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Non-residential building forecast to ease

A new University of Auckland building is helping to keep non-residential building consents from falling but next year's activity is expected to be slower, with an oversupply of office space possible.


The forecast is from economic researcher Infometrics, which looks at Statistics New Zealand's monthly consent values for commercial buildings like shops, hotels and office blocks.


In October, consents were up 11 per cent in October compared to a year earlier. However, it was largely due to a $120 million engineering block at the university. Without it, building activity would have been 12 per cent lower than October last year.


Infometrics senior economist Gareth Kiernan said Canterbury and Wellington were weighing heaviest on consents.

Approvals in Canterbury were down 44 per cent ($64m) compared with the previous year, primarily due to a dip in hotel consents and an $11m drop in education consents in Waimakariri.

Consents in the Wellington region fell by 64 per cent ($66m) over the same period, driven by a $32m fall in the value of office consents and a $20m decline in retail consents in the city.

Kiernan expected the weakness in Wellington's consents to be temporary, "given the ongoing seismic strengthening work and the need to replace buildings damaged in last November's Kaikōura earthquake".

Apart from the large education building, consents in Auckland were a mixed bag. There were rises in office consents in the Waitematā and Gulf ward, along with lifts in storage consents in Waitematā and Gulf, Howick, and Manurewa-Papakura.

These increases were largely offset by declines in hostel consents in Albany and office consents in Maungakiekie-Tāmaki and Manukau.

Bay of Plenty, however, was enjoying a boost to its non-residential building levels, with a $37m lift in consents on an annual basis. Factory consents and shop consents in Tauranga were up markedly from a year earlier.

New Zealand's solid economy indicated there would be further increases in non-residential consents over the next six to 12 months, Kiernan said.

However, the strength of growth would be limited by the continued decline in post-quake rebuilding work in Christchurch.

"Slowing economic growth and a potential oversupply of office space is likely to further restrict activity by 2019."

Real Estate Investar Editor
Real Estate Investar Editor
Real Estate Investar provides intelligent software, tools and data to help you save time and make money in the residential property investment market.

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