Archive | Construction

Greenland & Golden Horse start 1400-apartment job on old Goodman industrial site

Chinese state-owned developer Greenland Group & Golden Horse Group of Hong Kong turned the first sod on Thursday for a 6.9ha 1400-apartment joint-venture project at Erskineville in Sydney’s inner-west, on a former industrial site which Goodman Group sold to Golden Horse in 2014.

Construction partner for stage 1 of the Park Sydney development is local family-owned builder Richard Crookes Constructions Pty Ltd, which has worked on several Greenland projects.

Image above: Park Sydney masterplan, highlighting amenities.

The masterplanned residential community will be developed in 5 stages and will ultimately feature 9 development blocks ranging in height from 2-8 storeys.

Park Sydney, 4km from Sydney’s cbd, will have a 7446m² public park, a supermarket & specialty shops, a fresh food precinct, eat street, medical centre & childcare centre.

Greenland Australia managing director Sherwood Luo said: “Together with Golden Horse Australia, we’ve been planning Park Sydney since 2016, so it’s particularly exciting to see major projects of this scale starting to take shape and watching how they transform the local area.

“We are converting this large former industrial precinct into an engaging & inclusive residential community that will ultimately become home to some 3000 residents.”

The value to Goodman of its exit

Golden Horse Group expanded into Australia in 2013 and bought the former industrial site in Erskineville from Goodman Group the next year. For Goodman (owner of NZX-listed Goodman Property Trust’s management company & cornerstone investor in the trust), that deal was among many as the group sold $A1.9 billion of mostly industrial assets in a year, and reinvested the lot to generate higher development returns.

Builder with long list of staff support programmes

On a different tack, the builder on this project has a lot to say about how it treats its staff – an eye-opener at a time the New Zealand construction sector has been grumbling about contract arrangements, and this government (like the last one) is talking about increasing training for & numbers in the construction industry.

Richard Crookes Constructions says on its careers page: “RCC believes the success of every project depends on the ability of their personnel and the synergy of the project teams… RCC’s business is based on maintaining long-term relationships with clients, partners & subcontractors.”

It also lists a number of staff-supporting views that I’m sure would be novelties if espoused in New Zealand:

  • We build a talent pipeline
  • We expect our staff to engage in the business and be part of its success, growth & evolution. In return we invest in their growth & development. We give people autonomy, support & the resources they need to perform at their best
  • We maintain a flat management structure with an open door policy and an honest & collaborative culture
  • Fitness passport gives individuals & families access to multiple facilities (gyms, swimming pools) which allows you to go as often as you like
  • Exercise incentives, health assessments, mindfit programme, access to trainers, $A100 annual rebate & annual flu vaccinations
  • RCC offers corporate rates with BUPA to all employees in an effort to encourage healthy lifestyles
  • Every employee receives one day off every 6 months – employees are encouraged to use the leave for engaging in health & wellbeing activities, spending time with family & friends or to relax
  • Each employee has the ability to purchase an additional 2 weeks of annual leave/year
  • Maternity & paternity leave is offered when members of the RCC family start or expand their own families
  • We would like your salary to work as hard as possible; for this reason, we offer salary packaging options such as novated leases (a lease arrangement, usually for a vehicle, where the employer takes on the obligations of the lessee to the financier, which ceases if the employee leaves the job)
  • Our staff can access a range of discounts from partnering retailers
  • RCC has a financial advisor in-house who is available to meet with staff one on one
  • We believe in & support females at RCC; one of the programme offerings is our women’s leadership lunch & learns
  • We offer an array of learning & development for our employees through coaching sessions, formal mentoring programmes, external training, role-specific technical training & leadership development programmes across all levels.

Links:
Park Sydney
Greenland Australia
Golden Horse Australia
Richard Crookes Constructions

Earlier story:
17 August 2015: Urban renewal lifts Goodman Group

Attribution: Joint venture release, Greenland, Golden Horse & Richard Crookes websites.

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MBIE opens consultation on acceptable solutions

The Ministry of Business, Innovation & Employment (MBIE) opened consultation on Wednesday on proposals to amend a number of acceptable solutions & verification methods, and to revoke the simple house acceptable solution SH/AS1. The consultation period closes on Friday 21 September.

MBIE said in a release the changes were intended to update the documents to reflect the latest knowledge & current building practices, and also make editorial changes for clarity.

