Construction firms set for hard times ahead

BY NICOLA BOYES

Commercial building consents in Hamilton city have hit a low, with just four consents approved last month, and construction companies are warning of a tough 18 months ahead.

Figures from Statistics New Zealand show there were four non-residential building consents granted for Hamilton city last month.

Across the region there were 84 new consents issued and while there is often a lag between applications being lodged and approval being granted, construction companies spoken to said the commercial market is increasingly tight.

Projects including the Waikato Hospital upgrade, Claudelands Event Centre and work on Wintec House and the Wintec campus at Avalon were all either in progress or nearing completion.

Following the completion of those, work in the pipeline was looking thin.

Foster Construction general manager Leonard Gardner said the amount of public works coming through had slowed.

The company won the contract to build the Claudelands Events Centre, but contracts following that were mainly in the private sector.

He said the company had a decent volume of work in the pipeline as some businesses decided to go ahead with office and site expansions while it was still cheaper to do so, but it was competitive.

"There was a lot of public work but now it's probably about 50-50 public and private."

The company was working on the new Cambridge Mitre 10 and would be working on the Bridges Church in Cambridge.

"Commercial is still very competitive.

"There aren't many really big jobs coming through, it's going to be a very competitive time out there for people to win the work."

The Waikato Times had been told margins could be squeezed as tight as 2 per cent over the coming year.

Mainzeal's Waikato manager, Finlay Irwin, said the environment was very competitive.

"There has been a lot of design consultants that have been short of work over the past six to nine months, that eventually flows through to a shortage in jobs."

Mr Irwin said Mainzeal was working on stage two of Braemar Hospital, the Wintec carpark and Rotorua Hospital.

"Really, until now, there has been a lot of jobs that have been coming through which has cushioned the impact but some of those projects are starting to slow."

He said there were still projects available but supply of contractors outstripped demand and margins were being driven down, although he said customers looking to tender weren't necessarily getting the best deal and said businesses should be looking at options like design-build contracts.

Hawkins Construction project director Gary Walker said there was a definite tightening in the marketplace, particularly looking ahead to after the 2011 Rugby World Cup.

He said there were projects coming through in the Waikato but the tightening in the market was in the $25 million-plus bracket. He said margins were likely to become a lot tighter in the coming year.

Nationally, the value of non-residential building consents was $293m in July 2010, down 21 per cent compared with July 2009.

The largest decreases were in offices and administration buildings, down $59m, education buildings, down $35m, and hotels and other short-term accommodation, down $19m.

The largest increase was for shops, restaurants, and taverns, up $25m.

A positive to come out of yesterday's figures was a lift in residential units.

More new dwellings were authorised in 11 of New Zealand's 16 regions in July 2010. Waikato had one of the largest increases, up 33 units to 197.

Bay of Plenty was up 90 units to 174 while Auckland recorded 318 units and Canterbury 266.

Nationally in July, consents were issued for 1473 new housing units, including 203 apartments.

"This is the highest monthly number of apartment units authorised for more than a year," business statistics manager Louise Holmes-Oliver said, "and over half of these were for retirement units."

The value of consents issued for residential buildings rose $48m (11 per cent) for July 2010 compared with July 2009.

- © Fairfax NZ News