Construction activities varied across the country’s residential, non-residential, and infrastructure sectors in 2023, with several new and prevailing issues impacting project timelines. These challenges included labor supply issues, material and project cost inflation resulting in project re-costing, plan evaluations, lower profit margins, and weather-related incidents causing damage to infrastructure and buildings. Nonetheless, with setbacks comes the opportunity to re-evaluate industry priorities. Some of the leading events and issues expected to have a positive impact on New Zealand’s construction industry in the next three years include the development of a clearer pipeline of central and local government work, new immigration changes creating a pathway for construction workers, better resource management, and the creation of a more climate-resilient infrastructure network.
Building construction activitiesIn February 2024, the CEO of Fletcher Building, one of New Zealand’s largest construction companies, announced his intention to step down amid the company reporting a net loss after significant items of 120 million New Zealand dollars. The company’s losses have come at a time when New Zealand’s residential construction sector has been struggling, with the country's new residential dwelling consents reaching a five-year low in 2023. In terms of non-residential building activities, commercial buildings dominated building starts by volume and value in 2023, with a high number of industrial and education facilities also in the pipeline that year. Auckland, New Zealand’s largest metropolitan area, continues to lead the country regarding residential, non-residential, and infrastructure construction work.
The path to climate-resilient infrastructureNew Zealand’s infrastructure development faced several obstacles in 2023, including natural disasters, the leading perceived threat to the country, according to New Zealanders. Construction material cost inflation and damage to properties, roads, and bridges caused by flooding and Cyclone Gabrielle led to the re-prioritization, cancellation, and delay of several projects. These events will likely continue to disrupt the pipeline in the coming years, with building and infrastructure rebuild costs following the 2023 disasters estimated at around 13 billion New Zealand dollars by the Ministry of Business, Innovation and Employment (MBIE).
As a result, the country’s most dominant infrastructure sector, transport, grew at the expense of other categories in 2023, with the number of transport infrastructure projects commenced in New Zealand rising to over 1.15 thousand. In comparison, energy infrastructure project commencements accounted for only one percent of all projects that year. While New Zealand’s infrastructure continues to develop, the impacts of climate change are coming to the forefront of governmental discussions. Building new and adapting existing infrastructure to withstand climate change and lowering carbon emissions generated by new projects is becoming vital. Despite setbacks, forecasts show activities are expected to increase until 2026 as the nation’s infrastructure needs continue to evolve in conjunction with population growth.