The publisher has revised the estimate for growth down in South Africa’s construction industry in 2021, with the industry now expected to decline marginally by 0.3% in real terms, down from the earlier estimate of 4.6% growth. This downward revision is attributed to a weaker performance than had been anticipated in the third quarter, owing in part to a third wave of the Coronavirus (COVID-19) pandemic. In late 2021, the emergence of the Omicron variant of the virus and the subsequent tightening of travel restrictions to contain its spread could weigh on demand and investor confidence in the short term, thereby affecting investments in the leisure and hospitality and retail sectors.
Assuming no further waves of the virus and a gradual improvement of the economy, the industry is expected to rebound in 2022, and expand by 9.1% in real terms. The industry will then stabilize at an annual average growth of 3.1% between 2023-2025, although output will not return pre-pandemic levels during the entire forecast period. The industry’s growth over the forecast period will, however, be supported by government investments on transport, energy, residential, telecommunication and industrial projects. The government’s support towards businesses and Small and Medium Enterprises (SMEs) is expected to boost business confidence. In November 2021, the National Treasury announced a plan to spend ZAR2.3 billion (US$142.4 million) in the current Financial Year (FY) (April 2021 to March 2022), to assist in rebuilding businesses affected by the third wave of the pandemic and reconstruct infrastructure that was damaged due to the civil unrest that erupted in July 2021 in the Gauteng and KwaZulu-Natal provinces. The increase in the total number of building plans passed in the first 10 months of 2021 also points to a rebound in 2022.
According to Stats SA, the total value of recorded building plans passed by larger municipalities rose by 37.5% YoY in the first 10 months of this year, following an annual decline of 33.5% in 2020. In the latest budget unveiled in February 2021, the government announced a plan to invest ZAR791.2 billion (US$49 billion) towards the public-sector infrastructure spending over the Medium-Term Expenditure Framework (MTEF) period, which runs from FY2021/2022 to FY2023/2024. Of the total, it allocated ZAR287 billion (US$17.8 billion) towards the transport and logistics sector and ZAR149.9 billion (US$9.3 billion) towards the energy sector.
Over the long term, the industry’s output will be supported by investments related to the 10-year ZAR2.2 trillion (US$133 billion) infrastructure plan unveiled by the government last year. The plan comprises 276 projects in various sectors, including transport, energy, industrial and housing. Of the total, ZAR1 trillion (US$62 billion) will be spent over the next four years alone. The industry’s output over the long term will also be supported by the government’s aim to produce 26% of the total electricity from renewable energy sources by 2030. To achieve this goal, the state-owned electricity public utility company Eskom plans to invest ZAR106 billion (US$6.6 billion) on the construction of wind farms and solar plants until 2030. The government’s intentions to increase the number of Special Economic Zones (SEZ) across the country will also support the industry’s growth. In October 2021, South Africa’s president Cyril Ramaphosa announced plans to designate the Sedibeng area into a SEZ, with the SEZ expected to attract 99 investment opportunities worth ZAR48 billion (US$3 billion).
The publisher’s Construction in South Africa - Key Trends and Opportunities to 2025 report provides detailed market analysis, information, and insights into South Africa’s construction industry, including:
This report provides a comprehensive analysis of the construction industry in South Africa. It provides:
Assuming no further waves of the virus and a gradual improvement of the economy, the industry is expected to rebound in 2022, and expand by 9.1% in real terms. The industry will then stabilize at an annual average growth of 3.1% between 2023-2025, although output will not return pre-pandemic levels during the entire forecast period. The industry’s growth over the forecast period will, however, be supported by government investments on transport, energy, residential, telecommunication and industrial projects. The government’s support towards businesses and Small and Medium Enterprises (SMEs) is expected to boost business confidence. In November 2021, the National Treasury announced a plan to spend ZAR2.3 billion (US$142.4 million) in the current Financial Year (FY) (April 2021 to March 2022), to assist in rebuilding businesses affected by the third wave of the pandemic and reconstruct infrastructure that was damaged due to the civil unrest that erupted in July 2021 in the Gauteng and KwaZulu-Natal provinces. The increase in the total number of building plans passed in the first 10 months of 2021 also points to a rebound in 2022.
According to Stats SA, the total value of recorded building plans passed by larger municipalities rose by 37.5% YoY in the first 10 months of this year, following an annual decline of 33.5% in 2020. In the latest budget unveiled in February 2021, the government announced a plan to invest ZAR791.2 billion (US$49 billion) towards the public-sector infrastructure spending over the Medium-Term Expenditure Framework (MTEF) period, which runs from FY2021/2022 to FY2023/2024. Of the total, it allocated ZAR287 billion (US$17.8 billion) towards the transport and logistics sector and ZAR149.9 billion (US$9.3 billion) towards the energy sector.
Over the long term, the industry’s output will be supported by investments related to the 10-year ZAR2.2 trillion (US$133 billion) infrastructure plan unveiled by the government last year. The plan comprises 276 projects in various sectors, including transport, energy, industrial and housing. Of the total, ZAR1 trillion (US$62 billion) will be spent over the next four years alone. The industry’s output over the long term will also be supported by the government’s aim to produce 26% of the total electricity from renewable energy sources by 2030. To achieve this goal, the state-owned electricity public utility company Eskom plans to invest ZAR106 billion (US$6.6 billion) on the construction of wind farms and solar plants until 2030. The government’s intentions to increase the number of Special Economic Zones (SEZ) across the country will also support the industry’s growth. In October 2021, South Africa’s president Cyril Ramaphosa announced plans to designate the Sedibeng area into a SEZ, with the SEZ expected to attract 99 investment opportunities worth ZAR48 billion (US$3 billion).
The publisher’s Construction in South Africa - Key Trends and Opportunities to 2025 report provides detailed market analysis, information, and insights into South Africa’s construction industry, including:
- South Africa’s 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 South Africa’s construction industry
- Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.
Scope
This report provides a comprehensive analysis of the construction industry in South Africa. It provides:
- Historical (2016-2020) and forecast (2021-2025) 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 the publisher's 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 the publisher's critical and actionable insight.
- Assess business risks, including cost, regulatory and competitive pressures.
- Evaluate competitive risk and success factors.
Table of Contents
1 Executive Summary2 Construction Industry: At-a-Glance6 Construction Market Data
3 Context
4 Construction Outlook
5 Key Industry Participants
7 Appendix
List of Tables
List of Figures
