Author: Aldrin Thayalakal, ATEED investment specialist
Published: 21 AUG 2020
Building and Infrastructure

The building and infrastructure sector in New Zealand is seeing unprecedented pipeline and planned investments. Some estimates put investment funds at around NZ$47 billion over the next five years, which provides the required scale and direction for various stakeholders – national and international – to plan an ongoing and consistent engagement strategy in this sector.

The spectrum of stakeholders can include, but is not limited to, equity and debt providers, building and infrastructure (B&I) suppliers, technology players, off-site manufacturers, professional services and skilled labour.

Worldwide, building and infrastructure is a tested format to inject a large-scale stimulus as productive deployment of taxpayers’ money, and lends itself to mass employment potential, where monetary policy has been less effective. And with significant pressure following years of underinvestment, New Zealand’s construction sector will benefit from significant and timely stimulus packages. Significantly, the Government is boosting infrastructure investments as one of the routes to economic recovery from the COVID-19 induced crisis. With currently no community transmission, and the development of smart borders, New Zealand is open for business. The Government is focusing on delivery, which is visible in initiatives such as the Construction Sector Accord, the Living Standards Framework, and new Government Procurement Rules.


Capacity building reforms

The Government has also tactically reviewed some of the time-consuming processes in the Resource Management Act (RMA) for priority projects to expedite delivery and enable agencies to self-consent for certain types of projects to cut delivery timelines. There is a behavioural change in the way agencies approach these projects, and we are witnessing more unsolicited bids, bilateral negotiations and reduction in bid costs to level the playing field. The New Zealand Infrastructure Commission has been beefed up with skills to oversee the regulatory landscape and assist agencies with limited in-house capacity.

All these initiatives point towards a targeted approach to the planning and delivery of building and infrastructure projects in a timely way. The stakeholders recognise that infrastructure investment is not only an enabler of economic growth, but also a catalyst for delivering the social, economic and environmental benefits that are now required under the new Government Procurement Rules. It is not only the project itself, but also the wider outcomes that such investment will enable.

To stimulate this sector, government has kickstarted many traditional and tested infrastructure projects in the ‘roads and pipes’ space to be delivered by agencies leveraging their own or the Crown’s balance sheets. This will trigger activity for professional services, builders, developers, subcontractors, suppliers, technology providers and labour.

Since infrastructure is a connector and enabler, it provides cascading benefits. For example, rail or road widening to the south of Auckland can enable and grow the food and beverage industry in the south, an area which has some of the most productive soil in New Zealand. This enables the investors and stakeholders of the cascading sector to position themselves to benefit from the new infrastructure.


Private capital participation

It is recognised that there will be a limit to Crown or public agency balance sheets and their ability to borrow without compromising their rating and credibility. So private capital providers will need to play a role. The ‘light rail’ model is an example of how private parties (such as pension funds) can develop unsolicited bids to provision infrastructure and engage with public agencies to fund and deliver projects.

Housing sector

The other associated sector that will see an uptick in activity is the housing sector. There is a shortage of affordable homes, especially in Auckland. The government has budgeted for 8000 new homes, which will be a mix of state and private housing developments of single house, medium-density and apartments, on both greenfield and brownfield sites.

The Infrastructure Funding and Financing Bill (IFF) was passed in Parliament in July 2020. This will enable the private sector to provide last-mile infrastructure for bulk housing and charge targeted rates. It will also unlock lot of bulk housing delayed due to limited funds within local bodies to provide the infrastructure.

The Milldale Development was a successful example in unlocking bulk housing through privately funded infrastructure. This will create opportunities for capital providers, developers and suppliers in the housing sector. The government is also promoting offsite manufacturing models as a more efficient, controlled and environmentally friendly way to deliver housing at scale.

The opportunity

Crown Infrastructure Partners (CIP), a Crown agency, called for building and infrastructure projects in New Zealand that were shovel-ready. They received applications for 1924 projects, from the public and private sectors, with a combined value of NZ$136 billion. The government will only be able to provision 10–15 per cent of that pipeline. CIP also provides an idea of the outstanding projects and possible private initiative required to deliver project aspirations.

In conclusion, New Zealand is seeing the requisite scale, consistent pipeline, and aggregation of building and infrastructure projects and investment to stimulate jobs and growth. The Government is making all efforts to deliver wider outcomes for Auckland and New Zealand economies and communities through reforms to legislation and public agency support. This new environment of unprecedented fiscal stimulus creates new opportunities for international players in building and infrastructure.

ATEED: economic development agency

As the economic development agency for Auckland, and part of the Auckland Council group (the largest local government authority in Australasia), ATEED and our Invest Auckland team are charged with creating prosperity for all by enriching Auckland as a place for investment, talent, innovation, and visitors. This includes driving investment into Auckland by facilitating and guiding potential investors. We encourage interest from international investors and businesses to participate in Auckland’s opportunity pipeline.

ATEED, being part of the Auckland Council group, has better visibility of projects initiated by other council family members, such as Auckland Transport, Panuku Development Auckland (the entity managing council assets), Watercare, Regional Facilities Auckland (managing facilities such as stadiums, venues, the Auckland Zoo). It also has ongoing conversations with the various Crown agencies, such as the New Zealand Transport Agency (NZTA), Kāinga Ora (the entity implementing housing), the Infrastructure Commission, CIP and respective ministries.

Our services come at no cost to the potential participants and are neutral, as we are committed to the best interests of Aucklanders.


Find out more

Contact investment specialist Aldrin Thayalakal to learn more about investing in Auckland, New Zealand.

This article provides general information on potential investment opportunities in Auckland and is not intended to be used as a substitute for financial advice. The views and opinions expressed are those of the relevant author, and do not necessarily reflect the views of Auckland Tourism Events and Economic Development. Auckland Tourism Events and Economic Development disclaims all liability in connection with any action that may be taken in reliance of this article, and for any error, deficiency, flaw or omission contained in it.