New Zealand: Strong Pipeline for Construction Sector

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The National Construction Pipeline Report 2021 shows New Zealand’s construction sector has held up well during the COVID-19 pandemic and the future outlook is positive.

  • Infrastructure activity forecast to reach $11.2 billion in 2026
  • Construction sector now the fourth biggest employer with more than 280 000 people working in the industry
  • Residential construction the largest contributor to national construction activity.

Minister for Building and Construction Poto Williams says the National Construction Pipeline Report 2021 released today shows the construction sector has held up well during the COVID-19 pandemic and the future outlook is positive.

“The sector can be confident that current levels of demand are expected to continue for some time,” Poto Williams said.

“Today’s report shows that despite disruptions from COVID-19, construction activity is forecast to grow steadily to about $48.3b in 2024, driven largely by the residential sector,” Poto Williams said.

The annual report provides a projection of national building and construction activity through to 31 December 2026, based on current settings. It includes national and regional breakdowns of actual and forecast residential building, non-residential building and infrastructure activity.

Residential construction remains the largest contributor of national construction activity, making up 58 percent of total construction value in 2020.

“Demand for housing remains strong and will continue to play a lead role in the industry’s COVID-19 recovery, with residential construction forecast to keep growing for the next few years,” Poto Williams said.

The construction sector is now the fourth largest employer in the country employing over 281,400 people for the year ended September 2021.

“This has been helped by the Government’s ongoing investment in skills and training with the Construction Skills Action Plan exceeding its target of supporting an additional 4,000 people into construction related education or employment since it as launched in 2018,” Poto Williams said.

“The report also forecasts an increase in infrastructure activity, reflecting the high levels of government investment in this area.

Infrastructure activity is expected to grow steadily, from $9.2b in 2020 to reach $11.2b in 2026. Growth is expected to be particularly strong in Auckland and Waikato/Bay of Plenty.

“This Government’s swift actions to invest in infrastructure development at the start of the COVID-19 response has meant that the sector has been able to retain and attract talent at a critical time. The sector is now in a robust position to build back better and continue to deliver on this strong pipeline of work,” Poto Williams said.

View the Media Release here

The National Construction Pipeline Report 2021

The National Construction Pipeline Report 2021 was commissioned by the Ministry of Business, Innovation and Employment (MBIE) and jointly prepared by BRANZ and Pacifecon (NZ) Ltd.

The report projects building activity for the next six years, ending 31 December 2026. It includes national and regional breakdowns of actual and forecast residential building, nonresidential building and infrastructure activity.

The report is based on residential and non-residential building and construction forecasts from BRANZ and data on researched non-residential building and infrastructure intentions from Pacifecon.

Key Findings

Construction activity has held up well against the COVID-19 pandemic and is expected to continue to do so

New Zealand’s total construction value decreased by 5.7% in 2020 to $42.6b. This year’s forecast is for construction activity to grow steadily to about $48.3b in 2024, driven largely by the continued strength of the residential sector. Residential buildings contributed 58% of total construction value in 2020.

Residential construction grows through to 2023

Multi-unit dwellings accounted for 44% of all dwellings consented in 2020. We forecast detached
dwellings to peak at about 26,500 consents in 2023, whereas multi-unit consents will peak slightly
earlier at 21,300 in 2022. The forecast is for 265,000 new dwellings to be consented over the next six
years at an average of over 44,000 dwellings a year.

Growth in non-residential activity throughout the forecast period

Non-residential building value nationally peaked in 2019 at $10.2b. However, strong project
intentions in the sector remain, as can be seen by Pacifecon’s researched project data. We forecast
activity to reach the 2019 levels towards the end of the research period, with a forecast of $10.2b in
2025 and $10.3b in 2026.

Growth in infrastructure activity throughout the forecast period

In 2020, infrastructure represented one-fifth of total building and construction value. Infrastructure
activity fell slightly between 2019 and 2020 to $9.2b, but we forecast activity to increase steadily
throughout the forecast period and reach $11.2b in 2026. Pacifecon’s research data indicates strong
short-term intentions, and these remain at high levels through to 2026.

Types of infrastructure construction

Transport, water and subdivision projects will dominate new infrastructure activity in 2021,
contributing 87% of the projects and 83% of the total value, very similar to the 2020 report. As with
last year, transport intentions stand out, with high-value projects contributing a much higher
proportion of value (40%) than the number of projects (33%).

Download the full report here

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