Amendments are proposed to the following documents:

  • Clause B1 Structure: B1/VM1
  • Clause B2 Durability: B2/AS1
  • Clause E2 External Moisture: E2/VM1, E2/AS1
  • Clause G12 Water Supplies: G12/VM1, G12/AS1, G12/AS2
  • Clause G13 Foul Water: G13/AS1, G13/VM2, G13/AS2, G13/AS3

Revoking Simple House:

On revoking the simple house acceptable solution SH/AS1, MBIE said: “SH/AS1 is now 8 years old and is no longer fit for purpose. It has not been updated in a number of years, meaning current knowledge & practices are not reflected, and it is inconsistent with other acceptable solutions.

“Anecdotal evidence is that few architects & designers refer to SH/AS1 because of its limitations on floor & roof shapes. SH/AS1 does not contain any information that is not available elsewhere in acceptable solutions or New Zealand Standards.

Link:
Full proposals & consultation MBIE corporate website

Attribution: MBIE release.

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More moderate but sustained construction growth forecast, but new records seen for housing

The National Construction Pipeline Report 2018, out on Monday, forecasts a continuing rise instead of a tailing off in housing construction, a less optimistic future for non-residential & flatlining for infrastructure.

The report provides a projection of national building & construction activity for the next 6 years, ending 31 December 2023. It includes national and regional breakdowns of actual and forecast residential building, non–residential building and infrastructure activity. The report is based on building & construction forecasting by the Building Research Association (BRANZ) & Pacifecon NZ Ltd data on researched non-residential building & infrastructure intentions.

The 5 key findings in the report:

  1. Sustained growth is forecast for building & construction nationally
  2. National dwelling consents expected to exceed historic highs with 43,000 in 2023
  3. Multi-unit dwellings overtook detached house consents in Auckland in 2017
  4. Non-residential building growth expected for Auckland, Waikato & the Bay of Plenty
  5. Wellington experienced the strongest total construction growth in 2017.

MBIE said all previous reports had been adjusted to 2017 dollars for comparison.

Switch to more sustained growth

The report suggests growth will moderate, but be sustained: “For the first time since the report was initiated in 2013, a peak in total construction value is not expected within the forecast period. Instead a more moderate sustained growth is forecast for the next 6 years. The 2017 report forecast a peak in total construction value of $42 billion in 2020. This year’s forecast is for activity to remain at current elevated levels until the end of 2020, with growth expected from 2021 to over $41 billion in 2023. The forecast of sustained growth reflects strong researched project intentions nationally.”

How good was last year’s forecast?

The ministry asks in this year’s report how well did it do with the 2017 forecast. I noted when that report was released last August that it acknowledged an optimism bias in forecasting, then didn’t seem to take it into account.

MBIE bears that out: “The revised total construction forecast for the period 2017-23 is for moderate & sustained growth. The higher & earlier construction peak, which was forecast for 2020 in last year’s report, is expected to give way to long-term growth. This year’s forecast is lower than previously forecast.

“Actual national growth decreased by 0.3% in 2017, whereas the 2017 report had expected 10% growth. All 3 construction types (residential buildings, non-residential buildings & infrastructure construction) grew less than expected. Long-term growth is now forecast showing continued growth to 2023. This is unique compared with all previous reports, which have all forecast a peak at some point in their 6-year views.”

Housing forecast – true if KiwiBuild succeeds

While, in the 2018 report, the ministry acknowledges over-optimism last year, the forecast for housing consents is even more optimistic. Whereas the 2017 report showed consents peaking at about 34,000 in 2019 then tailing off, the 2018 report shows consents continuing the almost straightline rise since the market bottomed below 14,000 in 2011 (13,269 in the 12 months to July 2011).

“Over the next 6 years the number of dwelling units consented is forecast to increase by 39% to a forecast high of 43,000 dwelling units in 2023. Dwelling unit consents are expected to go past the 2004 peak (31,423 dwellings) in 2018 and grow year-on-year throughout the forecast period. This is considerably higher & longer-term dwelling growth than was forecast in the 2017 report.”

The latest consent figures, released by Stats NZ yesterday, show the pipeline report is correct on the first part of this forecast: consents for the 12 months to June totalled 32,860.

The dwelling unit forecasts are based on Stats NZ’s December 2017 household formation data, which provides estimates of the number of new dwellings required derived from population estimates. This information provides estimates of the number of new dwellings required to meet both expected population growth and to remedy already existing housing shortages.

One reason for the greater optimism: “KiwiBuild is expected to provide greater certainty of the forward pipeline of construction work and allow the sector greater ability to manage constraints and scale up to provide year-on-year increases in dwelling numbers into the future.”

