Rider Levett Bucknall’s First Quarter 2026 Infrastructure Forecast – New Zealand Trends in Infrastructure – shows early signs of recovery emerging within the infrastructure sector, even as other areas of construction remain subdued.
With building activity still subdued, the report points to improving conditions in infrastructure, supported by lower interest rates and a substantial long-term pipeline.
RLB Director Ed Cook says infrastructure is becoming an important contributor to the recovery cycle.
While non-residential and residential building remain subdued, infrastructure demand is firming, supported by lower interest rates and a substantial long-term project pipeline.
Civil construction cost inflation also remains comparatively resilient, although broader sector spare capacity is moderating pricing pressures.
Economic recovery beginning to take hold
New Zealand’s economy returned to quarterly growth in September 2025, with GDP rising 1.1 percent following a previous contraction. Although annual GDP remains slightly negative, leading indicators suggest that recovery momentum is building.
However, construction recovery remains uneven. Infrastructure and residential construction have lifted modestly, while non-residential construction continues to decline. Building sector demand remains soft, constraining pricing power across much of the market.
The report, prepared by the New Zealand Institute of Economic Research (NZIER), excludes the impact of recent actions in Iran and the wider Middle East, as the longer-term implications are still being assessed.
Ed notes that these developments could introduce short-term volatility.
These actions are likely to result in near term market volatility, including increased oil prices, potential weakening of the New Zealand dollar, as well as supply chain, shipping and inflationary pressures.
Infrastructure pipeline underpins sector resilience
Te Waihanga’s September 2025 snapshot values total infrastructure projects at $275 billion, including $181 billion funded and $82 billion fully funded initiatives across 4,498 projects.
Transport infrastructure remains the dominant driver at $168.6 billion, followed by water infrastructure at $39.3 billion. Major projects currently in planning or procurement include:
- Waitematā Harbour Connections
- Southern Links roading
- Huia treatment plant replacement
- Mill Road Stage One
- Nelson Hospital redevelopment
In parallel, Te Waihanga’s first 30-Year National Infrastructure Plan reinforces long-term investment certainty, while the newly released Infrastructure Resilience Index identifies electricity and interdependent network vulnerabilities as priority investment areas.
For civil contractors and specialist infrastructure firms, the pipeline offers sustained medium-term visibility, particularly across transport, water and resilience-related projects.
Civil construction costs remain resilient
According to RLB’s Infrastructure Forecast, civil construction costs increased by 0.3 percent in the September 2025 quarter, resulting in annual civil construction cost inflation of 1.8 percent compared with the same quarter last year.
This elevated level of civil construction cost inflation reflects the continued strength of the infrastructure pipeline, in contrast to softer conditions across other construction segments.
Nonetheless, RLB expects cost inflation to decline over the coming year, largely driven by a forecast easing in input material prices. Consensus forecasts indicate that copper prices are expected to soften from recent highs in late 2025.
RLB’s CGPI-Civil Index forecasting model also anticipates continued easing in labour cost inflation.
Ed says annual civil construction cost inflation is forecast to trough at 0.5 percent around mid-2027.
Over the longer term, RLB expects civil construction cost inflation to gradually increase to around 2.8 percent, supported by a recovery in construction demand driven by lower interest rates from the end of 2026.
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