In real terms, the South African construction industry registered a growth of 0.3% in 2017. This was preceded by an annual growth of 0.7% in 2016 and 1.7% in 2015. This slow growth can be attributed to low commodity prices, weak government policies and ongoing political uncertainty. Declines in government revenue – due predominantly to low international demand for metal, minerals and other mining products – have also weighed on growth in the construction industry.
The industry is expected to remain weak over the forecast period (2018–2022), albeit with a slight improvement. Constrained government revenue and low private investment are expected to hamper the industry’s growth, as will ongoing political uncertainty. Despite the fact that the outlook for the South African construction industry is expected to be weak in real terms, there will be some support from investment in infrastructure and energy projects.
The implementation of flagship government programs – such as the National Transport Master Plan 2050, Integrated Resource Plan (IRP), Water Infrastructure Development program and South Africa Connect program – is expected to support industry growth. Consequently, the industry’s output value in real terms is expected to post a compound annual growth rate (CAGR) of 1.48% over the forecast period.
Construction in South Africa – Key Trends and Opportunities to 2022 report provides detailed market analysis, information and insights into the South African construction industry, including:
• The South African construction industry’s growth prospects by market, project type and construction activity
• Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the South African construction industry
• Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.
This report provides a comprehensive analysis of the construction industry in South Africa. It provides:
• Historical (2013-2017) and forecast (2018-2022) valuations of the construction industry in South Africa, featuring details of key growth drivers.
• Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
• Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
• Listings of major projects, in addition to details of leading contractors and consultants
Reasons to Buy
• Identify and evaluate market opportunities using standardized valuation and forecasting methodologies.
• Assess market growth potential at a micro-level with over 600 time-series data forecasts.
• Understand the latest industry and market trends.
• Formulate and validate strategy using critical and actionable insight.
• Assess business risks, including cost, regulatory and competitive pressures.
• Evaluate competitive risk and success factors.
• Research expects the infrastructure construction market to retain its leading position over the forecast period, with a share of 35% of the industry’s total value in 2022. In 2017, the government announced plans to invest ZAR327.7 billion (US$21.5 billion) on transport and logistics infrastructure by 2020 in order to improve the country’s transport network, boost the mobility of people and services, decrease transportation costs, and facilitate regional trade.
• In 2017, the government announced plans to invest ZAR1.9 billion (US$124.7 million) for broadband implementation in order to connect 6,135 schools and public buildings with an internet connection speed of 10Mbps by 2020. Moreover, to reduce the high cost of communication, the government plans to increase mobile broadband coverage to 80% of the population by 2019, which will support construction activity in the telecommunications category over the forecast period.
• Research expects the residential construction market to record a forecast-period CAGR of 6.00% in nominal terms, supported by an increase in the number of residential buildings permits granted across the country. According to Statistics South Africa (STATS SA), the total number of recorded building plans passed for residential construction grew by 17.1%, going from 17,318 units in 2016 to 20,286 in 2017.
• The government’s focus on the healthcare sector is also expected to drive market growth over the forecast period. In the 2018 budget, the government increased its spending on healthcare sector by 4.9%, going from ZAR195.8 billion (US$14.6 billion) in the 2017 budget to ZAR205.4 billion (US$15.1 billion) in that of 2018.
• The total construction project pipeline in South Africa, as tracked by the Construction Intelligence Center (CIC), including all mega projects with a value above US$25 million, stands at ZAR2.2 trillion (US$161.8 billion). The pipeline, which includes all projects from pre-planning to execution, is skewed to early-stage projects, with 67.4% of the pipeline value being in projects in the pre-planning and planning stages as of April 2018.
Table of Content: Key Points
1 Executive Summary
2 Construction Outlook: At-a-glance
3 Latest News and Indicators
4 Key Drivers and Risks
5 Construction Outlook
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