Non-residential construction is likely to increase during the next 12 months, peak early next year and then decline as economic growth dips, says the latest Rider Hunt forecast.
The report, prepared by the Institute of Economic Research, says the building industry will reflect an expected slowing in world growth.
It says prospects could be difficult for the non-residential building sector if growth slows sharply as businesses put investment plans on hold.
"Although interest rate cuts would provide a slight stimulus ... the impact of slowing world growth would tend to dominate," it says.
The value of building consents has been rising since last April and "building work put in place" is 5.5 per cent higher than a year ago.
The forecast predicts building work peaking at $3 billion in March 2002, then declining as the pace of economic growth begins to drop.
In the accommodation sector, the significant amount of modernisation and new building undertaken in 1999 is likely to dampen work for the next three years. But the increasing role of tourism will maintain activity at an average of $265 million a year.
Industrial sector building work grew 29 per cent in the year to September last year, marking a partial recovery from a 39 per cent decline in the year to March 1999.
Office vacancy rates in Wellington, Auckland and Christchurch are falling. Over the next five years, rates for premium space in Wellington are expected to drop from 10.5 per cent to 5.2 per cent.
Although very much at the planning stage, Wellington projects include a $20 million premium office space building between Boulcott and Willis Sts on foundations laid before the sharemarket crash.
Mall-style developments are the prime driver of the retail sector, the report says. Building consents for shops, restaurants and taverns increased 13 per cent to November.
- NZPA
Building slowdown predicted
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