Christchurch construction optimism fades while the rest of NZ lifts

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Construction workload optimism for the Christchurch rebuild has dropped from an average of 85% during 2011 to 63%, according to the May 2012 building construction sentiment survey by Davis Langdon, an AECOM company.

The survey is based on the views of 600 construction industry decision makers, including consultants, contractors, financiers, agents, developers and others from across the public and private sectors.

Davis Langdon New Zealand regional director Chris Sutherland says the outlook in Christchurch remains consistent with the trend observed over the past year.
“Frustration with the protracted Christchurch Central City Blueprint process has added to the uncertainty for investors.”
“One respondent described the impasse between commercial developers and prospective tenants as a ‘stalemate’ caused by the inability to commit to new projects, while the Christchurch CBD remained ‘little more than a construction site’.”

Mr Sutherland says while current conditions are still fairly poor, there is evidence of a positive upswing in the industry’s outlook for the coming year.
“85% of New Zealand construction industry decision makers anticipate stable or increasing workloads over the next 12 months, up from 80% in December.”
“Optimism is strongest in Auckland where 36% now expect more work over the coming year, up from 28% in the previous quarter.”

He says existing building refurbishments were selected by 76% of decision makers as a key source of new work.
“Refurbishment work has been spurred on by the need to enhance buildings without having to seek finance for an entirely new building. There is also the need to act on seismic assessments of existing building stock across the country.”

Tightening profit margins continue to plague the industry’s ability to deliver projects, Mr Sutherland says.
“Many respondents indicated that continually low margins were ‘putting some companies in financial difficulty’ or, worse, causing them to fail. This is adding to the industry’s shortage of expertise, and could destroy the industry resource base.”
Concerns about accessibility to finance remain steady, although some respondents identified encouraging signs of investor confidence thawing in the private sector development market.