Archive | Construction

Airport team wins urban design award, Farhi takes supreme title

The Auckland Airport property team has won the Property Council’s third annual Auckland property people award for urban design for its work on stage of The Landing business precinct at the airport.

The supreme award went to Chris Farhi (pictured), who leads Colliers’ research & consulting team. He was also named young achiever of the year.

Property Council branch president Michael Holloway said: “The Auckland Airport property team has shared a consistent vision to develop a world-class industrial business park, setting itself apart as a market leader who focuses not only on functionality, but also on driving quality design that will endure over time.

“They have been described as exceptionally professional & results-focused. The team culture is strong, professional yet relaxed, with a high level of respect & appreciation for everyone’s individual expertise.

“The Landing stage 2 delivers world-class architecture & urban design, transport connectivity & amenity, all aimed at enriching the working experience of its tenants & the surrounding community – a vision brought to life by this spectacular group of people.”

Award winners (sponsors in brackets):

Supreme award (Greenstone Group): Chris Farhi, Colliers International
Sheree Cooney memorial young achiever (Buchan): Chris Farhi, Colliers International
Urban design (Ignite): Auckland Airport property team
Best team (Barker & Associates): Wynyard development team
Property professional of the year (JLL): Lloyd Budd, Bayleys Real Estate
Women in property (Resene): Kelly Bunyan, Spark
Outstanding leadership (Rider Levett Bucknall): Colleen Seth, Auckland University
Long service (BSA Law): Waren Warfield, founding director of RCP
Judges’ choice (AMP Capital): Alastair Kent-Johnston, Blue Barn Consulting

Attribution: Council release.

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Updated: Consents for suburban units up 29% in year

Published & updated with additional detail 31 October 2018:
A record 6059 new townhouses, flats & units were consented to be built in the September year, up 29% on the previous year’s 4694.

Consents for the whole intensive residential sector – apartments, retirement village units, and those suburban townhouses & flats – rose 22% to a combined 11,856 for the last 12 months (9702).

Statistics NZ construction statistics manager Melissa McKenzie said: “The annual number of townhouses, flats & units consented has risen steadily since late 2012, coming off historically low levels. Growth in new townhouses, flats & units between 2013-16 was driven by activity in both Auckland & Canterbury, but more recently it was driven by Auckland.”

Consents for new standalone houses slipped 2.4% for the 12 months to 20,692 (21,190).

Total residential consents for the 12 months rose 5.4% to 32,548 (30,892).

Total residential consents for September fell 7.6% to 2559 (2770).

The national consent numbers for new homes in September and the year to September, compared to September last year, and the latest 12 months compared to the previous 12 months:

Total consents for new homes: 2559 (2770), down 7.6%; 32,548 (30,892), up 5.4%
Total value for new homes, plus alterations & additions: $1.098 billion ($1.213 billion), down 9.5%; $14.066 billion ($13.267 billion), up 6.0%
Alterations & additions, $163 million ($175 million), down 6.8%; $2.08 billion ($1.941 billion), up 7.2%
Standalone homes: 1673 (1843), down 9.2%; 20,692 (21,190), down 2.4%
Apartments: 215 (415), down 48.2%; 3825 (3152), up 21.4%
Retirement village units: 165 (85), up 94.1%; 1972 (1856), up 6.3%
Suburban townhouses & flats: 506 (427), up 18.5%; 6059 (4694), up 29.1%
Standalone share of consents: 65.4% for the month (66.5%); 63.6% for the year (68.6%).

The Auckland picture

Around Auckland, consents were up in 9 wards and down in 4 for the month. For the year, they were up in 11 wards, down in 2.

Auckland residential consents, for September & year to September compared to September last year and the previous 12 months:

Region: 854 (868 in September 2017), down 1.6% from last September, 33.4% of national total (31.3% last September); 12,945 (10,317), up 25.5%, 39.8% of national total for 12 months (33.4%)
Rodney: 67 (58), 770 (1018)
Albany: 136 (183), 2577 (2449)
North Shore: 109 (37), 901 (427)
Waitakere: 41 (81), 722 (578)
Waitemata & Gulf: 61 (192), 1182 (1130)
Whau: 34 (11), 560 (293)
Albert-Eden-Roskill: 52 (18), 855 (801)
Orakei: 27 (13), 429 (246)
Maungakiekie-Tamaki: 57 (54), 669 (635)
Howick: 54 (48), 917 (410)
Manukau: 30 (27), 1116 (430)
Manurewa-Papakura: 143 (87), 1586 (948)
Franklin: 43 (59), 661 (952)

All construction for September compared to September last year, and the latest 12 months compared to the previous 12 months:
Total: $1.682 billion ($1.799 billion), down 6.5%; $21.186 billion ($20.109 billion), up 5.4%
Non-residential: $556 million ($546 million), up 1.7%; $6.726 billion ($6.413 billion), up 4.9%

Attribution: Statistics NZ.

