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Construction in South Africa - Key Trends and Opportunities to 2025 (Q1 2021)

Construction in South Africa - Key Trends and Opportunities to 2025 (Q1 2021)

Summary

The South African construction industry is expected to grow by 6.1% in real terms in 2021 - up from a contraction of 16.5% in 2020. The industry’s output was severely affected by the outbreak of the Coronavirus (COVID-19) pandemic, with the country imposing a strict six-week lockdown in response to the outbreak. Reflecting the pandemic’s impact on construction activities, the industry’s value-add fell sharply by 21.6% year on year (YoY) in Q3 2020, which was preceded by a 33.3% contraction in Q2 2020, according to Statistics South Africa (Stats SA). The industry was also one of the hardest hits in terms of employment, losing 259,118 jobs at the end of Q3 2020, compared to that at the end of Q3 2019.

To help the economy recover from the crisis, in June 2020, the government announced a 10-year infrastructure investment plan worth ZAR2.3 trillion (US$124.7 billion), with investments planned in the housing, energy, agriculture, transport, water and sanitation and digital infrastructure sectors. Officials from the World Bank, African Development Bank (AfDB) and Development Bank of South Africa (DBSA) have pledged support for the infrastructure drive, which is expected to create over 1.8 million jobs over the next 10 years. In another positive development, in October 2020, the government rolled out an ambitious ZAR1.1 trillion (US$60 billion) Economic Reconstruction and Recovery Plan, which has four priority interventions: infrastructure investments; expansion of the energy generation capacity; job creation to support livelihoods; and industrial growth.

The industry is expected to register a marginal annual average growth of 0.2% between 2022-2025, with growth being restricted due to the government’s focus on fiscal consolidation, owing to the deteriorating fiscal situation in the country. The government expects the country’s public debt to rise from 63.3% of GDP in 2020 to 81.8% by 2021, and further increase to 93.5% by 2026. In October 2020, the treasury said that it aims to achieve a primary surplus by FY2025/2026, through cutting expenditures by nearly ZAR300 billion (US$16.3 billion) over the next three years; this will be done mainly through public wage cuts. Reflecting the effect of the COVID-19 pandemic on the construction industry, the total value of plans passed for building construction fell by 36.6% YoY in the first eleven months of 2020; this was preceded by annual declines of 11.8% and 1.1% in 2019 and 2018, respectively.

This 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.

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 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.

Table of Contents
1 Executive Summary
2 Construction Industry: At-a-Glance
3 Context
3.1 Economic Performance
3.2 Political Environment and Policy
3.3 Demographics
3.4 COVID-19 Status
4 Construction Outlook
4.1 All Construction
4.2 Commercial Construction
4.3 Industrial Construction
4.4 Infrastructure Construction
4.5 Energy and Utilities Construction
4.6 Institutional Construction
4.7 Residential Construction
5 Key Industry Participants
5.1 Contractors
5.2 Consultants
6 Construction Market Data
7 Appendix
7.1 What is this Report About?
7.2 Definitions
7.3 GlobalData Construction

List of Tables
Table 1: Construction Industry Key Data
Table 2: South Africa, Key Economic Indicators
Table 3: South Africa, Commercial Construction Output by Project Type (Real % Change), 2016-2025
Table 4: South Africa, Top Commercial Construction Projects by Value
Table 5: South Africa, Industrial Construction Output by Project Type (Real % Change), 2016-2025
Table 6: South Africa, Top Industrial Construction Projects by Value
Table 7: South Africa, Infrastructure Construction Output by Project Type (Real % Change), 2016-2025
Table 8: South Africa, Top Infrastructure Construction Projects by Value
Table 9: South Africa, Energy and Utilities Construction Output by Project Type (Real % Change), 2016-2025
Table 10: South Africa, Top Energy and Utilities Construction Projects by Value
Table 11: South Africa, Institutional Construction Output by Project Type (Real % Change), 2016-2025
Table 12: South Africa, Top Institutional Construction Projects by Value
Table 13: South Africa, Residential Construction Output by Project Type (Real % Change), 2016-2025
Table 14: South Africa, Top Residential Construction Projects by Value
Table 15: South Africa, Key Contractors
Table 16: South Africa, Key Consultants
Table 17: South Africa, Construction Output Value (Real, US$ Million)
Table 18: South Africa, Construction Output Value (Nominal, ZAR Million)
Table 19: GlobalData Construction Market Definitions

