State keeps building sector busy

More than 25 multimillion-dollar construction projects are either up for tender or about to start.

However, much of the work is coming from the state.

The Pacifecon construction report, which surveys $5 million-plus building work nationally, found the building sector busy.

"Ten new contracts were out to tender and 15 commenced or were about to start during April," Pacifecon reported. Only about a third of the projects were in the private sector, it said.

The Government's $1.5 billion ultra-fast broadband development via Crown Fibre Investment was one example cited.

Private sector work includes the fit-out of 250 Auckland Hyatt Regency rooms and $8 million for additions and alterations to The Langham, Auckland.

Information released last month showing Fletcher Construction winning Auckland International Airport work was wrong, Pacifecon said. It was supplied with incorrect information.

Work has not started and the project remains on hold.

Pacifecon has 21 researchers and said companies should consider starting development work because they could get bargains.

"Now is a great time for companies to build due to very competitive building prices on offer and lower interest rates," the research business said.

The financial stability report released by the Reserve Bank last week said only 10 per cent of bank lending was for commercial property, mostly secured against physical assets, but it raised issues about the market.

"Within the commercial property sector, one particular area of concern is property development. Ongoing strains in the non-bank sector have substantially reduced developers' access to mezzanine finance.

"This increases the risk that some projects will remain unfinished, exposing banks to increased credit risk," the report said.

Banks would make funds available so projects could be finished rather than risk part-finished deals.

Not everyone is convinced about big development opportunities.

Owen McShane, director of the Centre for Resource Management Studies at Kaiwaka, said he had extremely negative feedback about real estate and "no subdivider in their right mind would contemplate Auckland development in the next three to four years".

A retired developer told McShane: "The market is a bloodbath for section sales and subdividers. The Super City will only make matters much worse. Every subdivider I know has literally given up trying to fight all the ridiculous bureaucratic nonsense under the Resource Management Act.

"Rates will go sky high. Everyone will be worse off except John Banks, whose ego will get a great big boost when he is lord mayor.

"It will be almost impossible to get anything done or approved. Resource consents for all but very large projects should be processed by the local community boards," the ex-developer said.

"Councillors from Papakura won't give a damn about Orewa, and vice versa."