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Auckland home consents hit record

Building consents were issued for a record 12,959 new homes in Auckland in the year to August, 22 more than in the June 2004 year.

Nationally, 32,759 consents were issued for the August year, just short of the 32,851 in the June 2004 year but well short of the record 40,025 in the February 1974 year.

Statistics NZ construction statistics manager Melissa McKenzie said today: “The 2004 peak in Auckland homes consented was mainly driven by growth in the number of apartments. This new record is also driven by townhouses, flats & units, and retirement village units.”

Consents nationally for new homes in August were down 2.9% compared to August last year at 3075 (3166).

August consents in Auckland were up 9.6% to 1298 (1184).

  • More detail to follow.
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Institute of Building looks for young voice on national council

The NZ Institute of Building has created a new role on its national council for a young practitioner advisor, charged with providing a millennial voice. Expressions of interest close on Monday 1 October.

The institute is seeking registrations of interest from young construction practitioners who fit the following profile:

  • Ideally under 30
  • Ideally located in Auckland, Wellington or Christchurch
  • Employed full-time in the construction industry
  • Either trade-qualified or holding a construction-focused qualification
  • Considered a strategic thinker, and
  • Can point to a career already marked with accomplishments.

The requirement is to attend 6 one-day council meetings/year, unremunerated except for travel costs.

Attribution: Institute release.

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Auckland plays superstar in flat national consents picture

Published 30 August 2018
Auckland played a superstar role with a leap to record levels of new housing consents in July, and for the July year.

Nationally, the picture was more sedate – flat in July (down by just 10 from July last year) and 8% ahead for the year.

As consents for suburban townhouses & flats jumped 53% for the month, 26% for the year, the standalone share fell 6% for both month & year.

Alterations & additions made big contributions to the totals for both month & year.

The total value of all consents – residential & non-residential – for the month fell 2%, but was up nearly 10% for the year. The non-residential sectors were down 10.3% from a year ago but up 10% for the year.

Auckland’s share of total residential consents jumped from 28% last July to 45%, and to 39% for the year.

Statistics NZ construction indicators manager Melissa McKenzie said today the 12,845 consents for new homes in the last 12 months, up 28% from the previous year, was the second highest tally in Auckland since records began nearly 30 years ago. “The highest on record was 12,937 new homes in the June 2004 year.”

The 6039 standalones made up 48% of all new homes consented in Auckland in the last 12 months, while the 3032 consents for townhouses, flats & units were a record.

The national consent numbers for new homes in July and the year to July, compared to July last year, and the latest 12 months compared to the previous 12 months:

Total consents for new homes: 2752 (2762), down 0.4%; 32,850 (30,404), up 8%
Total value for new homes, plus alterations & additions: $1.195 billion ($1.179 billion), up 1.4%; $14.2 billion ($12.9 billion), up 10%
Alterations & additions, $181 million ($160 million), up 13.1%; $2.1 billion ($1.9 billion), up 10%
Standalone homes: 1731 (1900), down 8.9%; 21,007 (21,229), down 1%
Apartments: 347 (367), down 5.4%; 3902 (2855), up 36.7%
Retirement village units: 139 (145), down 4.1%; 1996 (1607), up 24.2%
Suburban townhouses & flats: 535 (350), up 52.9%; 5945 (4713), up 26.1%
Standalone share of consents:  62.9% for the month (68.8%); 63.9% for the year (69.8%).

The Auckland picture

Around Auckland, consents were up in 9 wards and down in 4 for the month (2 of those falls by just 1 & 3). For the year, they were up in 11 wards, down in 2.

