ELECTION 2023
Development activity falling as headwinds intensify Following an extended period of elevated development activity across New Zealand, Colliers expects new building construction to fall to its lowest levels since the Global Financial Crisis within the next 12 months
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confluence of mounting challenges has resulted in a marked slowdown in development activity over recent months. A combination of factors such as higher interest rates, a more stringent lending environment, elevated build costs and a cooling economic backdrop, have increased the difficulty of achieving development feasibility. However, the lack of building now will likely lead to availability constraints when conditions improve, 16 propertyandbuild.com
repeating challenges of the past.
Constraints force developers to take a cautious approach The deceleration in activity can be attributed to a range of factors. The most prominent is the amplified cost of financing and reduced access to funding. Interest rates have surged at an unprecedented pace as the Reserve Bank seeks to curb inflation. Consequently, financiers have adopted a more cautious lending
stance, making it harder for developers to secure funds for their projects. Another pivotal factor contributing to the slowdown is the substantial escalation of construction costs. Escalating material expenses, disruptions in supply chains, and a shortage of skilled labor have all driven up construction expenditures. The challenge of achieving project viability is compounded by the cooling economic climate, which renders an increasing number of businesses sensitive to rising rental
costs. This situation frequently compels developers to re-evaluate the feasibility of their projects, potentially resulting in delays or cancellations.
Data suggests activity could slow further Building consent data clearly illustrates a significant loss of momentum within the residential apartment and industrial sectors. Measured over a sixmonth rolling period, consent issuance for apartment