Non-residential

On non-residential, this year’s report forecasts a lower peak in 2019, the same time as the peak forecast previously. The 2017 report forecast 12% non-residential building growth for 2017 nationally, but actual recorded growth was a fall of 3%.

Infrastructure to flatline?

The 2018 report’s forecast for infrastructure activity nationally is far lower, almost flatlining for 6 years at about $7 billion/year, whereas the 2017 report had infrastructure spending rising from $8 billion at the start of this year to $10 billion in 2023.

The new report says: “Last year’s report expected 6% infrastructure growth, where actual recorded activity was a 3% decrease. National infrastructure values are historically more consistent year-on-year than residential or non-residential building activity values.”

Smoothing out the optimism bias

Pacifecon recognises the optimism bias inherent in development intentions, and has been steadily reducing the size of project it individually scrutinises more closely. For the first report in 2013 projects over $100 million were individually scrutinised. This year & last year, projects over $50 million were scrutinised.

The report explains that all intentions in building & construction come with some level of overconfidence, but many projects may lag behind their original timelines or are occasionally cancelled. “This optimism bias of non-residential building & infrastructure construction intentions in the Pacifecon dataset can be seen in the raw (un-‘smoothed’) known intentions data. This shows in a higher than expected number of projects over the next few years, and a lower than expected number of projects over the longer term.”

Links:
MBIE, Construction pipeline reports
MBIE, 2018 construction pipeline report

Earlier stories:
9 August 2017: Construction pipeline report continues to show high optimism bias
27 July 2016: $200 billion construction pipeline forecast for next 6 years

Attribution: MBIE release, pipeline report.

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Home consents up 8% for year, non-residential forging ahead

Consents for new homes nationally in June dropped 18% from a 14-year spike in May, but were up 9.1% compared to June last year.

The total value of all consents issued in the year to June rose 10.7% to $21.5 billion.

Home consents for the June year were 7.9% ahead of the previous year at 32,860, and lifted the rolling annual tally by 132 from May.

The value of all new residential consents, including additions & alterations, rose just over 11% for the month & the year, to $1.17 billion for the month and $12.8 billion for the year.

Standalone homes’ share of new consents fell 4 percentage points for the month to 62%, 5 points for the year to 64.4%.

The national consent numbers for new homes in June and the year to June, compared to June last year, and the latest 12 months compared to the previous 12 months:

Total consents for new homes:  2792 (2560 in June 2017, 3407 in May 2018), up 9.1%; 32,860 (30,453), up 7.9%
Total values for new homes, plus alterations & additions: $1.17 billion ($1.05 billion), up 11.2%; $14.2 billion ($12.8 billion), up 11.1%
Standalone homes:  1730 (1691), up 2.3%; 21,176 (21,090), up 0.4%
Apartments: 323 (268), up 20.5%; 3922 (2913), up 34.6%
Retirement village units: 144 (222), down 35.1%; 2002 (1651), up 21.3%
Suburban townhouses & flats: 595 (379), up 57%; 5760 (4799), up 20%
Standalone share of consents:  62% for the month (66%); 64.4% for the year (69.3%).

In Auckland – Manukau up 150%, Howick up 116%

The spread of new consents around the Auckland region has varied considerably over the last 12 months – down at the rural extremities, big jumps in parts of South Auckland, smaller rises in parts of the isthmus.

A quick count of the shifts: Rodney down 20%; in the city centre & islands ward of Waitemata & Gulf up 35%; down 3% in the ward with the biggest volume, Albany; up 56% in Orakei; up 67% in Maungakiekie-Tamaki; up 116% in Howick; up 150% in Manukau; up 34% in Manurewa & Papakura; down 25% in Franklin.

Auckland residential consents, for June & year to June compared to June last year and the previous 12 months:

Region: 1001 (906 in June 2017, 1530 in May 2018), up 10.5% from last June; 12,369 (10,364), up 19.3%
Rodney: 67 (105), 795 (992)
Albany: 210 (247), 2506 (2585)
North Shore: 24 (45), 721 (496)
Waitakere: 79 (45), 662 (606)
Waitemata & Gulf: 15 (61), 1408 (1040)
Whau: 83 (91), 434 (378)
Albert-Eden-Roskill: 107 (160), 822 (841)
Orakei: 21 (12), 386 (248)
Maungakiekie-Tamaki: 70 (20), 773 (464)
Howick: 98 (32), 847 (393)
Manukau: 68 (23), 1002 (401)
Manurewa-Papakura: 85 (19), 1307 (973)
Franklin: 74 (46), 706 (947)

The non-residential sectors, and the total

The total value of all consents issued in the year to June was $21.5 billion, up 10.7% from $19.4 billion in the previous 12 months.

