Elsie Snyman, a construction analyst weighs in on what can be expected in the construction sector this year.
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Industry Insight has released a forecast report on the South African construction industry’s outlook for 2024. Elsie Snyman, CEO of Industry Insight and a senior construction analyst, has highlighted several points to consider for the year ahead, which she presented at the MDA Collective Wisdom Conference on 29 February 2024.
The conference delved into SA’s construction industry.
The construction industry forecast report makes several observations. First off, inflation remains high, elevated debt levels, higher funding costs during slow economic growth as well as dollar strength all provide a negative outlook.
Economic growth has been hampered by broad base collapse of infrastructure. The contribution by infrastructure investment into gross domestic product (GDP) has halved in the period between 2009 and 2022.
The value of water-related projects is seen to become the next crisis in the country. However, confidence levels among civil contractors have improved to a level of 43.
There has been a reduced demand for office space with an increase in the use of rotating staff, leading to downsizing on office space use. However, there are some areas of growth as approvals for office space double in the first 8 months of 2023. Investment in residential buildings only increased by 1.1 percent in 2022. This growth picked up speed in the first half of 2023.
Another area of concern is the cancellation of housing contracts.
Global tensions as seen in Russia and Israel do have a negative impact on global economic growth. With ongoing supply disruptions as a result of these tensions, there may be continued disruptions ahead. The fall of critical infrastructure has also been seen as an area of great concern.
For the large part, though, there is a slight improvement in the outlook, however, with a possible rate hike and the Israel-Gaza conflict, there may be disruption on commodity prices.
