The Ministry of Business, Innovation & Employment has just released it’s 3rd Construction Pipeline report for the next five years in New Zealand. Have you read it and considered what it means for your company?
There is no doubt that the value of construction is set to stay at high levels over the next few years, but there are trends within the data that should be looked at and considered when thinking about how your business may grow over the next half decade.
Residential building shows strong growth, particularly in Auckland. Within this however, it shows that we are building fewer houses for the same total value, i.e. detached houses are getting bigger and more up-market. Another trend to continue gathering pace is the increase in higher density, multi-unit developments. It is forecast that by 2020 the number of detached and multi-unit dwellings in Auckland will be about equal.
What does this mean if you are a builder of new homes in Auckland? It could mean that focusing on either larger, up-market homes or high density housing will provide a better market niche than “traditional” mid-market homes. This mid-market space is likely to be further dominated by the group housing companies. The possible risk is this mid-market sector of the market may reduce in relative terms over the next few years and the big group housing companies will look to expand into other areas of the market. My guess will be higher density housing, so that sector of the market may be harder for an independent builder to compete in. Think about that and how you may need to position your company over time.
The other region of major construction activity is of course Christchurch. The residential re-build is peaking now and is forecast to reduce over the next few years. The commercial rebuild will continue to increase over the next couple of years and so there will be a need for contracting companies to adjust their focus on the opportunities that this will bring.
Being aware of the wider commercial environment is part of your role as the owner of your company. Taking the time to lift your horizon of vision out to the 3-5 year timeframe is important to do from time to time. You will then be able to set some longer term goals for your company to reach that are better aligned to the longer term direction in the market. Or you can continue to drift along, reacting to changes in the market as they affect you. Your choice.