After 2 $2 billion months this year (March & May), total consents were comparatively low at $1.74 billion, but that was 13.1% above June last year.

Consents for non-residential buildings were up 17.5% for the month at $530 million ($451 million), and up 10.3% over 12 months to $6.9 billion ($6.2 billion).

In non-residential sectors, the value of consents for hotels, motels & other short-term accommodation has slipped 33% in the last 12 months to $328 million after rising by 216% to $490 million in the previous 12 months. The consent value in that sector in June rose 103% to $50 million.

Consents for shops, restaurants & bars fell 23% in the year to June 2017, from $904 million to $698 million, but have regained most of that ground in the latest 12 months, rising 43% to $996 million.

Industrial building consents rose 43% in the year to June 2017 to $577 million, and another 37% in the last 12 months to $792 million.

The 2 biggest non-residential categories are education and a combination of offices, administration & public transport. Consents for education buildings have topped $1 billion/year for 3 years after jumping from $776 million to $1.24 billion in 2016. The sector slipped to $1.1 billion last year but has picked up to $1.16 billion in the last 12 months, a 5.2% rise.

Consents in the office sector have exceeded $1 billion/year for 5 years after rising from $797 million to $1.035 billion in 2014. They reached $1.25 billion in 2017 but have fallen 13.1% in the last 12 months to $1.09 billion.

Attribution: Stats NZ tables & release.

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15-year high for Auckland home consents

Consents for new homes in Auckland hit a 15-year high of 1530 in May. It was the 6th time in 12 months that consents had topped 1000.

In October 2002, 1945 consents for new homes were issued in Auckland, including 1206 apartments.

The 3407 consents for new homes issued nationally in May were the highest number since the 3447 in June 2004.

Nationally, consents were up 6.5% over the last 12 months to 32,628. In Auckland, the 12,274 consents for the year were up 18%.

Standalone houses remained the biggest contributor, but with a declining market share.

Standalones represented 77.6% of new consents in May 2016, falling to 73% last May and to 63.6% this May. On an annual basis, standalones fell from 72.1% in the year to May 2016 to 69.4% in 2017 and 64.8% in the latest 12 months.

The national consent numbers for May and the year to May, compared to May last year, and the latest 12 months compared to the previous 12 months:

Total consents for new homes: 3407 (2794), 32,628 (30,645)
Total values for new homes: $1.383 billion ($1.229 billion); $14.085 billion ($12.81  billion)
Standalone homes: 2167 (2039); 21,137 (21,262)
Apartments: 454 (123); 3867 (2881)
Retirement village units: 255 (137); 2080 (1718)
Suburban townhouses & flats: 531 (495); 5544 (4784)
Standalone share of consents:  63.6% for the month (73%); 64.8% (69.4%).

Auckland residential consents, for May & year to May compared to May last year and the previous 12 months:

Region: 1530 (885), 12,274 (10,379)
Rodney: 82 (159), 833 (965)
Albany: 283 (208), 2543 (2549)
North Shore: 37 (42), 742 (484)
Waitakere:  73 (53), 628 (626)
Waitemata & Gulf: 318 (9), 1454 (1093)
Whau: 54 (13), 442 (339)
Albert-Eden-Roskill: 147 (94), 875(731)
Orakei: 92 (5), 377 (280)
Maungakiekie-Tamaki: 85 (83), 723 (468)
Howick: 78 (33), 781 (401)
Manukau: 60 (33), 957(397)
Manurewa-Papakura: 145 (65), 1241 (1065)
Franklin: 76 (88), 678 (944)

Total construction

Over all sectors, the value of all consents has been rising by $2 billion/year since New Zealand edged out of the global financial crisis in 2013.

In the 12 months to May 2013, consents for all construction were worth $11.2 billion. In the latest 12 months they were worth $21.3 billion, up 8% from $19.7 billion in the year to May 2017.

Consents for non-residential construction rose 8.7% in May to $657 million ($605 million), and 4.2% for the year to $6.8 billion ($6.5 billion).

Attribution: Statistics NZ.

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Property Council award a tribute to Maurice Clark’s reinvigoration skills

The Property Council’s supreme award last night, to the former Dominion Post building on Boulcott St in Wellington, now known as Waikoukou and the headquarters of Transpower NZ Ltd (pictured), is a tribute to Maurice Clark for his determination to salvage tired buildings and light them up for new users.

