Fastest growing industries in NZ

Siobahn Brown : 15th Aug 2017
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Labour market data from Statistics NZ shows that in 2017's March quarter, our unemployment rate dropped to 4.2%, making it the lowest it's been since the December 2008 quarter. 

New Zealand's workforce is strengthening. Labour market data from Statistics NZ shows that in 2017's March quarter, our unemployment rate dropped to 2009. For men, this metric is at its lowest point in nearly 10 years. Overall unemployment has been steadily decreasing since mid-2012.

This swell is most prevalent in a few select industries: technology, construction, and retail. 

With a closer look at each of these, those looking to buy commercial property or a NZ business in 2017 may have found their next move. 

1) Technology

Pushpay. Plexure. Teknique. Ultrafast Fibre. Whanau Tahi. All tech companies, all in the top ten of Deloitte's Fast 50 in 2016 - including the first two spots. This highlights the rapid growth New Zealand's tech sector has undergone in the last few years, and the opportunities it affords Kiwi business buyers. 

New Zealand's tech businesses are growing fast. 

Ministry of Innovation, Business and Employment (MBIE) research lends even more strength to the case for investing in our tech sector. It notes that over 2016, investment in early stage tech businesses rose by 239 per cent. Revenue growth is up 12 per cent, and the industry employs nearly 100,000 people.

Acquisitions and listings have steadily risen since 2012 as well. Wellington and the lower North Island have the best compound annual growth rate (CAGR) for tech businesses, up 9.8 per cent in the last five years. If you’re a commercial property investor, you’d be well placed to consider targeting growing tech businesses when looking to secure long-term tenants. While it’s true many technology companies are established out of their founder’s garages, rapid expansion in recent years means many of these organisations are bursting at the seams and will soon be in search of premises.

In the country’s tech hub of Wellington, realestate.co.nz data shows that the average asking price of an office space for lease in Q2 of 2017 was $157,829 per annum. The average asking price to purchase such a space was around $3.1 million.

2) Construction

While construction companies do not feature as prevalently in the Deloitte Fast 50 (apart from Smartlift Systems in the top 10), NewZealand is riding a strong wave - especially in housing. Statistics NZ information shows that in the year to May 2017, we consented a total of 30,645 new homes. This is an increase of 8 per cent (in seasonally adjusted terms) on the previous year and comes off the back of a 12-year high for monthly consents midway through 2016.

As migration remains strong and demand for housing with it, construction must continue to lift to ensure a balanced housing market. This means more construction sector growth, and Statistics NZ's Mark Gordon says this is happening everywhere - not just in the traditional powerhouses of Auckland and Canterbury.

"Over the [March 2017] quarter, the Household Labour Force Survey showed a significant increase in employment in the Waikato region, which included 3,600 more people working in construction."

Linked to this, MBIE data shows that transport and logistics experienced 7.5 per cent CAGR between 2010 and 2015, with construction at 6 per cent. Clear opportunities abound for people seeking a new business entry point, given the heights they have reached since.

3) Retail

Some 20 per cent of Deloitte's Fast 50 are retail companies, highlighting the ongoing growth this sector experiences. MBIE's sectors dashboard shows the retail industry saw 5.1 per cent CAGR over 2010-2015, while the Westpac-McDermott Miller consumer confidence index forecasts improving consumer confidence over both one-year and five-year periods.

Retail

Is retail growth a focal point for you? 

Overall, confidence is above 20-year highs, despite lower spending in the first half of this year. While retail is not the top performing industry in the country, there are certain pockets of it (particularly related to tourism and advanced tech like payless systems) that continue to thrive.

Those looking to venture into the retail sector are currently spoiled for choice, with 709 non-food retail businesses listed for sale on realestate.co.nz in Q2 of 2017. This is up 21.8 per cent on the same time in 2013. Purchasing an established company can offer a shortcut to success, providing buyers with a history of profit, growth and brand equity.

Finding the right sector in which to buy a business is difficult, but the research is out there to help you find your niche in a rapid-growth industry.