Auckland residential consents, for July & year to July compared to July last year and the previous 12 months:

Region: 1250 (774 in July 2017), up 61.5% from last July, 45.4% of national total (28% last July); 12,845 (10,051), up 27.8%, 39.1% of national total for 12 months (33%)
Rodney: 54 (83), 766 (1004)
Albany: 223 (159), 2570 (2529)
North Shore: 25 (38), 708 (516)
Waitakere: 119 (42), 739 (576)
Waitemata & Gulf: 182 (183), 1407 (870)
Whau: 44 (16), 462 (353)
Albert-Eden-Roskill: 79 (14), 887 (800)
Orakei: 30 (27), 389 (255)
Maungakiekie-Tamaki: 30 (34), 769 (482)
Howick: 68 (34), 881 (363)
Manukau: 59 (18), 1043 (404)
Manurewa-Papakura: 256 (55), 1508 (949)
Franklin: 81 (71), 716 (950)

All construction for July compared to July last year, and the latest 12 months compared to the previous 12 months:
Total: $1.75 billion ($1.786 billion), down 2%; $21.463 billion ($19.53 billion), up 9.9%
Non-residential: $517 million ($576 million), down 10.3%; $6.824 billion ($6.2 billion), up 10%

Attribution: Statistics NZ tables & release.

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Wynyard Quarter project manager wins top Institute of Building award

Published 27 August 2018

Jason Carnie.

A project manager for Hawkins Construction Ltd, Jason Carnie, won the NZ Institute of Building’s supreme award at the weekend for his role in leading the Wynyard Quarter Innovation Precinct project in Auckland.

While Mr Carnie was a winner, the Hawkins business was sold by the McConnell family to Downer EDI Ltd last year.

The institute introduced 2 new award categories, one for consultants and the other interdisciplinary collaboration, which NZIOB chief executive Malcolm Fleming said broadened the target range of entrants “beyond primarily recognising project managers running commercial construction projects”.

On Mr Carnie’s supreme award, and the award in the $50-95 million category, the judges said: “This project had a tight 20-month timeline & multiple challenges. The ground was contaminated with heavy metals, petrochemicals & asbestos while the high tide mark sat 1.5m below ground. This required innovative solutions including: the first New Zealand use of state-of-the-art vapour & waterproof system, Coreflex60; high level adoption of building information modelling (BIM); and the development of a new health & safety (H&) monitoring system SOS that logged H&S issues via smart phones/tablets.

“Several of the innovations created are now being adopted by Hawkins or Precinct Properties across their respective future projects. The project was delivered on time & within budget.”

Young achievers award

Geoff Nash.

The BCITO young achievers award went to Geoff Nash, Auckland regional manager for Brosnan Construction Ltd. Mr Nash began his career as a joinery apprentice at Total Timba on leaving school. While undertaking his apprenticeship, he completed a national diploma in construction management at Unitec. In 2009 & 2010, he won back-to-back master joiners apprentice awards, while completing his diploma. He has since completed a national diploma in quantity surveying and, armed with his trade qualification & 2 diplomas, sought employment with a main contractor, and to enrol in Unitec’s bachelor of construction economics course.

Now 29, Mr Nash has completed his degree and has just passed the 5-year milestone with Brosnan Construction Ltd. He leads a team of 30 charged with securing & delivering $40 million/year of commercial construction projects in the Auckland region, and recently led the Auckland team on the successful open-book negotiation for the Spencer on Byron Hotel remediation project in Takapuna. The judges said Mr Nash was a standout winner, had a quest for knowledge that would see him “broadening his career to reach whatever level he chooses”.

The winners of the 6 project cost categories awards were:

Projects under $5 million (Resene):
Winner: Greg Guy, Prosper Northland Trust
Project: Te Kakano (the Seed), the precursor to the larger Hundertwasser Art Centre

Projects $5-8 million (Steel Construction NZ):
Winner: Brendan Keenan, project manager, & Gary Davidson, site manager; Naylor Love
Project: Christ’s College Kitchen Tower restoration, Christchurch

Projects $8-20 million (Hilti NZ)
Winner: Cameron Orr, Naylor Love, Dunedin
Project: The Otago Polytechnic’s new Te Pa Taurira student accommodation village

Projects $20-50 million (Colorsteel):
Winner: Jimmy Corric, NZ Strong Group
Project: The Manukau Bus Station, Auckland

Projects $50-95 million (Allied Concrete):
Winner: Jason Carnie, Hawkins
Project: 12 Madden St, Wynyard Quarter Innovation Precinct, Auckland

Projects over $95 million (Aecom):
Winner: Craig Treloer, project director, & Phil Helleur, project manager, Hawkins
Project: The 350mPier B extension at Auckland International Airport, Auckland

4 more specialist awards

The James Hardie innovation award, recognising innovation in the industry demonstrated within a project or through an innovative new product or procedure, was won by Dr Mikael Boulic, a senior lecturer at Massey University’s School of Engineering & Advanced Technology, Auckland.

