New Zealand’s construction industry will continue to expand in real terms up to 2020, according to Timetric’s Construction Intelligence Center (CIC).
Investment in infrastructure construction and housing projects are said to be the two factors to help drive growth.
In real terms, the industry’s output value rose at a compound annual growth rate (CAGR) of 6.6% between 2011 and 2015. Timetric’s CIC forecasts the growth to slow down to 6.07% over the next five years, increasing from US$ 32.8 billion in 2015 to US$ 44.0 billion in 2020.
It will be driven by government and private sector investments to modernise the country’s transport infrastructure and renewable energy sector, claims Timetric, while population growth is also said to create fresh demand for residential construction.
Residential construction is forecast to remain the largest market in the industry, accounting for 36.1% of the industry’s total value in 2020. It will be supported by an expanding middle-class population and rising disposable income.
Moreover, various affordable housing projects will also help the market to grow over the forecast period.
Consequently, Timetric expects the market output to record a CAGR of 7.52% in nominal terms, rising to US$ 15.2 billion in 2020.
Infrastructure construction was the second-largest market in the construction industry during the review period, accounting for 22.7% of its total value in 2015, said Timetric.
It said the market will maintain its position over the forecast period, driven by government plans to develop the country’s infrastructure through public-private partnerships (PPPs).
Moreover, due to a rise in international arrivals, the government plans to expand airport capacities by 2020, driving growth in the infrastructure construction market.
The market is forecast to grow at a CAGR of 9.61% in nominal terms, rising to US$ 10.3 billion in 2020.