As New Zealand construction faces a bleak winter, this group bucks the trend, bringing NZ$10,700,000,000 in revenue over 8 years

The property market cooled after Auckland house prices peaked in 2016.

 

More unexpectedly, New Zealand’s construction industry also appears to be entering a bleak winter.

 

In February 2018, New Zealand’s largest construction company, Fletcher, announced estimated losses of nearly NZ$1,000,000,000 over the preceding two years.

 

On the last day of July 2018, major construction company Ebert, owing NZ$40,000,000, was placed in the hands of receivers from PwC.

 

In February 2019, Arrow International, a construction company founded in 1984 with annual revenue exceeding NZ$350,000,000, entered voluntary receivership.

 

 

Ebert’s entry into receivership in July last year shocked the industry.

 

Yet amid the gloom, one group is pushing ahead against the tide.

 

A report by the New Zealand Chinese Building Industry Association (NZCBIA) identifies Chinese development and construction as New Zealand’s fastest-growing industry. It has completed projects worth nearly NZ$18 over the past few years, with NZ$2,100,000,000 worth currently underway. Over the next 8 years, Chinese developers could bring New Zealand construction projects worth more than NZ$10,600,000,000.

 

The NZCBIA report draws on historical data from 26 Chinese developers undertaking projects in New Zealand.

 

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The report shows that Chinese developers have completed NZ$1,777,000,000 worth of projects in New Zealand since 2010. Residential projects accounted for 84%, commercial projects for 12%, and industrial projects for the remaining 4%. Auckland was home to 90% of the projects.

 

NZCBIA president Frank Xu said some people accused Chinese people of property speculation, but “Chinese people build far more houses than they buy.”

 

 

 

Frank Xu said Chinese developers were expected to undertake a further NZ$10,690,000,000 worth of construction projects over the next 8 years. Projects worth NZ$21.56 were already under construction, including Fu Wah Group’s Park Hyatt hotel on Auckland’s waterfront and the NZ$300,000,000 third stage of the Sugar Tree apartment development in Auckland’s central business district.

 

NZCBIA president Frank Xu

 

The report on New Zealand’s Chinese building industry states: “Total floor area over the next 7 to 8 years is expected to reach 2,565,000 square metres, representing NZ$10,600,000,000 in investment, mainly in residential property.”

 

Frank Xu called this “exciting news that also means enormous subcontracting opportunities for New Zealand companies”.

 

Property Council chief executive Leonie Freeman welcomed investment on this scale. “New Zealand — particularly Auckland — has a housing shortage, and our cities need substantial numbers of new homes,” she said.

 

Leonie Freeman

 

Leonie Freeman said: “These projects include apartments, townhouses and standalone homes. We need a large pool of highly skilled people and organisations to help address this issue. Developers, including Chinese companies, are a crucial part of addressing housing quality for New Zealanders.”

 

However, Frank Xu said that although property development activity remained strong, he did not expect Chinese developers to increase their investment in New Zealand, for two reasons.

 

“First, the New Zealand Government intends to restrict foreign investment through the Overseas Investment Office. Second, and more importantly, the Chinese Government is preventing capital from leaving China. This has an enormous impact on Chinese businesses, greater than that of the New Zealand Government.”

 

Discussing the image of Chinese developers in New Zealand, Xu said: “The idea that overseas buyers drive up New Zealand house prices is a subjective impression, but it is not racism.” He also noted that Chinese people working in New Zealand were developing important hotel and apartment projects and making a substantial contribution to the country.

 

The Ministry of Business, Innovation and Employment’s (MBIE) National Construction Pipeline Report forecasts that New Zealand’s total construction output could reach NZ$42,000,000,000 by 2020. The current elevated level of construction activity is expected to continue until the end of 2020, with the industry expected to remain at NZ$41,000,000,000 over 2021–2023.

 

Stats NZ said that by April 2019, new dwelling consents had risen 7.4% to 34,392. Non-residential projects granted resource consent over the year were worth NZ$7,500,000,000, up 11% compared with April 2018.

 

 

Looking ahead, Frank Xu said: “Chinese people are known for their diligence, and construction companies from mainland China have, worldwide… Construction companies from China and Chinese-owned businesses based in New Zealand will continue to play an increasingly prominent role in New Zealand’s development and construction markets.”

 

From 16 August 2019 to 18, the 2019 New Zealand International Building Expo & Summit (2019 NZIBES), organised by NZCBIA, will take place at Vodafone Events Centre.

 

As one of New Zealand’s largest property and construction exhibitions, 2019 NZIBES aims to give industry professionals valuable opportunities to exchange knowledge, learn and improve their professional skills. It also offers outstanding suppliers a platform to collaborate, network and showcase products and services, while providing consumers with information on top-quality products and brands.

 

A particular highlight is this year’s summit theme, “OFF SITE, OFF SHORE” — off-site construction and offshore prefabrication. At the event, property and construction leaders, including senior representatives from government agencies, the public sector and banks, will explore this theme, exchanging views, discussing and debating related issues, ideas, trends and opportunities.

 

The summit will give international sponsors and exhibitors rare opportunities to build relationships and connect with local government and industry leaders, making it an excellent choice for researching and entering New Zealand’s property and construction markets.

 

NZCBIA warmly invites you to join 2019 NZIBES and help protect and nurture a pillar industry for New Zealand’s Chinese community.

 

Event dates: 16–18 August 2019

 

Venue: Vodafone Events Centre

 

Event website:

https://www.nzibes.com/cms/nzibes/

 

Summit ticket website:

https://www.eventfinda.co.nz/2019/2019-new-zealand-international-building-summit/auckland/manukau-city

 

For business enquiries, call: 021 363 389