He also salvages old names. According to a Dominion Post story in 2015, Boulcott St was once a stream running down from bushclad hills, and the place it met Manners & Willis Sts was called Wai-koukou, for the pool where forest birds bathed.

I recall the Evening Post building (in 1969, well before the 2 Wellington newspapers merged) as a chaotic joining of structures, where reporters & sub-editors were separated by a chasm and a back staircase somehow dropped you at the door of the Britannia. And Boulcott St was the first place I drove a company car, a Fiat bubble car, managing to terrorise motorists & pedestrians on all sides before making it to the Holeproof factory at Shannon & back. But back to the awards:

Maurice Clark.

Mr Clark was developer through Cheops Holdings Ltd. [Cheops, the Great Pyramid of Giza, is the oldest of the 7 wonders of the ancient world. It’s notable as the only one of those 7 to remain largely intact.]

He bought McKee-Fehl Constructors Ltd in 1987, remains its owner & managing director and has focused its work in recent years on restoration, especially of quake-damaged structures, including Transpower’s former premises (originally Shell House) on The Terrace.

The construction company has a long series of building salvages to its name. Earlier projects include the 1904 Victoria University Hunter Building, the 1876 Law School (Old Government Building) and the 1908 Public Trust Building, now occupied by the Ministry for Culture & Heritage.

Mr Clark’s also had his engineering skills tested on the strengthening for the Victoria University Rankine Brown Building, Museum of Wellington City & Sea, and structural testing before redevelopment of the former Defence building at 15 Stout St, now occupied by the Ministry of Business, Innovation & Employment.

Mr Clark, 74, was made an officer of the NZ Order of Merit in 2016 for his services to heritage preservation & the construction industry.

Multiple awards for Waikoukou

On Waikoukou’s way to winning the supreme award at the Property Council-Rider Levett Bucknall industry awards, it was also best in the commercial office category and won a merit award for green building.

The awards judges said the Waikoukou project team had rejuvenated what was a largely vacant & obsolete collection of buildings, refurbishing the existing and adding a new office structure on top. They also added a hospitality courtyard & laneway, Press Hall, linking Boulcott St through to Willis St.

The judges commented: “Not only does the building’s superior structural resilience ensure Transpower uninterrupted operations in the event of an earthquake, the project team have transformed the property into a modern, seismically upgraded office environment.

“A ground-to-roof central atrium with connecting bridges between the north & south buildings and generous internal stairwell creates a unique social environment.

“The judges believe this project successfully integrates multiple challenges, delivering a thoughtful design, quality execution, and anchored with a long-term lease to a recognised tenant, resulting in a high quality investment asset.”

Supreme winner:
Waikoukou, 22 Boulcott St, Wellington, developer Cheops Holdings Ltd, along with project partners McKee-Fehl Constructors Ltd (Maurice Clark is sole director of both Cheops & McKee-Fehl), Architecture + Ltd, Jasmax Ltd, BlackYARD Engineering Ltd, Beca Ltd and tenant, Transpower NZ Ltd

Civic & arts, sponsor Warren & Mahoney:

Excellence & best in category: Ellen Melville Centre & Freyberg Place, Auckland
Excellence: Justice & Emergency Services Precinct, Christchurch; Matuku Takotako, Sumner Centre, Christchurch
Merit: Dunedin law courts, Dunedin; Manukau bus station, Manukau; Objectspace art gallery, Grey Lynn; David O McKay Stake & Cultural Events Centre, Hamilton; Salvation Army Christchurch City, Christchurch

Commercial office, sponsor RCP:

Excellence & best in category:
Waikoukou, 22 Boulcott St, Wellington
Excellence:
12 Madden St, Wynyard Quarter
Genesis Energy, Hamilton
Ministry for Primary Industries, Auckland
Pita Te Hori Centre (King Edward Barracks), Christchurch
Merit:
AA Insurance, Auckland
Alpine Energy office building, Timaru
Maori Television, East Tamaki
QBE Centre, 125 Queen St

Education, sponsor GIB:

Excellence & best in category:
King’s School centennial building, Remuera
Excellence:
Otago Business School, Dunedin
Te Auaha NZ Institute of Creativity (Cuba Dixon redevelopment), Wellington
Wakatipu High School, Queenstown
Merit:
Rangiora High School – Rakahuri building, Christchurch Ara Kahukura, Christchurch
Unitec construction, engineering & trades building (Mataaho), Mt Albert
Unitec Hub (Te Puna), Mt Albert
Auckland University Science Centre, Auckland

Green building, sponsor Resene:

