Building and construction to New Zealand

(Last updated: 26 Jul 2007)

Trends and opportunities

The market

The New Zealand building and construction sector contributed approximately four per cent of New Zealand GDP in 2003, growing from around 3.3 per cent in 1999. The sector has seen significant growth over the last two to three years, driven by a strong domestic economy and continuing immigration. 

There have been an estimated 65,000 new residential building consents issued between 2002 and 2004. This has driven sales of housing-related retail goods. Hardware retailing sales grew 11 per cent in 2004 to have a total value of approximately NZ$1.1 billion. 

The New Zealand building sector has undergone major upheaval since the ‘leaky building syndrome’ problems of the past few years. Leaky building syndrome refers to houses becoming water damaged due to a combination of (but not exclusively) untreated-timber framing, monolithic (external) cladding systems, lack of mechanical flashing around windows and doors and the Mediterranean-style designs that lacked rain protection features such as eaves. Monolithic cladding is a term that refers to external cladding materials that are given an applied coating so as to appear seamless, often imitating concrete, masonry or plaster.

Houses built with these methods and materials were unsuitable for New Zealand’s climatic conditions. The syndrome affected a significant number of buildings. Consumers became increasingly wary of the industry, and the general standard of building and construction within New Zealand. 

The Building Act of 2004 replaced the Building Act of 1991. The government acted to increase public confidence by: 

• Providing more information on expectations of building standards
• Giving guidance as to how standards could be achieved
• Ensuring that more expertise would be developed within the industry
• Putting more checks in place, both in building and inspection

The government is planning to require compulsory licensing of some building practitioners in 2009. 

Opportunities

Stand-alone dwellings remain the predominant types of building in New Zealand although the number of multi-unit developments is growing at a high rate.

Serviced apartments are another growing sector. 

Britomart Urban Village – This is a NZ$350 million project to regenerate 17 historic buildings from the Victorian and Edwardian eras located near the Britomart transport centre in Auckland. Plans include new buildings for hotels, apartments, offices, shops and restaurants, with a large public square.

Major road projects – Over NZ$5 billion worth of new road projects are planned for the next 10 years in the Auckland region alone. These include the: 

• State Highway (SH) 20 Avondale extension
• Mount Roskill extension
• Manukau extension
• SH1 and SH1 alternative
• Alpurt B2
• Transmission Gully
• Eastern Highway
• Penlink
• SH16/SH18 Upper Harbour development
• North Shore busway
• Central Motorway improvements, including the Central Motorway Junction and the Harbour Bridge to City stretch

Major rail developments – The Auckland Regional Council has set up a body called the Auckland Regional Transport Authority (ARTA) to manage passenger transport and rail infrastructure. Rail projects include:

• A 'double track' on the western line
• Upgrading of rail stations in the Auckland region
• Possible electrification of rail lines and the purchase of electric passenger trains

Competitive environment

The market for building supplies in New Zealand is very competitive with local companies already supplying a wide range of high quality, well-priced building products. Local suppliers dominate, although there are an increasing number of imported building materials. Competition is fierce and building suppliers are always looking for new and innovative products.

Consumers have reacted to the leaky building syndrome by favouring more traditional building materials, such as brick, concrete and weatherboard, or by using light steel framing.

Tariffs, regulations and customs

Under the Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) or commonly (CER) any product that has 50 per cent or more Australian content may enter New Zealand duty free. Depending upon the product, Australia has (up to) a 15 per cent tariff advantage over other countries.

Goods and services tax (GST) at 12.5 per cent applies to all products, both local and imported. GST is levied at each point of sale. In the case of imported goods, New Zealand Customs collects the GST (based on the cost, insurance and freight (CIF) value) at point of entry before releasing the goods.

The Chambers of Commerce can arrange a carnet in advance for non-saleable show or sample goods otherwise GST applies. To receive a refund for GST paid on show or sample goods, the Australian company would have to register for GST in New Zealand (or use a customs agent or associated company registered for GST in New Zealand). 

Suppliers of goods and services must register for GST if their gross turnover exceeds NZ$40,000.

