CMA NEWS & ARTICLES
CMA News & Articles
1 March 2016
Tough economy stifles construction
Indications are that South Africa’s construction industry will be stuck in an extended period of low growth for the foreseeable future.
This is according to economist David Metelerkamp of Industry Insight, who was speaking at the annual feedback session of the Concrete Manufacturers Association (CMA) in Kempton Park recently. He explained that the construction industry is intrinsically linked to the economy and that the battered state of our economy will most probably take a long while to recover from its current state.
However, there is a glimmer of hope for role players in the industry who should look towards sectors that are performing well and tailor offering to meet demands. Also, in certain geographical areas requirements exist for housing, infrastructure etc which can drive local construction economies far higher than the average. Also, sectors such as retail are booming and construction of retail centers is at an all-time high.
“Since the global economic crisis in 2008 the world has experienced the slowest recovery from such an event ever. In addition, the slowdown of China is putting immense pressures on commodity prices. This has caused turmoil among producer countries and has led indirectly to emerging economies taking a beating. While the world’s economy is expected to grow by only 2.6%, South Africa’s economy will be still slower at just 0.7%.”
He cited the following areas as being potentially lucrative in the year ahead:
1. Property trusts and funds are buoyant and continue to invest in properties
2. Retail construction is booming and showed an 18% annual growth last year
3. The affordable housing market continues to grow at 8% per annum
4. Townhouse developments are growing by 6%
5. There are well publicized plans for a Mega Housing projects in Gauteng with 700 000 units planned in 4 years.
6. Similar projects are planned for KZN and pockets across the country
“It pays to make use of information at the disposal of the industry and to capitalize on the many opportunities that exist in order to ensure that your business does not remain stagnant during this period,” concluded David.