BDO Construction Sector Report 2025

Foundations for future growth

Welcome to the seventh BDO Construction Sector Report, our annual study of the priority issues facing business leaders in New Zealand’s construction industry. Based on a nationwide survey of 196 business owners and leaders in April-May 2025, the report reveals that while the construction sector is facing significant uncertainty right now, there are reasons to be optimistic.

Along with an overview of the core challenges facing the sector, our report captures the current sentiment of construction business leaders and their expectations for the future. We take a closer look at specific projects, business types and regional issues, while also sharing practical tips for construction business leaders to help navigate the challenges ahead. 

Watch below as BDO Construction Sector Leader Nick Innes-Jones shares his views on the 2025 BDO Construction Sector Report and provides tips for business leaders.


VIEW OUR REPORT SECTIONS

This report has been developed for device-friendly viewing in a web-based format (no PDF attachment). Please click on the icons below to view our report insights in each section; overall insights, subsector trends, regional commentary & tips for construction leaders

        

Executive summary

New Zealand’s construction industry has experienced significant fluctuations in recent years, reflecting broader economic trends seen nationally and internationally. While the recessionary conditions of 2024 have given way to a slightly improved outlook locally, ongoing volatility in global markets is creating an uncertain business environment for Aotearoa’s business leaders. 

Mirroring what we saw in 2024, the 2025 BDO Construction Sector Report shows that economic pressures continue to be the leading concern for construction business leaders. Just 37% of respondents felt positive about economic factors (all or most of the time) in the two weeks prior to the survey, ranking it lowest among the 18 business performance metrics surveyed. Rounding out the top five issues are political factors, leveraging new technologies (including AI), business growth and cash flow – the latter two factors entering the top five for the first time in this year’s survey.

Just 45% of construction business leaders felt positive about their business growth in the two weeks before our survey, making this a priority issue for the first time in our survey. 

“With tough economic conditions and an unsteady forward work position, achieving growth has been challenging for much of the construction sector recently - but there are signs of foundations being laid for future growth. The Government’s new Investment Boost initiative will likely incentivise some businesses to invest in productive assets to grow profitability, although strong pipelines of forward work remain essential for businesses to grow.”

Nick Innes-Jones, BDO Construction Sector Leader


Leading business issues 2025

While the report shows New Zealand’s construction sector is still plagued by some of the problems evidenced in our 2024 report, there are positive signs emerging. It has become less difficult to access finance and staffing levels are now more stable. The civil/infrastructure subsector is faring better than the residential and commercial subsectors, while business performance sentiment among construction business leaders in the South Island is especially positive compared to Auckland and the rest of the North Island. And while it’s encouraging to see more business leaders with increased profit margins compared to last year, this number is still relatively low - just 31% say they have seen increased profit margins over the last 12 months.

At a national level, construction business leaders are expecting to feel more positive in the future. While 60% currently feel positive about their overall business performance (all or most of the time), this increases to 67% when looking ahead to six months’ time – a small uptick from last year’s survey and a sign that leaders may see hope on the horizon. And with business growth now becoming a priority issue for construction leaders, more stable economic and financial conditions could result in opportunities for consolidation and expansion.

However, with international trade tariffs still up in the air, ongoing geopolitical turmoil and a shaky local economy – not to mention record numbers of people leaving New Zealand – the future for the sector may not be entirely rosy. The 2025 BDO Construction Sector Report reflects the uncertainty that many are feeling about the New Zealand economy right now, with multiple market forces leading to pockets of positivity and circles of concern. For now, business leaders will need to dig deep and focus on what they can control as macroeconomic conditions look set to ebb and flow into 2025 and beyond. 

Feeling positive

Growing for the future

While different challenges are being experienced across regions, projects and roles, nationally some consistent patterns are emerging. Business growth has become more of an issue for construction business leaders than it was in 2024, and when conditions allow, many may seize opportunities to expand – but they must have the foundations in place to do so. This means the right staff, the right strategy, and the right support.

With such varied issues and opportunities faced throughout the industry, it is more essential than ever to partner with industry experts who not only understand the macro matters impacting the construction sector, but also the specific local and subsector nuances that can make all the difference in a business’s success. At BDO, we have construction specialists across the country who can help to peel back the layers and understand what’s going on in your business. 

