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Construction in South Africa - Key Trends and Opportunities to 2023

Construction in South Africa - Key Trends and Opportunities to 2023

Summary

South Africa's construction industry suffered a downturn during 2017-2018, contracting by 0.6% and 1.2% in real terms in 2017 and 2018 respectively, following an average annual growth of 2.2% during the preceding three years. This decline can be attributed to economic slowdown, coupled with weak consumer and investor confidence, which in turn reduced public and private sector investments in construction projects.

The government's efforts to enhance transport, residential and industrial infrastructure will support the growth of the industry over the forecast period (2019-2023). The industry's output is expected to be supported by improvements in business confidence over the forecast period, which will drive investment in infrastructure, commercial, residential projects and energy infrastructure. In the 2019 budget, the government announced plans to invest ZAR276.1 billion (US$20 billion) on public-sector infrastructure in 2019-2020. The focus on the development of renewable energy infrastructure is also expected to drive industry growth.

The industry's output value in real terms is expected to rise at a compound annual growth rate (CAGR) of 1.68% over the forecast period, compared to 0.30% during the review period.

GlobalData's "Construction in South Africa - Key Trends and Opportunities to 2023", 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

Key Highlights

- GlobalData expects the infrastructure construction market to account for 35.3% of the industry's total value in 2023. Market output over the forecast period is expected to be supported by the government's plan to improve the country's transport infrastructure. In the 2019 budget, the government announced plans to invest ZAR313.9 billion (US$22.7 billion) over the next three years to develop the country's transport and logistics infrastructure under the Medium-Term Expenditure Framework (MTEF) period of 2019-2022.
- Residential construction market's growth over the forecast-period will be driven by the government's efforts to construct affordable housing coupled with public and private sector investments in the construction of new residential buildings to meet the demand for housing. In the 2019 budget, the government introduced the Our Help to Buy initiative to help the first-time buyers to purchase houses, under which prospective buyers gain assistance through subsidies mortgage loan over the medium-term period of 2019-2022. The government will provide a grant of ZAR950 million (US$68.7 million) over the next three years in order to provide subsidized mortgage loans to 18,185 households.
- GlobalData expects the energy and utilities construction market to record a forecast-period CAGR of 7.57% in nominal terms in 2023, supported by public and private sector investments in the development of the country's energy and utilities infrastructure. In the 2019 budget, the government announced its commitment to invest ZAR158.1 billion (US$11.4 billion) to construct and develop energy infrastructure over the next three years.
- Forecast-period growth in the institutional construction market will be supported by the government's commitment to pursuing quality development and continuous expenditure on the education sectors. In the 2019 budget, the government increased its spending towards learning and culture by 8.9%, going from ZAR354.8 billion (US$26.8 billion) in 2018 to ZAR386.4 billion (US$27.9 billion) in 2019. Of the total budget allocation towards learning and culture, the government allocated ZAR262.4 billion (US$19 billion) towards basic education - an increase of 6.4% compared to the 2018 budget allocation, and ZAR112.7 billion (US$8.1 billion) towards post-school education and training - an increase of 15.4% compared to the 2018 budget.
- The total construction project pipeline in South Africa - as tracked by GlobalData, and including all mega projects with a value above US$25 million - stands at ZAR2.6 trillion (US$194 billion). The pipeline, which includes all projects from pre-planning to execution, is skewed towards early-stage projects, with 65.1% of the pipeline value being in projects in the pre-planning and planning stages as of April 2019.

Scope

- This report provides a comprehensive analysis of the construction industry in South Africa.
- Historical (2014-2018) and forecast (2019-2023) 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 GlobalData'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 GlobalData's critical and actionable insight.
- Assess business risks, including cost, regulatory and competitive pressures.
- Evaluate competitive risk and success factors.
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Construction in South Africa - Key Trends and Opportunities to 2023
Published By :GlobalData
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