List of Figures
Figure 1: Sub-Saharan Africa, Construction Output (Real % Change), 2020 and 2021
Figure 2: South Africa, Construction Projects Pipeline by Sector (US$ Billion)
Figure 3: South Africa, COVID-19 Confirmed Cases
Figure 4: South Africa, Construction Output Value (Real, US$ Billion, 2017 Prices and Exchange Rate), 2016-2025
Figure 5: South Africa, Construction Output Value, by Sector (Real, US$ Million), 2016-2025
Figure 6: South Africa, Construction Value-Add (ZAR Billion, Constant 2010 Prices), % Change YoY
Figure 7: South Africa, Number of People Employed in The Construction Industry, In Thousands, % Change YoY
Figure 8: South Africa, Gross Fixed Capital Formation, (Constant 2010 Prices, % Change YoY)
Figure 9: South Africa, Value of Building Plans Passed, 2015 Constant Prices, % Change YoY
Figure 10: South Africa, Value of Buildings Reported as Completed, 2015 Constant Prices, % Change YoY
Figure 11: South Africa, Construction Projects Momentum Index
Figure 12: South Africa, Commercial Construction Output by Project Type (Real, US$ Million), 2016-2025
Figure 13: South Africa, Commercial Construction Projects Pipeline, Value by Stage (US$ Million)
Figure 14: South Africa, Foreign Arrivals (In Thousands), % Change YoY
Figure 15: South Africa, Income from Accommodation and Food Services, in ZAR Million (Current Prices)
Figure 16: South Africa, Total Retail and Wholesale Trade Sales at Constant 2015 Prices, % Change YoY
Figure 17: South Africa, Industrial Construction Output by Project Type (Real, US$ Million), 2016-2025
Figure 18: South Africa, Industrial Construction Projects Pipeline, Value by Stage (US$ Million)
Figure 19: South Africa, Volume Index of Manufacturing Production (2015=100) and Total Value of Manufacturing Sales, % Change YoY
Figure 20: South Africa, Absa Purchasing Managers’ Index (PMI), Business Activity Index and New Sales Orders Index, Seasonally Adjusted
Figure 21: South Africa, Volume Index of Mining Production (2015=100) and Mineral Sales, % Change YoY
Figure 22: South Africa, Total Merchandise Exports (in ZAR Billion), % Change YoY
Figure 23: South Africa, Infrastructure Construction Output by Project Type (Real, US$ Million), 2016-2025
Figure 24: South Africa, Infrastructure Construction Projects Pipeline, Value by Stage (US$ Million)
Figure 25: South Africa, Energy and Utilities Construction Output by Project Type (Real, US$ Million), 2016-2025
Figure 26: South Africa, Energy and Utilities Construction Projects Pipeline, Value by Stage (US$ Million)
Figure 27: South Africa, Volume Index of Electricity Produced (2015=100), and Electricity Distributed, % Change YoY
Figure 28: South Africa, Institutional Construction Output by Project Type (Real, US$ Million), 2016-2025
Figure 29: South Africa, Institutional Construction Projects Pipeline, Value by Stage (US$ Million)
Figure 30: South Africa, Residential Construction Output by Project Type (Real, US$ Million), 2016-2025
Figure 31: South Africa, Residential Construction Projects Pipeline, Value by Stage (US$ Million)
Figure 32: South Africa, Value of Residential Buildings Reported as Completed, in ZAR Million, Constant 2015 Prices, % Change YoY
Figure 33: South Africa, Value of Residential Building Plans Passed, in ZAR Million, Constant 2015 Prices, % Change YoY
Figure 34: South Africa, Headquarters of Key Contractors (% of Total Project Pipeline)
Figure 35: South Africa, Headquarters of Key Consultants (% of Total Project Pipeline)

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