Excellence & best in category:
Ara Kahukura, Christchurch
Excellence:
Pita Te Hori/King Edward Barracks, Christchurch
Te Pa Tauira – Otago Polytechnic student village, Dunedin
Merit:
Waikoukou, 22 Boulcott St, Wellington
Goodman fitout, KPMG Centre, VXV precinct, Wynyard Quarter

Health & medical, sponsor Fagerhult:

Merit:
Whenua Pupuke – Waitemata Clinical Skills Centre, North Shore Hospital, Takapuna

Heritage & adaptive reuses, sponsor Hawkins:

Excellence & best in category:
Dunedin law courts, Dunedin
Excellence:
Melanesian Mission, Auckland
Merit:
94-96 Queen St, Auckland
Air NZ airport campus, Auckland Airport
Bishop Selwyn Chapel & St Mary’s Church, Parnell
Christ’s College kitchen tower restoration, Christchurch
Mona Vale homestead, Christchurch
Sign of the Kiwi, Christchurch

Industrial, sponsor Yardi:

Excellence & best in category:
Röhlig Logistics, Mangere
Excellence:
Fonterra Co-operative Group, 109 Fanshawe St, Auckland
Merit:
Ministry for Primary Industries, Auckland
Potter Interior Systems Ltd, The Gate Industry Park, Penrose

Multi-unit residential, sponsor Arrow International:
Excellence & best in category:
Sale Street Apartments, 70 Sale St, Auckland
Excellence:
Hereford Residences, Freemans Bay
North West Quarter, Kensington Park, Orewa
Merit:
Centro, Sugartree, 27 Union St, Auckland
Millwater Central Terraces, Millwater, Hibiscus Coast
Te Pa Tauira – Otago Polytechnic student village, Dunedin
The Foundries, Freemans

Retail, sponsor RCG:

Excellence & best in category:
The Hub Hornby, Christchurch
Excellence:
Huami Restaurant – SkyCity Auckland Ltd, Auckland

Tourism & leisure, sponsor Holmes Consulting:

Excellence & best in category:
Ramada Albany, Albany
Excellence:
Auckland International Airport pier B extension project, Auckland Airport
Merit:
Bug Lab, Auckland Zoo, Western Springs

Urban land development, sponsor Natural Habitats:

Excellence & best in category:
Beaches – Coast Papamoa subdivision, Papamoa
Merit:
Jennings St-Jersey Avenue redevelopment by Housing NZ Corp, Mt Albert
Richmond subdivision (stage 1), Mt Wellington

Links:
Transpower, 11 June 2015: Maurice Clark to develop Wellington building for Transpower
McKee Fehl, Press Hall – a new landmark
McKee Fehl projects
Dominion Post, 20 July 2015: Many Maori names for Wellington landmarks lost – 150 years of news

Attribution: Property Council release, McKee Fehl, Dominion Post, Wikipedia.

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Commission opens investigation into Fulton Hogan’s Stevenson acquisition

The Commerce Commission has opened an investigation into Fulton Hogan Ltd’s proposed acquisition of Stevenson Group Ltd’s construction materials business.

The commission said yesterday it would consider whether the acquisition would be likely to result in a substantial lessening of competition in any relevant market in breach of section 47 of the Commerce Act. The acquisition is due to be completed by 31 July, but the parties haven’t applied for clearance for it.

Fulton Hogan is one of New Zealand’s largest roading & infrastructure construction companies. The commission said it would focus initially on the potential competitive effects of the proposed acquisition on quarry markets in Auckland & North Waikato.

It would also consider whether any competitive effects arise from Fulton Hogan’s proposed acquisition of Stevenson’s concrete plants, transport, laboratory services and associated plant & equipment.

The commission seeks input to its investigation by Friday 29 June.

The sale would leave Stevenson’s with its property development & mining operations. Its biggest property interest is the 360ha Drury South industrial park it’s begun developing.

Related stories:
7 April 2017: Kiwi Property plans new town centre next to Stevenson’s Drury development
30 August 2013: Drury South industrial area plan change & MUL extension approved

Attribution: Commission release.

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Residential statistics – some taken with salt, some seriously

Statistics – be wary of them.

Colliers issued its latest figures on the residential markets yesterday, and on Auckland in particular. The first statistic was population growth, and it turned out to be first in a series of national statistics, this March & last, not Auckland statistics.

It concerned me because it showed net migration down 5.5% (71,932/year down to 67,984/year). But for Auckland, Statistics NZ put the fall in net migrant inflow at 3.7% (35,772/year down to 34,448/year, a decline of 1324/year). That is also an uncertain figure, because Statistics NZ has started trying to map movement of immigrants to see where they actually end up.

