Revealed: New Zealand’s 10 biggest builders

Wednesday, 26 June 2024

The country’s top 10 building companies got a combined 283 projects underway last year, with a total value of just over $4.8 billion.

New Zealand’s biggest builders are working on projects worth over $4.8 billion, but there have been changes at the top, a new report shows.

BCI Central’s second annual Construction League has just been released, and it ranks the country’s top 50 builders by the total value of projects that started construction in 2023.

The projects encompass the commercial, community, industrial, legal and military, and multi-residential sectors across different regions.

Last year the top 50 builders broke ground on a total of 612 projects at a combined value of $8.4b, and the top 10 began work on 283 projects worth just over $4.8b.

While construction activity has slowed, and is expected to slow further, the top 50 builders started work on more projects than in 2022 when 488 projects worth $8.9b got underway.

There were changes in the rankings with Naylor Love taking out the top spot, with a total value of over $820 million across 75 projects. Last year it was at number four.

Watt & Hughes, Cook Brothers Construction, Southbase Construction and Icon were all new entrants to the top 10, while CMP Construction NZ and Dominion Constructors were in it for the second year.

Some established companies, including Mansons TCLM, which was number one last year, and Williams Corporation, which was number 13 last year, did not make the top 50 this year.

BCI Central chief operating officer Ashleigh Porter said the differences came down to significant changes in the market, and reflected where and what parts of the sector most work was taking place in.

Nearly half (43%) of the projects (120) were in the South Island, and that showed there was a really strong volume of work in that part of the country, she said.

“But another very evident trend is the big pullback in residential building, with most of the builders in the top 10 focused on commercial and community building projects.

'Only 6% of project commencements were in the residential space, while 31% were in the community sector, and the top performing sector among the top 10 was commercial at 38%.”

A good example of the shift from a residential focus could be seen in the breakdown of Dominion Constructors projects, she said. Last year 40% of their projects were residential, this year just 10% were.

Porter said the changes were driven by the financial strain, which included high interest rates and the cost of materials, that had been affecting the industry over the last 18 months.

“You often see this cyclical shift with construction. Residential gets tight, and the bigger builders are able to diversify and change their focus from residential to other areas, such as commercial.

BCI Central’s Ashleigh Porter says a major trend is the big pullback in residential building.

“Many residential builders also change to renovation work because that is where the money is, and that has a flow on effect for sub-contractors and tradies in the market.”

One of the worst outcomes of a constricted market was an increase in building insolvencies, which also had trickle down effects on sub-contractors, she said.

“A big challenge can also be labour shortages, as when projects have been put on hold or are abandoned, and the market is volatile, you start to see workers looking for work elsewhere.”

But industry reforms, such as moves to make more products more easily available, and to cut red tape connected to the Building Act and consents, were happening and that was positive, she said.

“If financial pressures ease, more consents get through local government, and there is greater availability of materials, it should help to open the industry and stabilise costs, and, hopefully, the situation will ease.”

A recent Westpac report estimated the country needed 125,000 more houses to be built in the next five years to keep on top of population growth.

Porter said it was hard to see that happening when looking at the pull back in residential building.

But there were some big projects in the community sphere, ones that involved education and health facilities, and such amenities tended to spur on residential building, she said.

Some of the big projects underway included the Ikea building in Auckland’s Sylvia Park ($260m, Naylor Love), and the Dunedin Hospital build ($250m, Southbase Construction).