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Trends in the South African Construction Industry

Marthinus Havenga | South Africa | 30 November 2021

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Trends in The South African Construction Industry

The construction industry is a driver of socio-economic development and a key employment multiplier, yet despite its strategic importance, the last few years have not been kind to the South African construction industry, with a persistently sluggish economy, disruption on construction sites, the ever- present shadow of corruption and COVID-19 weighing down on the industry.

Report Coverage

This report focuses on trends in the overall South African construction industry. It includes information on the key trends, success factors and pain points relevant to the industry, whilst analysing in depth such issues as local growth trends, current confidence levels, employment movements, rising input costs and the overall health of the industry. The rationale for South African companies to internationalise is investigated, premised on a clear analysis of the drivers of the African construction industry.

The Size of The Industry

The construction industry contributed R134.bn in gross value added at current prices to the South African economy in 2020 (2.7% share of the total GDP). The value added is a direct function of the level of investment in the industry as measured by the gross fixed capital formation (GFCF) in construction, which stood at R308.2bn in 2020. This report tracks the performance of the industry from its heydays pre-World Cup 2010 and more currently since 2017, by investigating the reasons for the decline to its current levels.

Outlook

The growth prospects of the industry in the medium- to longer-term remains positive. Whilst the impact of COVID-19 was severe, the effects of the pandemic will eventually be worked out of the system. It may even leave the industry with better, more sound business practises. However, to attain a growing construction industry going forward will require some belt tightening, greater initiatives and focus to find new work and further diversification by the industry players. But the greatest responsibility for success lays at the feet of Government who needs to deliver on their promised infrastructure projects – these promises are only of value to contractors as and when the work materialises.

Table of Contents

PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1 Industry Value Chain 2
2.2 Size of the Industry 4
2.3 Key Success Factors and Pain Points 6
2.4 Key Trends 7
3. LOCAL 9
3.1 Local Growth Trends 9
3.2 Current Confidence Levels in the Industry 13
3.3 Labour 14
3.4 Rising Input Costs 16
3.5 Building Plans Passed and Buildings Completed 17
4. AFRICA 18
5. INFLUENCING FACTORS 22
5.1 COVID-19 22
5.3 Investment (Gross Fixed Capital Formation) 25
6. OUTLOOK 26
7. INDUSTRY ASSOCIATIONS 27
8. REFERENCES 27
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