New Zealand Customs have a system of pre-lodgement to allow imported goods to go through a pre-arrival customs clearance after providing information including:

• flight/shipping number and date
• house airway bill number/bill of lading
• number of packages
• gross weight
• freight charges
• freight payment arrangements (pre-paid or on collection)

The May 1998 changes in the Copyright Act 1994 meant that New Zealand no longer prohibited parallel importing of products. This means authorised distributors may no longer have exclusive distribution rights in New Zealand over copyright products sourced overseas.

Industry standards

The Building Industry Authority regulates the New Zealand building industry. 

In New Zealand, the Building Act 2004 regulates house building and applies not only to the construction of new buildings but also to the alteration, demolition and maintenance of existing buildings. The Building Regulations and Building Code align with the Building Act.

Marketing your products and services

Market entry

A common method of market entry for both construction and consulting companies is to work with a local company or with Australian companies established in the market. There are a number of Australian companies already working in the building and construction sectors, including Multiplex, the Abigroup and Leighton.

Companies with a local presence are much more attractive to entities funding major projects.

For building and construction products, the most common method of market entry is through an agent or distributor in New Zealand. These parties often have well-established distribution channels and a wide range of clients throughout the country.

Manufacturing under license is a less common method of entering the market, although in certain industries this method enhances competitiveness, eg. aluminium extrusion in New Zealand is well established and competitive.

Industry publications have wide distribution to their designated target market and are therefore an effective medium when marketing to the trade. Mainstream media is available for consumer marketing.

Distribution channels

There are three main methods of distribution in New Zealand for Australian companies:

• Appointing an agent/importer where the representative can target retail sectors or architects and specifiers.
• Selling direct to building retail chains and independent groups like Independent Timber Merchants (ITM). This is less common as retailers are generally unlikely or unwilling to purchase directly.
• Establishing an office/warehousing/subsidiary to conduct distribution in New Zealand.

Major building supply retailers include Placemakers, Mitre 10, Carters and Benchmark Building Supplies (owned by Bunnings) and Bunnings. An independent group of merchants also has a presence in the market under the ITM banner. The Warehouse is a significant player in the discount/hardware sector.

Transport

New Zealand’s internal transport networks are extensive and efficient. Distribution is relatively easy due to short travel distances. Distribution costs can be higher than Australia due to the broad geographic spread of a relatively small population.

The major ports of entry are Auckland, Wellington, Christchurch, Tauranga, Napier and Nelson.

International airports are located in Auckland, Hamilton, Wellington and Christchurch.

Links and industry contacts

Building and construction-related resources

New Zealand Certified Builders Association - www.certifiedbuilders.org.nz
Auckland Regional Council - www.arc.govt.nz

Registered Master Builders’ Federation Inc – www.masterbuilder.org.nz
PO Box 1796
Wellington, New Zealand
Tel: (64 4) 385 8999
Fax: (64 4) 385 8995

The Building Industry Authority – www.bia.co.nz
PO Box 11-846
Wellington, New Zealand
Tel: (64 4) 471 0794
Fax: (64 4) 471 0798

Cement and Concrete Association of New Zealand – www.cca.org.nz
PO Box 448
Wellington, New Zealand
Tel: (64 4) 499 8820
Fax: (64 4) 499 7760

Building Research Association of New Zealand (BRANZ) – www.branz.co.nz
Private Bag 50 908
Porirua City, New Zealand
Tel: (64 4) 235 7600
Fax: (64 4) 235 6070

Standards New Zealand (Building Standards) ­– www.standards.co.nz
Private Bag 2439,
Wellington, New Zealand
Tel: (64 4) 498 5990
Fax: (64 4) 498 5994

New Zealand Certified Builders Association
PO Box 6084,
Brookfield
Tauranga, New Zealand
Tel: (64 7) 576 0651
Fax: (64 7) 576 8405

Publications

BUILD – www.branz.co.nz
c/o BRANZ (Building Research Association of New Zealand)
Private Bag 50 908
Porirua City, New Zealand
Tel: (64 4) 237 1170
Fax: (64 4) 237 1171

Building Today – New Zealand Master Builders Federation
Taurean Publications Ltd
PO Box 35 343, Browns Bay
Auckland, New Zealand
Tel: (64 9) 478 4888
Fax: (64 9) 478 4588

