 months, up from 80 percent in December.”

“Optimism is strongest in Auckland where 36 percent now expect more work over the coming year, up from 28 percent in the previous quarter.”

He says existing building refurbishments were selected by 76 percent of decision makers as a key source of new work.

“Refurbishment work has been spurred on by the need to enhance buildings without having to seek finance for an entirely new building. There is also the need to act on seismic assessments of existing building stock across the country.”

Tightening profit margins continue to plague the industry’s ability to deliver projects, says Mr Sutherland.

“Many respondents indicated that continually low margins were ‘putting some companies in financial difficulty’, or worse, causing them to fail. This is adding to the industry’s shortage of expertise and could destroy the industry resource base.”

Concerns about accessibility to finance remain steady, although some respondents identified encouraging signs of investor confidence thawing in the private sector development market.

ENDS

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