Bright construction outlook for Queenstown-Lakes

The Queenstown-Lakes District has had some phenomenal growth over the past decade or so. On the back of such strong growth, many would expect the rate of future growth in the area to slow. For the construction industry, this is far from the case. In this article, Shaun Twaddle takes a sneak peek at Infometrics recently released Regional Construction Outlook to see how construction activity in the area is shaping up.

Residential building consents to surge ahead

Residential consent numbers in Queenstown-Lakes reached an all-time record high of 893pa in the year to March 2016. While one may expect growth in the number of residential consents to plateau or to gradually increase, this couldn’t be further from the truth. Our Region Construction Outlook shows that further significant growth is expected over the next two years given the strength of the region’s housing market and strong demand conditions in the tourism industry. Between March 2016 and September 2018, the annual consent total is forecast to lift to 1,387 as developers look to cash in on a rapid appreciation in property prices.

One of the biggest challenges for the area continues to be constructing dwellings that are affordable for Queenstown’s service workers, but our forecasts expect growth to be largely focused on standalone houses, despite townhouses or apartments possibly offering a cheaper alternative for potential homeowners and investors. Growth in activity will not be limited to Queenstown, but will also show up in Wanaka and Arrowtown.

Non-residential building to ease from peaks

The total annual number of building work put in place in Queenstown-Lakes more than trebled between June 2014 and December 2015. Education and social, cultural, and religious buildings were big drivers behind the increase. Over the next few years, total non-residential building activity is forecast to ease. Our Regional Construction Outlook shows non-residential building activity to ease by 27% between December 2015 and December 2018, yet remain high by historical standards, as activity across these building types retreats from their peaks. Nevertheless, commercial and accommodation building are still expected to perform strongly over this period. This outlook reflects growth in tourist numbers and spending, which will attract more domestic and international retailers to the area, placing further pressure on the area’s already-stretched accommodation stock.

The above are some high level insights from the recently released Infometrics Regional Construction Outlook, a web based profile that provides detailed construction data and forecasts at a regional, territorial authority and Auckland ward level. For more information about the Regional Construction Outlook, click here.

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