The Construction Industry in South Africa 2024

This report on the construction industry in South Africa includes information on the industry’s economic contribution, construction activity, the number of contractors, investment by sector and relevant growth indicators and indices. It includes information on notable companies, corporate actions, the latest developments, and public and private sector projects.

There are profiles of 61 companies including large construction companies such as Aveng, Raubex and Stefanutti stocks, engineering, consulting and services companies including Haw & Inglis, TCM Developments and Waco, and major Chinese construction companies such as China Communications Construction and China State Construction Engineering.

Introduction

South Africa’s construction industry has been under pressure for more than a decade. Several civil engineering and construction companies have gone out of business, and others are in business rescue, or have sold their local businesses and diversified. In real terms, the industry’s contribution to the economy in 2023 was 35% lower than in 2016. Construction activity rebounded in the second half of 2024. Although the public sector infrastructure project pipeline has improved, many industry players no longer have the capacity to undertake large-scale projects. This has provided an opening for major Chinese construction companies to gain a foothold in the domestic market.

Opportunities

• 3D printing of building materials and structures.
• Construction support services such as the supply of scaffolding and formwork, locally and regionally.
• Projects focusing on sustainability and green building, including off-grid living.
• Providing building management systems to improve energy and water efficiency.
• The supply of prefabricated modular structures for mining operations, residential use, schools and healthcare facilities.
• There are opportunities for the private sector to partner with the government and its agencies on infrastructure projects.
• Urban renewal and the repurposing and conversion of vacant commercial and industrial buildings into affordable residential units.

Challenges

• Concerns over construction safety issues and regulatory compliance.
• Corruption, irregular procurement practices, and the construction mafia are an ongoing threat.
• High interest rates continue to constrain growth in the residential building industry.
• The industry has been substantially weakened by a prolonged period of underinvestment, lower levels of government spending, procurement backlogs and delays in finalising public sector construction tenders.
• The shortage of experienced professionals with specialist skills has been exacerbated by the exodus of some of the largest construction companies.

Trends

• Government is soliciting private investment in strategic infrastructure projects.
• Major Chinese construction companies have been awarded public sector infrastructure projects and are expected to play an increasingly prominent role in the industry.
• The high interest rate environment continues to constrain residential building activity.
• The industry remains under pressure, but confidence in the civil construction and building subsectors is improving.
• There is a focus on energy-related projects, particularly renewable energy.
• There is a growing focus on sustainable construction practices such as energy and water efficiency, and the need for climate-resilient infrastructure.

Outlook

Public sector infrastructure spending is expected to increase. With public sector project pipelines improving, construction activity is expected to grow. Private sector investment is growing, with the value of new projects more than doubling in 2024.

Lower interest rates could boost residential building. The industry continues to be held to ransom by the construction mafia.

A growing challenge is the presence of China’s major construction companies, which are set to become formidable competitors in public infrastructure.