The judges found Mr Boulic was incredibly passionate about his classroom environment monitoring innovation, SKOMOBO, an instrumentation system that monitors CO₂, relative humidity, air temperatures and air-particles inside classrooms. The collection of such data provides a better understanding of what is happening inside teaching spaces, intended ultimately to lead to solutions being implemented or developed that will provide healthier, warmer & drier learning environments. SKOMOBO costs well under one-tenth of comparable instruments (about $500 versus $15,000) and has both internal memory & the ability to live feed to a server, therefore making it a perfect tool for long-term data collection.

Mr Boulic conceptualised the project, received $100,000 from BRANZ to build a prototype, brought together a team of researchers and supervised the inhouse manufacture of the first batch of 150 SKOMOBOs. These were installed into classrooms throughout the South Island. He has now secured funding from MBIE (the Ministry of Business, Innovation & Employment) to develop an enhanced version of SKOMOBO that will feed live data to a dashboard, enabling schools to see in real-time the environmental conditions inside their spaces. A referee described Mr Boulic as “possessing boundless energy, determination & a huge intellect. He has the courage to challenge the status quo and to have big goals, matched with a passion to continuously strive for a better way to do things. SKOMOBO is the result of such talent & focus”.

The Site Safe safety award was won by Safety Wingman Team. The Wingman Safety campaign had been established by Wellington International Airport Ltd for earlier construction projects on its site. The current Rydges Hotel project at the airport represented version 3 of the programme, which was developed with main contractor, Arrow International Ltd.

Wingman 3.0 is about everything that happens onsite, while promoting a positive worker engagement through all levels of site activities. It involves ongoing regular events, celebrations, awards, ‘rate a mate’, incentives for near-miss observations & learning opportunities, positive reinforcement, lots of collateral/posters, and a unique site induction video. The simple premise that a ‘safe site is a productive site’ has translated to quality & productivity gains, and a higher level of commitment & attitude exhibited by the site team. What was originally a safety campaign has become a site culture campaign. The judges could see the project team from Arrow had accepted the challenge set by the airport company and had created an inspiring & effective health & safety environment onsite.

The new Hays Construction interdisciplinary collaboration award, recognising exceptional examples of collaborative partnerships between consultants & contractor, was won by 12 Madden St, Auckland’s first purpose-built co-working space. It’s a 6-storey building comprised 9183m² of general office floor area & 3424m² of parking spread over 2 basement levels.

The client, Precinct Properties NZ Ltd, was very much an active project team member, driving the culture & challenging all project participants to think outside the box and provide innovative ideas across all project phases.

Beca, Holmes Consulting, Warren & Mahoney and RLB were engaged as the design team, with the Hawkins engagement based on a 2-stage tender (design bid & build) model, before the design completion. This allowed Hawkins to review the design with key sub-trades and provide alternative solutions & options for the design team to consider.

The judges said this project exhibited a multi-level degree of interdisciplinary collaboration that was led jointly by the client, design consultants & contractor: “That the identical team has been engaged by Precinct Properties for their next new building project at Wynyard Quarter underlines the judges’ view that 21 Madden St was an outstanding example of project collaboration.”

Raji Rai, a senior project manager at The Building Intelligence Group, won the Metro Performance Glass consultants award. New for 2018, this award recognises high performance of design consultants (architects, engineers, quantity surveyors or project managers) who have contributed to the design, documentation & delivery stages of a successful project.

Telecommunications company Spark NZ Ltd had undertaken an asbestos identification & management survey across its property portfolio. An outcome was that Spark’s AT Building in the Auckland cbd was identified as having asbestos contamination that needed removal. The Building Intelligence Group was engaged as project manager, with Raji Rai as its representative.

The judges said: “The biggest challenge was to ensure that the facility was operational during the asbestos removal works. There was a considerable time pressure overlay to the project also, as Spark had moved the AT Building’s 400 occupants into temporary accommodation for the duration of the asbestos removal project. The project was successfully completed without any single outage to Spark’s services, and the asbestos breaches reported were able to be contained within the active zones.

