Dire warnings that property development will shrink without Govt help
Commercial property owners and developers are warning about 60 per cent of all planned construction and development projects are now uncertain and the sector needed Government help.
They said billions of dollars of developments could be cancelled or postponed and that would decimate the construction sector.
It follows their callfive weeks ago for the Government to underwrite construction projects of commercial buildings, high-rise apartments, hotels, malls and office blocks.
Property Council chief executive Leonie Freeman said a Property Council survey of its owner and developer members found that 60 per cent of planned projects worth several billion dollars were uncertain given the current economic climate.
"These statistics demonstrate the developer's natural reaction to uncertainty. This outcome could have an enormous impact on the construction sector and the wider New Zealand economy," Freeman said.
Industrial and commercial property developers were most cautious, signalling that 70 per cent of projects were uncertain, while residential developers indicated that around half of all projects were uncertain.
"We have very real concerns for the impact this may have on the construction industry and related sectors."
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"The last thing we need right now is for developers to pull out of projects that could have seen the construction sector and wider economy supported during the post-Covid recovery," Freeman said.
Naylor Love chief executive, Rick Herd, said that the vertical and residential construction sectors that made up over 80 per cent of the entire construction industry were about 80 per cent funded by private sector property owners.
"Unless the government finds the means to support and stimulate private sector construction, we will see a collapse of the vertical construction sector on a greater scale than occurred post the 1987 stock market crash," Herd said.
"This will mean the collapse of numerous business, particularly SMEs, and job losses for more than 100,000 people."
He said the Government's offer of $100,000 cheap loans to SMEs was short-sighted.
"If these SMEs operate in the vertical construction sector they will probably collapse, meaning an enormous burden of bad debt to the taxpayer.
"Why not look to the longer-term and use this money to stimulate private sector building investment and construction for a long-term sustainable commercial property and construction industry, rather than short-term pain relief," Herd said.
"We need to see some positive action in the next two or three weeks or month to see what actually the government is going to do to stimulate that private sector investment."
Article supplied by Marta Steeman at STUFF