Has Auck­land build­ing peaked?

Data on cranes shows con­struc­tion in city may have hit ca­pac­ity

The New Zealand Herald - - BUSINESS - Matthew The­unis­sen matthew.the­unis­sen@nzher­ald.co.nz

The num­ber of cranes op­er­at­ing in New Zealand has de­clined for the first time in years, largely be­cause of a sharp drop in Christchurch. Ac­cord­ing to the Rider Levett Buck­nall (RLB) Crane In­dex, out last week, the num­ber of cranes in Auck­land rose by just one as op­posed to an av­er­age of about 10 a quar­ter since 2014. RLB di­rec­tor Chris Haines said the re­port — the eighth edi­tion — raised the ques­tions of whether Auck­land had reached its peak con­struc­tion ca­pac­ity, and whether the fo­cus was shift­ing from the re­build­ing of Christchurch.

Over­all, there were 123 “long-term cranes”, mostly tower or large crawler cranes, op­er­at­ing in New Zealand in the past quar­ter, down from 132.

“The real rea­son for the drop is Christchurch and the steam com­ing off the mar­ket there — it’s def­i­nitely slow­ing,” Haines said.

The num­ber of cranes work­ing on res­i­den­tial projects, on the other hand, went up by seven and now rep­re­sented 45 per cent of the to­tal na­tion­wide.

This was par­tic­u­larly so in Auck­land, where cranes work­ing on res­i­den­tial prop­er­ties rose by about 70 per cent.

Haines said this was largely due to the re­cent apart­ment boom in the city and its need for big cranes.

There was a de­cline in the num­ber of cranes on com­mer­cial sites, which dropped from 34 to 27. Health, ho­tel and civil projects also em­ployed fewer cranes.

“The other in­ter­est­ing one is Christchurch . . . which used to have more cranes than Auck­land whereas where we’re at now it’s very no­tice­able how the work-rate’s dropped off and the crane num­bers re­flect that.”

Auck­land’s 73 cranes now out­num­ber Christchurch’s by more than four to one.

“I think a lot of the is­sue is that peo­ple have been tak­ing their in­sur- ance pay­outs and in­vest­ing in Auck­land, in­clud­ing a lot of in­sti­tu­tional in­vestors or fun­ders who peo­ple had hoped would rein­vest in Christchurch.”

The num­bers co­in­cide with the com­ple­tion of im­por­tant com­mu­nity projects in and around the city in­clud­ing the Christchurch Jus­tice and Emergency Ser­vices Precinct, Crowne Plaza, the Forte Health ex­pan­sion and the Hereford St carpark.

How­ever, there were a num­ber of projects planned for the re­build­ing yet to hap­pen, and the de­clin­ing

num­ber of cranes might in­di­cate the re­build had lost mo­men­tum af­ter peak­ing in 2014.

“At the mo­ment we’re get­ting so many CVs from . . . peo­ple who have done Christchurch re­pair work,” said Haines, who is based in Auck­land.

“The ques­tion is what it means in the long term. Are the num­bers in Christchurch go­ing to keep go­ing down be­cause in­vest­ment is fall­ing and the fo­cus has gone else­where to things like light rail, air­ports, wastew­a­ter in­fras­truc­ture or Kaik­oura and Welling­ton af­ter their earth­quakes?”

A num­ber of Christchurch con­struc­tion firms spo­ken to by the Her­ald said they had not no­ticed such a trend with plenty of work still be­ing done. They said the num­ber of cranes was not nec­es­sar­ily the most ac­cu­rate mea­sure of con­struc­tion progress.

Chris Hunter, man­ag­ing di­rec­tor of con­struc­tion firm NZStrong, said it was not sur­pris­ing that Christchurch was los­ing its cranes but he at­trib­uted this to the fo­cus shift­ing to out-of-city jobs.

“[It’s not Christchurch be­ing for­got­ten about] there’s big­ger dy­nam­ics go­ing on,” Hunter said.

The con­struc­tion in­dus­try was head­ing into an­other de­mand­ing year in 2018 with risks as­so­ci­ated with reg­u­la­tion and sup­ply chain costs more likely than not to con­tinue.

“You’re also go­ing to have an in­crease in costs due to the new Gov­ern­ment’s poli­cies, par­tic­u­larly around min­i­mum wage,” he said.

“The projects that are strug­gling to get funded, which are typ­i­cally pri­vate de­vel­op­ments, the crane re­port in­di­cates that the res­i­den­tial side is prob­a­bly go­ing to peak in Auck­land and then drop away, be­cause you’ve had a mas­sive vol­ume of high-rises built by large de­vel­op­ers in that space and I don’t see that con­tin­u­ing.

“But all other build­ings, I can see the level of cranes staying the same if not in­creas­ing.”

Her­ald graphic

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