Architecture New Zealand – New Zealand Institute of Architects
AGM Publishing Ltd
Private Bag 99-915, Newmarket
Auckland 1031, New Zealand
Tel: (64 9) 846 4068
Fax: (64 9) 846 9742

Progressive Building – New Zealand Institute of Building
AGM Publishing
Private Bag 99-915, Newmarket
Auckland 1031, New Zealand
Tel: (64 9) 846 4068
Fax: (64 9) 846 9742

New Zealand Hardware Journal
Marketplace Press Ltd
PO Box 28 – 372 Remuera
Auckland, New Zealand
Tel:  (64 9) 366 4578
Fax:  (64 9) 366 4580

e.NZ – The Institution of Professional Engineers New Zealand
PO Box 12 – 241
Wellington, New Zealand
Tel: (64 4) 474 8945
Fax: (64 4) 474 8933

Joiners Magazine – NZ Joinery Manufacturers Federation and Laminate Fabrications Society
C/o Magenta Publishing
PO Box 27 – 513
Mount Roskill
Auckland, New Zealand
Tel: (64 9) 627 5666
Fax: (64 9) 627 5777

Home Ideas Centre  – www.homeideas.co.nz
PO Box 37-333, Parnell
Auckland, New Zealand
Tel: (64 9) 303 4755
Fax: (64 9) 373 3320

Government, business and trade resources for New Zealand

The New Zealand Government – www.govt.nz
Statistics New Zealand – www.stats.govt.nz
New Zealand Government's ‘online’ strategy – www.e-government.govt.nz
New Zealand Companies Office – www.companies.govt.nz
New Zealand Department of Labour – www.dol.govt.nz
New Zealand Inland Revenue Department – www.ird.govt.nz
New Zealand Treasury – www.treasury.govt.nz
Transit New Zealand – www.transit.govt.nz
Chambers of Commerce – www.chamber.co.nz

NZ Customs Department – www.customs.govt.nz

17-21 Whitmore Street,
Wellington, New Zealand
Tel: (64 4) 473 6099
Fax: (64 4) 473 7370

Postal Address
PO Box 2218
Whitmore Street
Wellington, New Zealand

New Zealand Overseas Investment Commission – www.oic.govt.nz
PO Box 2498
Wellington, New Zealand
Tel: (64 4) 471 3838
Fax: (64 4) 471 3655

Financial

ANZ Banking Group – www.anz.co.nz
ASB Bank – www.asbbank.co.nz
Bank of New Zealand – www.bnz.co.nz
The National Bank of NZ – www.nationalbank.co.nz
WestpacTrust – www.westpac.co.nz
Baycorp ­– www.baycorp.co.nz
Dun and Bradstreet – www.dnb.co.nz/default.htm
IT Investment Network – www.itinvestment.co.nz

Logistics

Air New Zealand – www.airnz.co.nz
Qantas (in NZ) – www.qantas.com.au/regions/dyn/home/qualifier-region-nz
Rail and Ferry Travel – www.interislander.co.nz
Rail and Ferry Freight – www.interislanderbookings.co.nz/freight/default.asp

Service providers

Tenderlink – www.tenderlink.com
NZ Telecom Yellow pages – www.yellowpages.co.nz

Media

Stuff – www.stuff.co.nz
The National Business Review – www.nbr.co.nz
The New Zealand Herald – www.nzherald.co.nz
The Dominion Post – www.dompost.co.nz
The Press – www.thepress.co.nz
Scoop – www.scoop.co.nz
Otago Daily Times – www.odt.co.nz
Xtarmsn – www.xtramsn.co.nz

Australian resources

Australian High Commission – www.australia.org.nz
72-78 Hobson Street
Thorndon
Wellington, New Zealand
Tel: (64 9) 473 6411
Fax: (64 9) 498 7118

New Zealand Consulate-General – www.nzembassy.com
Level 10, 55 Hunter Street,
Sydney NSW 2000
Tel: (61 2) 9238 0280
Fax: (61 2) 9238 0182

Australian Department of Foreign Affairs and Trade – www.dfat.gov.au/geo/new_zealand/index.html