Uncertainty slows construction industry

Plans for the ASB Bank headquarters on Jellicoe St in the Wynyard Quarter, one of Auckland's biggest building projects. Photo / Supplied

Christchurch's multi-billion-dollar earthquake rebuild is putting a damper on construction for now as businesses assess the costs of the devastation and staff flock to Canterbury, creating a shortage elsewhere.

A construction sentiment survey from David Langdon, part of AECOM, says uncertainty is dogging the building sector, largely due to the earthquake and ongoing seismic activity.

"Across the country, projects have been cancelled or deferred pending determinations on companies' capital requirements in Christchurch," the survey said.

Many were still reporting and assessing the status of affected sites and suggested more activity was likely early next year.

"Christchurch continues to expect a considerable influx of work: 75 per cent of those surveyed believe work levels will rise over the coming year." However, when this work would happen was still unclear.

Aucklanders working in the building sector were most optimistic, with 44 per cent seeing more work on the horizon.

"The industry was encouraged by the prospect of improved investor confidence and public infrastructure spending.

"Others were more pessimistic, explaining deals are not feasible due to banks having too much market risk and there is still some time to go before demand will increase sufficiently to prompt new development," the survey said.

Some people surveyed worried about whether there was any driving force to re-populate Christchurch. Others predicted a lack of innovation because leading players would not have to work too hard to fill their books and might drop standards because of time constraints.

Statistics NZ's latest data on the construction sector showed consents for residential buildings fell $70 million or 14 per cent from June till July. But non-residential values rose $50 million or 17 per cent, led by a $105 million consent for work on Middlemore Hospital in Auckland.

"Earthquake-related consents identified in Canterbury totalled $32 million, including 36 new dwellings," Statistics NZ said.

The value of all building consents issued for the year to July was $8.9 billion, well down on last year's $10 billion.

A source said building inspectors had left their home areas to shift temporarily to Christchurch and help there.

That had a detrimental effect on construction work elsewhere in New Zealand because it created a skills shortage, the source said. But many inspectors had now left Christchurch, tenders were being issued and work was beginning to flow again, he said.

Auckland' biggest new project is the 23,000sq m, $160 million ASB Bank headquarters on Jellicoe St in the Wynyard Quarter being developed by listed Kiwi Income Property Trust, which owns $1.98 billion of property.

Work by Fletcher Construction started there in March.

The country's biggest project in the pipeline is SkyCity's new national convention and exhibition centre on Hobson St, a $350 million job which will span an entire block in the city's CBD.