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  1. #1
    Join Date
    Sep 2003
    High up above and deep down under

    Default Worldwide credit squeeze hits NZ construction sector

    Worldwide credit squeeze hits NZ construction sector
    5:00AM Saturday February 02, 2008
    By Anne Gibson

    The global credit squeeze is hovering over Auckland's key property sector, raising questions about the future of about $1 billion of building work.

    Two construction bosses, whose firms build $800 million of projects a year, are blaming a combination of serious factors for the unease, including the effects of the United States credit crisis and a string of finance company collapses last year.

    Chris Hunter, chief executive of Hawkins Construction, says he has serious doubts about many large Auckland developments planned for years and worth about $1 billion. Either work has not begun or sites are standing idle, showing a new degree of paralysis, he says.

    And Peter Gomm, chief operating officer of Mainzeal Construction, says some projects will be canned, but the good ones will survive.

    As heads of two of the country's four largest building firms, they say the sector has hit hard times. The country's four largest builders are Fletcher Construction, followed by Multiplex, Hawkins and Mainzeal.

    Builders are yet to start the $120 million Victoria Park Markets revamp or the $450 million 67-level Dae Ju Elliott Tower, both planned for some time.

    Mr Hunter said his firm was busy on other jobs and had an annual workload of at least $400 million.

    "It's a challenging period and a lot of projects people are hoping will go ahead but they might not get there."

    He blamed high council fees and finance company collapses. "It's harder for developers to get cash."

    Mr Gomm said fringe developments would suffer most because money was much harder to get without finance companies' 'mezzanine' funding, he said.

    Developers rely on high-interest mezzanine funding when they are unable to secure cheaper money from the main trading banks.

    Many of the city's most active developers have little or no work on in central Auckland. Melview Development's Nigel McKenna is working at Flat Bush and in Queenstown, and Kitchener Group's David Henderson has been planning to revamp Victoria Park Markets but major building work has yet to start.

    Conrad Properties' Robert Holden, who has built many of the large "shoe box" apartment blocks in Hobson St and Nelson St, has shifted his focus to Wellington.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  2. #2
    Join Date
    May 2007


    This is a very interesting article, backing up the figures from the other day re:building consents down 6%. This is a clear sign that developers are struggling out there, lack of money means lack of productivity, this will pertain to various other sectors.

    I think the RBNZ is not recognising this slowdown enough.


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