Observations from our construction sector leaders

“It’s a mixed bag for construction business leaders right now, but it’s great to see parts of the sector feeling optimistic – and may even be looking at opportunities for growth in future. Head contractors and civil and infrastructure leaders appear best placed, which reflects what I see in the market. At the other end of the spectrum, Auckland has been hit by a slowdown in residential activity and there is more concern here about forward work and cash flow – issues echoed across the rest of the North Island. As macroeconomic conditions remain a concern, construction business leaders will be looking at inflation levels, cost of living pressures and what policies the Government might introduce to help alleviate pressure.” 

Nick Innes-Jones, BDO Construction Sector Leader 

Nick Innes-Jones

Nick Innes-Jones

National Construction & Real Estate Sector Leader, Advisory Partner
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“After last year’s market downturn, we’re now seeing different issues emerge for different parts of the sector. The labour market seems to have stabilised from 2024, with businesses now rightsizing and looking to consolidate, and certainly in Christchurch we’re observing more construction work in progress than this time last year. However, the picture in Auckland and other parts of the North Island is more concerning, and economic pressures are driving this. I’m hopeful we’re turning a corner, and indications are that we will see the market improve towards the latter part of 2025.”

Martin Veitch, BDO Construction Partner

Martin Veitch

Martin Veitch

Advisory Partner, Managing Partner BDO Christchurch
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“It’s encouraging to see some positivity return to the construction sector after very challenging conditions in the past year or so, but it’s clear there are still major challenges for many regions and subsectors. Here in the Southern Lakes, the residential sector is strong – however we’re seeing different scenarios playing out across the country. If and when the market picks back up nationally, it will be essential for businesses to have the right staff in place to maximise opportunities and drive growth. This means training and retention are key now.” 

Bjorn de Nijs, BDO Construction Partner

Bjorn

Bjorn de Nijs

Advisory Partner, Managing Partner BDO Southern Lakes & Central Otago
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“Construction leaders are feeling optimistic about the future, but many are experiencing a sluggish market with cash flow and staffing struggles to contend with. A balance needs to be struck between hiring experienced staff to be ready for a market recovery and managing the financial risk of bringing on new people when future projects aren’t guaranteed. The recently announced Investment Boost will likely drive larger commercial spend and may provide a welcome boost to the sector overall.”

Ruth McGregor, BDO Construction Partner

About the report

The BDO Construction Sector Report, now in its seventh year, aims to shed light on the priority issues facing New Zealand’s construction businesses, now and into the future. 

Our survey took place during April-May 2025 and was completed by 196 construction business owners and leaders from across Aotearoa New Zealand.

The demographic profile of respondents is as follows:

Position

  • Owner, CEO or Managing Director: 51%
  • General Manager or Other: 49%

Number of employees

  • <11: 29%
  • 11-30: 26%
  • >30: 45%

Average annual turnover (past 3 years)

  • < $5m: 33%
  • $5m-$9m: 24%
  • $10m-$29m: 20%
  • $30m-$59m: 7%
  • > $60m: 11%
  • Prefer not to disclose: 5%

Type of business

  • Head contractor: 45%
  • Subcontractor: 26%
  • Material supplier/supply chain: 10%
  • Consultancy: 12%
  • Other: 7%

Type of projects

  • Civil/infrastructure: 32%
  • Commercial: 68%
  • Residential: 56%
    Note: Some businesses work across multiple project types

Location

  • Auckland: 40%
  • Wellington-Wairarapa: 16%
  • Rest of North Island: 16%
  • South Island: 28%

More information and support

  • Click here to view our range of practical business tips to help construction business leaders navigate the big issues highlighted in this report.  
  • Read our BDO Business Wellbeing Index (May 2025 report) for more construction sector insights.  
  • For more help and to discuss report insights, please don’t hesitate to reach out to our Construction team here or your BDO advisor.

View our report sections

Overall insights
Subsector trends
Regional commentary
Tips for construction leaders

To download a pdf version of this report, click here.

Next section: Overall report insights