So, first statistic on which to base conclusions raises an alarm bell.

After that, it looked best to ignore the prognostication and stick to statistics of what has happened.

Except, Colliers’ statistics include a construction cost index rise of 4.6%, which Colliers national research & consulting director Alan McMahon told me was national.

According to Statistics NZ, the construction cost index rose 4.7% nationally in the year to March, but only by 0.3% in both Auckland & Wellington. Auckland’s rise was the smallest for the region since December 2012.

That puts paid to some of the assumption on which Mr McMahon based a broad commentary about market constraints: “Slower presales & rising construction costs make achieving a positive feasibility more difficult and bank funding harder to secure. If sale prices are steady and building costs go up, the only variable left to balance the equation is land cost. The problem is that a lot of land sold in Auckland between about 2013 & 2016 was priced on the assumption of continuing house price inflation. Since then, house price inflation has slowed, while construction costs have increased by 5% in the last year alone. As a consequence, some landowners can’t sell for a profit, nor can they develop at a profit, so they are essentially sitting tight for now.”

The Colliers chart shows residential consents for Auckland at 11,629 for the 12 months to April, which was up from 10,226 in the previous 12 months, a 13.7% rise. Statistics NZ’s breakdown of residential sectors is national, so I can’t show a comparison for apartments in Auckland.

The apartment sector

However, Colliers has monitored the supply of apartments, a sector in which it has become more active in the last 3 years.

It shows 10 apartment projects completed in the December 2017 & March 2018 quarters, 75 under construction and 28 at the marketing & design stage.

Looking forward, Colliers estimates 57 projects completed in 2018 & 2019, resulting in the addition of 4534 units. For the following 2 years to 2021, it estimates 46 projects & 4122 unit completions.

The notable feature of this is the decline in the central city’s dominance of the apartment market – down from 59% to 55% of supply by 2021, while suburbia rises from 16% to 21% of supply and the city fringe slips a point to 24%.

It puts the median apartment sizes at 97m² for 2 bedrooms, 146m² for 3 bedrooms and median asking prices at $10,955/m² for 2 bedrooms, $11,877/m² for 3 bedrooms. Those figures are for “all individual developments tracked”.

Colliers has identified 31 apartment projects that won’t proceed under original plans. 6 of those sites are being remarketed for sale or have sold, 10 have been abandoned under current proposals and 15 have been deferred.

Colliers also looked at suburban growth areas Hobsonville Point, Manukau & Mt Wellington and found median floor areas for terraces & detached homes of 113m² for 2 bedrooms, 162m² for 3 bedrooms, and median asking prices of $7462/m² for 2 bedrooms, $6571/m² for 3 bedrooms.

Attribution: Colliers report & release.

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Decision Monday on how to meet building consent flows

Auckland Council’s strategic procurement committee will decide tomorrow (noon Monday) whether to renew its overflow delivery model for building consent services.

The item is listed in the committee’s open agenda but the main discussion will be confidential.

The question for the council is how to provide an efficient service at peak times without employing its own staff to cover those peaks.

The council’s head of physical works & technical services procurement, Peter Cunningham, says in his meeting report: “Building consent services are currently provided through a combination of inhouse delivery, an overflow delivery model that operates across the Auckland region and a legacy outsourced provider model that operates exclusively in Manukau.

“In the central region, in addition to the overflow model there is also an agency provider to manage building consenting volumes.”

The current contracts expire on 30 June.

In further explanation, Mr Cunningham says: “The preferred regional service delivery model for building consents is one where third-party suppliers are used to process consents and inspect buildings that council staff do not have the capacity to process, eg, an overflow delivery model.  In an overflow model, the suppliers would act as an agent of Auckland Council.

“Due to restraint on additional staff and to manage risk of over-capacity, the overflow model is considered an essential component to ensure the delivery of an efficient, quality, timely building consenting service.

“The overflow model is considered a more feasible alternative to delivering the full service inhouse, as it provides flexibility during seasonal peaks & troughs in building consent volumes.”

Also listed in both the open & confidential sections of the agenda are:

  • an update on the 48 council projects with a budget over $5 million, and
  • the council’s vertical construction procurement category strategy
  • an update on the Westgate town centre integrated library & community centre.

Web notification issues

Through Auckland Council’s changes to its website it’s been hard at times to track the whereabouts of information such as resource consent application hearings and submissions on them.

The latest trick I’ve stumbled upon under submissions is submission documents with an opening date for submissions – but no closing date.