“The judges were impressed by Raji’s total commitment to attaining a result on what was a complex project both technically & logistically. As the client said, ‘The scale & risk of the asbestos remediation works within a working voice & data exchange was off the scale.’”

Attribution: Institute release.

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Innovative construction the target in 2 Institute of Building awards

Published 27 August 2018
The NZ Institute of Building’s charitable trust made 2 scholarship awards at the weekend, each worth $10,000, to 2 Master of Architecture (Professional) students from the School of Architecture at Victoria University of Wellington, Emma Fell & Mikayla Heesterman.

The scholarships, first offered last year, were established to recognise, encourage & financially support recipients from a trade, technical or professional role, who are proposing to pursue a project linked to building through research, practice or professional development.

Emma Fell.

Trust chair Gina Jones said: “These awards were established to encourage aspirational thinking that has the potential to advance the design, construction or management of buildings in New Zealand, and thereby enhance the quality of our built environment.”

3 former institute presidents were on the judging panel – Gina Jones, Bill Porteous & John Jonassen. They reviewed 11 entries.

Emma Fell is researching the design & development of a prefabricated building envelope system for mass timber construction using cross-laminated timber (CLT). The system uses specially designed proprietary joints specific to different types of cladding. Ms Fell proposes to use her award to fund a fullscale prototype using CLT and the building elements necessary to assess the viability of the system. The resultant research has the capability to revolutionise prefabrication in New Zealand.

She said it offered the possibility of offsite fabrication, followed by delivery to the site and quick erection without scaffolding. The optimised design & process could lead to an immense reduction of overall construction time & costs.

Mikayla Heesterman.

Ms Heesterman has been inspired by traditional Japanese timber architecture, which used intricately carved timber-only connections. The judges said such connections were structurally successful & aesthetically beautiful but, as Ms Heesterman noted in her application, their complexity makes them time-consuming & difficult to make.

By using pioneering industrial robotic arm technology, she proposes that it will be possible to fabricate more complex designs than is usually possible with existing woodworking machinery. Traditional timber joints are used as a starting point for the development of new intricate joints that are suitable for modern fabrication & complex largescale timber architecture.

Her study is focused on traditional timber-only (no metal) connections to create new sustainable solutions that can only be produced by robotic milling. The ultimate aim is to produce an accessible database of new construction designs, with relevant structural information for different applications, that can be easily selected, personalised & produced.

Attribution: Institute release.

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Greenland & Golden Horse start 1400-apartment job on old Goodman industrial site

Chinese state-owned developer Greenland Group & Golden Horse Group of Hong Kong turned the first sod on Thursday for a 6.9ha 1400-apartment joint-venture project at Erskineville in Sydney’s inner-west, on a former industrial site which Goodman Group sold to Golden Horse in 2014.

Construction partner for stage 1 of the Park Sydney development is local family-owned builder Richard Crookes Constructions Pty Ltd, which has worked on several Greenland projects.

Image above: Park Sydney masterplan, highlighting amenities.

The masterplanned residential community will be developed in 5 stages and will ultimately feature 9 development blocks ranging in height from 2-8 storeys.

Park Sydney, 4km from Sydney’s cbd, will have a 7446m² public park, a supermarket & specialty shops, a fresh food precinct, eat street, medical centre & childcare centre.

Greenland Australia managing director Sherwood Luo said: “Together with Golden Horse Australia, we’ve been planning Park Sydney since 2016, so it’s particularly exciting to see major projects of this scale starting to take shape and watching how they transform the local area.

“We are converting this large former industrial precinct into an engaging & inclusive residential community that will ultimately become home to some 3000 residents.”

The value to Goodman of its exit

Golden Horse Group expanded into Australia in 2013 and bought the former industrial site in Erskineville from Goodman Group the next year. For Goodman (owner of NZX-listed Goodman Property Trust’s management company & cornerstone investor in the trust), that deal was among many as the group sold $A1.9 billion of mostly industrial assets in a year, and reinvested the lot to generate higher development returns.

Builder with long list of staff support programmes

On a different tack, the builder on this project has a lot to say about how it treats its staff – an eye-opener at a time the New Zealand construction sector has been grumbling about contract arrangements, and this government (like the last one) is talking about increasing training for & numbers in the construction industry.

