In a statement, Defence Minister Ron Mark said there was no question the ruling could impact the military's use of Whenuapai - which was established before World War II.
"I understand this could mean moving the testing to another area of the base," he said.
"To me, that makes the noise somebody else's problem and would impose significant cost on the taxpayer - I understand this would be in the millions of dollars".
Mark said the precedent set by the decision could have serious impacts on the Defence Force's operations nationwide.
"It could put in jeopardy our ability to conduct search and rescue, and disaster relief operations outside of commercial office hours," he said.
"Looking at the ruling it makes me wonder if perhaps one of the threats to our national security is property development."
Mark said the NZDF's legal team would report back next week with advice about further steps.
Comment has been sought from Neil Construction.
Mark earlier this year announced the future of the RNZAF Base Auckland at Whenuapai was under review – along with the rest of the Defence Force estate - saying it was increasingly under threat from growing urbanisation near its boundaries.
"A property developer who has bought land right next to the base, which has been there for decades, is complaining that we run our engines at night or after dark," Mark told the Herald in July.
"This reverse nimbyism is having a massive impact on the ability of the Defence Force to operate today."
The decision also comes after outgoing Air New Zealand chief Christopher Luxon said the company was in the final stages of testing the viability of flying commercially from Whenuapai.
The company declined to comment on the Environment Court ruling on Friday.