I’m writing this on Sunday, so ringing the council to check today would be pointless.

Similarly, the Eden Park Trust’s application for resource consent for a concert at Eden Park stadium on the evening of Waitangi Day (6 February) next year has the submissions period opening on Wednesday, no closing date.

The closing date will very likely appear on the website once the opening date has passed. But tell me, which would you, as a submitter, find the more useful?

Links:
Strategic procurement committee, Monday 11 June at noon, 135 Albert St
11, Update on capital projects over $5 million (addressed further in confidential agenda)
12, Procurement of building consents overflow services (decisions to be made in confidential agenda)
13, Status update: Westgate multipurpose facility (integrated library & community centre) construction (addressed further in confidential agenda)
14, Vertical construction procurement category strategy (addressed further in confidential agenda)

Attribution: Council committee agenda.

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Construction slowing – but still on growth track

Figures out from Statistics NZ on Wednesday on construction activity indicate slowdowns – but still growth – across all sectors, and specifically residential.

But an overall call on the direction of construction activity – residential & other, nationally & in Auckland, quarterly & annually – proves impossible. For starters, Statistics NZ doesn’t run actual residential figures for Auckland, just seasonally adjusted & trend, which longtime readers of these pages know I steer clear of.

Auckland construction (all sectors) jumped almost 15% from the March quarter to June last year, then plateaued for 3 quarters.

For the national picture of all construction sectors, looking back 4 years shows leaps in 2 years, lower growth in 2.

Residentially, the March quarter was the quietest since September 2015 but still showed growth.

The detail

Total building work put in place, March quarter: $5.28 billion ($5.6 billion & $5.5 billion in the previous 2 quarters, $5.16 billion in the March 2017 quarter)
Quarterly percentage shifts: Up 7.0% in the March quarter after 3 quarters of lower gains, a 10.9% rise in the March 2017 quarter and above-20% increases in the 3 quarters before that
Total all buildings for the March year: $21.57 billion, up $1.2 billion (5.9%) after leaps, since the $13.15 billion in the March 2014 year, of $2.5 billion (19.1%), $1.5 billion (9.5%) & $3.2 billion (18.7%)

The residential figures nationally, March quarter:

New: $2.92 billion ($2.71 billion in the March 2017 quarter), up 7.6% from the March 2017 quarter, the smallest quarterly increase since September 2015; increases in the last 3 quarters of 2016 were in the range of 24-28%, slipping to 14.8% in the March 2017 quarter
Alterations & additions: $568 million ($542 million in the March 2017 quarter), up 4.9%; this segment of the residential market has put $5-600 million of work in place in 9 of the last 10 quarters
Total residential: $3.49 billion ($3.25 billion), up 7.2%, the smallest quarterly rise over the last 3 years

The residential figures nationally, March year:

New: $11.78 billion ($10.82 billion), up 8.9% after a 22% rise the previous year
Alterations & additions: $2.31 billion ($2.23 billion), up 3.8% after a 12.9% rise the previous year
Total residential: $14.09 billion ($13.04 billion), up 8.1% after double-digit annual rises in the previous 4 years, including 21.1% in the March 2017 year & 26% in the March 2014 year

Auckland & Canterbury drive construction activity

Construction statistics manager Melissa McKenzie said Auckland & Canterbury accounted for $3 billion (56%) of the national value of total building activity in the March quarter: “Total
building work in Auckland was about $2 billion/quarter for the last year, while values in Canterbury were down from post-earthquake highs. However, these values were boosted by higher construction costs.”

In Auckland, she said, the value of residential building work had been growing strongly, with the March 2018 quarter value of $1.39 billion almost double that in the March 2014 quarter. Meanwhile, non-residential building work has shown moderate growth. Offices, education & accommodation buildings accounted for over half of Auckland’s $632 million total non-residential building work in the March 2018 quarter.

In Canterbury, the value of building work in the latest quarter was $941 million – the lowest quarterly value since the March 2014 quarter: “Residential building activity value in Canterbury has been generally falling since the March 2015 quarter. Non-residential building activity has been variable, but reached $440 million in the March 2018 quarter. The latest value was boosted by several projects on social, cultural & religious buildings.”

Auckland:
All buildings, March quarter: $2.02 billion (up 14.8% from $1.76 billion in the March 2017 quarter; the last 3 quarters have all been just over $2 billion)

Links:
Statistics NZ, 2 February 2018: Conferences, culture, and tourism boost consents
Statistics NZ, 31 July 2017: More hotels on the way

Attribution: Statistics NZ tables & release.

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