Richard Crookes Constructions says on its careers page: “RCC believes the success of every project depends on the ability of their personnel and the synergy of the project teams… RCC’s business is based on maintaining long-term relationships with clients, partners & subcontractors.”

It also lists a number of staff-supporting views that I’m sure would be novelties if espoused in New Zealand:

  • We build a talent pipeline
  • We expect our staff to engage in the business and be part of its success, growth & evolution. In return we invest in their growth & development. We give people autonomy, support & the resources they need to perform at their best
  • We maintain a flat management structure with an open door policy and an honest & collaborative culture
  • Fitness passport gives individuals & families access to multiple facilities (gyms, swimming pools) which allows you to go as often as you like
  • Exercise incentives, health assessments, mindfit programme, access to trainers, $A100 annual rebate & annual flu vaccinations
  • RCC offers corporate rates with BUPA to all employees in an effort to encourage healthy lifestyles
  • Every employee receives one day off every 6 months – employees are encouraged to use the leave for engaging in health & wellbeing activities, spending time with family & friends or to relax
  • Each employee has the ability to purchase an additional 2 weeks of annual leave/year
  • Maternity & paternity leave is offered when members of the RCC family start or expand their own families
  • We would like your salary to work as hard as possible; for this reason, we offer salary packaging options such as novated leases (a lease arrangement, usually for a vehicle, where the employer takes on the obligations of the lessee to the financier, which ceases if the employee leaves the job)
  • Our staff can access a range of discounts from partnering retailers
  • RCC has a financial advisor in-house who is available to meet with staff one on one
  • We believe in & support females at RCC; one of the programme offerings is our women’s leadership lunch & learns
  • We offer an array of learning & development for our employees through coaching sessions, formal mentoring programmes, external training, role-specific technical training & leadership development programmes across all levels.

Links:
Park Sydney
Greenland Australia
Golden Horse Australia
Richard Crookes Constructions

Earlier story:
17 August 2015: Urban renewal lifts Goodman Group

Attribution: Joint venture release, Greenland, Golden Horse & Richard Crookes websites.

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MBIE opens consultation on acceptable solutions

The Ministry of Business, Innovation & Employment (MBIE) opened consultation on Wednesday on proposals to amend a number of acceptable solutions & verification methods, and to revoke the simple house acceptable solution SH/AS1. The consultation period closes on Friday 21 September.

MBIE said in a release the changes were intended to update the documents to reflect the latest knowledge & current building practices, and also make editorial changes for clarity.

Amendments are proposed to the following documents:

  • Clause B1 Structure: B1/VM1
  • Clause B2 Durability: B2/AS1
  • Clause E2 External Moisture: E2/VM1, E2/AS1
  • Clause G12 Water Supplies: G12/VM1, G12/AS1, G12/AS2
  • Clause G13 Foul Water: G13/AS1, G13/VM2, G13/AS2, G13/AS3

Revoking Simple House:

On revoking the simple house acceptable solution SH/AS1, MBIE said: “SH/AS1 is now 8 years old and is no longer fit for purpose. It has not been updated in a number of years, meaning current knowledge & practices are not reflected, and it is inconsistent with other acceptable solutions.

“Anecdotal evidence is that few architects & designers refer to SH/AS1 because of its limitations on floor & roof shapes. SH/AS1 does not contain any information that is not available elsewhere in acceptable solutions or New Zealand Standards.

Link:
Full proposals & consultation MBIE corporate website

Attribution: MBIE release.

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More moderate but sustained construction growth forecast, but new records seen for housing

The National Construction Pipeline Report 2018, out on Monday, forecasts a continuing rise instead of a tailing off in housing construction, a less optimistic future for non-residential & flatlining for infrastructure.

The report provides a projection of national building & construction activity for the next 6 years, ending 31 December 2023. It includes national and regional breakdowns of actual and forecast residential building, non–residential building and infrastructure activity. The report is based on building & construction forecasting by the Building Research Association (BRANZ) & Pacifecon NZ Ltd data on researched non-residential building & infrastructure intentions.

The 5 key findings in the report:

  1. Sustained growth is forecast for building & construction nationally
  2. National dwelling consents expected to exceed historic highs with 43,000 in 2023
  3. Multi-unit dwellings overtook detached house consents in Auckland in 2017
  4. Non-residential building growth expected for Auckland, Waikato & the Bay of Plenty
  5. Wellington experienced the strongest total construction growth in 2017.

