Apartment developer Gary Groves works in a sector picked to be New Zealand's top performer in the year ahead, forecast to grow by 9.2 per cent.

"You don't have to be a rocket scientist to work that out," says the engineer of his chosen industry.

The multi-unit apartment and townhouse construction industry is forecast to grow to $1.42b in the 2017/18 financial year, up from $1.3 billion.

A study of more than 200 New Zealand industries, conducted by market researchers at IBISWorld, picked the top Kiwi industries set to flourish and those forecast to decline in the next year.

Advertisement
Gary Groves of Sanctuary Group. Photo/Greg Bowker
Gary Groves of Sanctuary Group. Photo/Greg Bowker

Groves, of Sanctuary Group, said he was not qualified to compare or forecast the fortunes of sectors, but he understood apartment development.

"I just started renovating old houses in Ponsonby and Grey Lynn, then I did multi-unit projects. I started in 1986, a long time ago. I think the career picked me rather than me picking the career," he said.

"All I'm doing is following overseas trends of intensification. I've built more than 1000 apartments."

His biggest project to date is The International, a $200 million build converting the ex-Fonterra headquarters on Princes St in Auckland's CBD from commercial premises into 90 upmarket apartments, including a penthouse reportedly sold to Chris Liddell, an advisor to US President Donald Trump, although Groves said he could not comment due to confidentiality arrangements.

Sanctuary pre-sold 62 apartments in The International, worth about $150m, Groves said.

Brett Russell's Dominion Constructors was about to strip off the tower's facade. Most of the internal demolition had been completed, Groves said.

Nathan Cloutman, IBISWorld senior industry analyst based in Australia, said low interest rates had driven demand for apartments and townhouses.

National building consents issued for new dwellings reached a 12-year high in 2016/17 and growth was anticipated to continue over the current year due to a housing supply shortfall, Cloutman said.

Surging Auckland and Wellington house prices had led to a shift towards more-affordable, higher-density living, particularly for first-time buyers, which had fuelled demand for apartments and townhouses, he said.

The study forecast natural energy and dairy sector food processing to be the second and third best sectors for growth in the year ahead, followed by superannuation funds and aged care residential services.

New Zealand's producers of cheese, butter and milk powder were heavily export oriented, with nearly three-quarters of revenue derived from global markets, according to IBISWorld research.

A combination of stronger contributions and investment returns was expected to support continued growth in the superannuation funds industry during 2017-18.

IBISWorld forecast industry revenue to rise by 6.4 per cent in 2017-18.

"The KiwiSaver scheme continues to grow in size as a result of rising membership numbers and contributions since its inception, and is expected to be the main contributor to industry growth. This is due to the scheme being operated on an opt-out basis," Cloutman said.

Annual revenue from the television broadcasting, rail transport and fossil fuel electricity generation industries were forecast to decline by 5 per cent, 5.1 per cent and 5.9 per cent respectively.

READ ABOUT THE SURVEY