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“Construction in South Africa – Key Trends and Opportunities to 2018” is now
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Synopsis
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 type of
construction activity
- Analysis of equipment, material
and service costs across each project type in South Africa
- Critical insight into the impact
of industry trends and issues, and the risks and opportunities they
present to participants in the South African construction industry
- Analyzing the profiles of the
leading operators in the South African construction industry.
- Data highlights of the largest
construction projects in South Africa
Summary
The South African
construction industry registered a
compound annual growth rate (CAGR) of 8.65% during the review period
(2009–2013). This growth was supported by increased government spending in the
country’s residential, infrastructural and commercial construction projects.
The residential and infrastructure construction markets drove growth, as the
preparation for both the World Cup and 2009 Confederations Cup supported
improvements and acceleration in construction activities. Moreover, the
government has also adopted the National Infrastructure Plan (NIP) and
announced National Budget estimates in order to develop the country’s
infrastructure. Therefore, a large number of announced projects will provide
hope for the construction industry, as corruption, mismanagement and price
fixing within the industry all threaten to undermine the proper implementation
of these developments. Timetric expects the South African construction industry
to record a CAGR of 8.93% over the forecast period (2014–2018).
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Key highlights
- In nominal terms, the total
construction value add in South Africa registered a nominal CAGR of 9.97%
during the review period. The value add is anticipated to record a nominal
forecast-period CAGR of 7.70%, driven by a decline in the confidence of
building construction and civil engineering construction. According to the
Bureau for Economic Research (BER), the building confidence index declined
by 11.0 index points, going from 52.0 points in the first quarter of 2014
to 41.0 points in the second. The civil confidence index declined by 11.0
index points over the same period, going from 55.0 to 44.0 points. The
total outlook for construction in South Africa over the forecast period
remains positive.
- The South African Construction
industry is undergoing a period of unfavorable conditions as a consequence
of economic indicators, which continue to disappoint the building
industry. There are fewer projects in the construction market with a
higher interest rate, dampening the country’s growth of real estate
construction projects. According to BER, the building confidence index
declined by 11.0 index points, going from 52.0 in the first quarter of
2014 to 41.0 in the second. This was largely due to the weak demand from
private sector, prolonged strike in platinum sector, acceleration in the
project postponement rate, increasing interest rates and declining
exports. The industry is set to rebound over the forecast period, due to
improved economic conditions, increase in profitability, and investment in
the construction industry.
- The South African government is
taking various initiatives to improve the country’s transport
infrastructure. The National Transport Master Plan 2050 (Natmap) was
approved by the South African government in 2010, with an aim to expand
the country’s rail network and ports with an investment of ZAR750.0
million (US$102.5 million). The government adopted the National
Infrastructure Plan in 2012, with the objective of investing ZAR827.0
billion (US$100.7 billion) over a period of three years, from 2013–2014
until 2015–2016, to build and upgrade infrastructure in South Africa. Additionally,
with the Public Transport Strategy (2007–2020), the government plans to
improve the country’s public transport by establishing the integrated
rapid public transport network (IRPTN), and developing rail corridors and
bus rapid transit systems (BRTs).
- The South African construction
market will also be supported by the country’s macroeconomic factors,
which include mortgage loans, interest rate and inflation. According to
the latest data from Absa Bank Ltd (ABSA), private sector mortgage loans
(which comprise both commercial and residential mortgage loans) recorded a
growth of 3.4% at the end of June 2014 and annually, with commercial and
residential mortgage loans recording respective growths of 6.1% and 2.4%
in the first half of 2014. Moreover, mortgage interest rates climbed by
50.0 basis points in January 2014, going from 8.5% in 2013 to 9.0%
annually, while inflation maintained stability in the first half of 2014,
at 5.3%, after increasing from 3.5% in 2011, 4.6% in 2012 and 5.2% in
2013. Inflation and mortgage interest rates are expected to increase
further in 2014 and 2015, depending on present global and economic trends,
highlighting the growth prospects of the South African construction
market.
- According to the National Budget,
the South African government increased its expenditure for social
infrastructure, which includes the development of education, health and
other formal communities. The expenditure is expected to increase from
ZAR30.0 billion (US$3.7 billion) in 2012–2013 to ZAR43.0 billion (US$4.0
billion) in 2016–2017. The main emphasis will be on the refurbishment of
clinics and hospitals, and clearance of school infrastructure backlogs.
This will contribute to the institutional construction market’s continued
expansion over the forecast period.
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Scope
This report
provides a comprehensive analysis of the construction industry in South Africa.
It provides:
- Historical (2009-2013) and
forecast (2014-2018) valuations of the construction industry in South
Africa using construction output and value-add methods
- Segmentation by sector
(commercial, industrial, infrastructure, institutional and residential)
and by project type
- Breakdown of values within each
project type, by type of activity (new construction, repair and
maintenance, refurbishment and demolition) and by type of cost (materials,
equipment and services)
- Analysis of key construction
industry issues, including regulation, cost management, funding and
pricing
- Detailed profiles of the leading
construction companies in South Africa
Reasons to buy
- Identify and evaluate market
opportunities using Timetric’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 business
strategies using Timetric’s critical and actionable insight
- Assess business risks, including
cost, regulatory and competitive pressures
- Evaluate competitive risk and
success factors
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