MBIE said all previous reports had been adjusted to 2017 dollars for comparison.

Switch to more sustained growth

The report suggests growth will moderate, but be sustained: “For the first time since the report was initiated in 2013, a peak in total construction value is not expected within the forecast period. Instead a more moderate sustained growth is forecast for the next 6 years. The 2017 report forecast a peak in total construction value of $42 billion in 2020. This year’s forecast is for activity to remain at current elevated levels until the end of 2020, with growth expected from 2021 to over $41 billion in 2023. The forecast of sustained growth reflects strong researched project intentions nationally.”

How good was last year’s forecast?

The ministry asks in this year’s report how well did it do with the 2017 forecast. I noted when that report was released last August that it acknowledged an optimism bias in forecasting, then didn’t seem to take it into account.

MBIE bears that out: “The revised total construction forecast for the period 2017-23 is for moderate & sustained growth. The higher & earlier construction peak, which was forecast for 2020 in last year’s report, is expected to give way to long-term growth. This year’s forecast is lower than previously forecast.

“Actual national growth decreased by 0.3% in 2017, whereas the 2017 report had expected 10% growth. All 3 construction types (residential buildings, non-residential buildings & infrastructure construction) grew less than expected. Long-term growth is now forecast showing continued growth to 2023. This is unique compared with all previous reports, which have all forecast a peak at some point in their 6-year views.”

Housing forecast – true if KiwiBuild succeeds

While, in the 2018 report, the ministry acknowledges over-optimism last year, the forecast for housing consents is even more optimistic. Whereas the 2017 report showed consents peaking at about 34,000 in 2019 then tailing off, the 2018 report shows consents continuing the almost straightline rise since the market bottomed below 14,000 in 2011 (13,269 in the 12 months to July 2011).

“Over the next 6 years the number of dwelling units consented is forecast to increase by 39% to a forecast high of 43,000 dwelling units in 2023. Dwelling unit consents are expected to go past the 2004 peak (31,423 dwellings) in 2018 and grow year-on-year throughout the forecast period. This is considerably higher & longer-term dwelling growth than was forecast in the 2017 report.”

The latest consent figures, released by Stats NZ yesterday, show the pipeline report is correct on the first part of this forecast: consents for the 12 months to June totalled 32,860.

The dwelling unit forecasts are based on Stats NZ’s December 2017 household formation data, which provides estimates of the number of new dwellings required derived from population estimates. This information provides estimates of the number of new dwellings required to meet both expected population growth and to remedy already existing housing shortages.

One reason for the greater optimism: “KiwiBuild is expected to provide greater certainty of the forward pipeline of construction work and allow the sector greater ability to manage constraints and scale up to provide year-on-year increases in dwelling numbers into the future.”

Non-residential

On non-residential, this year’s report forecasts a lower peak in 2019, the same time as the peak forecast previously. The 2017 report forecast 12% non-residential building growth for 2017 nationally, but actual recorded growth was a fall of 3%.

Infrastructure to flatline?

The 2018 report’s forecast for infrastructure activity nationally is far lower, almost flatlining for 6 years at about $7 billion/year, whereas the 2017 report had infrastructure spending rising from $8 billion at the start of this year to $10 billion in 2023.

The new report says: “Last year’s report expected 6% infrastructure growth, where actual recorded activity was a 3% decrease. National infrastructure values are historically more consistent year-on-year than residential or non-residential building activity values.”

Smoothing out the optimism bias

Pacifecon recognises the optimism bias inherent in development intentions, and has been steadily reducing the size of project it individually scrutinises more closely. For the first report in 2013 projects over $100 million were individually scrutinised. This year & last year, projects over $50 million were scrutinised.

The report explains that all intentions in building & construction come with some level of overconfidence, but many projects may lag behind their original timelines or are occasionally cancelled. “This optimism bias of non-residential building & infrastructure construction intentions in the Pacifecon dataset can be seen in the raw (un-‘smoothed’) known intentions data. This shows in a higher than expected number of projects over the next few years, and a lower than expected number of projects over the longer term.”

Links:
MBIE, Construction pipeline reports
MBIE, 2018 construction pipeline report

Earlier stories:
9 August 2017: Construction pipeline report continues to show high optimism bias
27 July 2016: $200 billion construction pipeline forecast for next 6 years

Attribution: MBIE release, pipeline report.

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