Construction World June 2015

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growth beyond 2020 PREDICTING A slow and steady recovery in the construction industry is being predicted over the next five years with gradually returning business confidence driving new investments in the industry and its key suppliers.

ABOVE: Readymix concrete allows for some innovative building techniques to be used to meet Government’s promise to build 1,5 million houses by 2020.

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As the largest supplier of mate- rials for construction projects, the readymix concrete industry is seeing increasingly more invest-

However, he said, positives outweigh the negatives and stability in interest rates and rising house prices all tend towards supporting growth. Residential building plans passed are particularly encouraging especially in the affordable housing market, while retail centre construction is also growing at a good rate. “One of the positive outcomes of the recent recession is the trend for businesses to return to quality and specification of quality produced materials. “In our industry there is increased co- operation between professional bodies who are working towards the specification of only accredited building materials to be used on site to avoid failures and possible disaster in the event of structures collapsing. Member benefit “Companies can no longer afford the risk of buying unregulated products and as a result we are seeing a number of large consulting engineering firms, contractors, municipal- ities and industry bodies writing-in clauses specifying only accredited materials to be used on their sites. This is obviously posi- tive for Aspasa and Sarma members who should win-back lost ground as a result of start-up operators undercutting prices etc,” concluded Pienaar.

capacity. In addition it has stifled investment in the construction and related industries and led to some stagnation of the readymix concrete industry. South Africa’s slow recovery has also led to the large construction companies sourcing up to 60% of their revenue abroad. The viability of transporting heavy building materials over long distances is poor and as a result the lack of investment from these firms has dampened growth to an extent. Positive growth signs and returning investment is however bringing back a more positive sentiment to the market. Simul- taneously, the increasing demand is also leading to a large number of new operators establishing themselves in the sector which is effectively absorbing any real growth that the established players would have other- wise enjoyed. Trending upwards Commenting on the report, Nico Pienaar, who sits on the boards of both Sarma and Aspasa, said that signs of renewed growth are positive, but are expected to be slow and measured, at least for the next two years. Some negative factors including electricity shortages and low demand glob- ally for commodities may slow growth and have a negative effect on business senti- ments locally.

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ment in the market in anticipation of more buoyant and profitable times in future. Large cement suppliers have already made acquisitions of some of the major readymix companies and talks are apparently afoot for more acquisitions and mergers at the top end of the market. The reasons for the shift in optimism are based on a number of positive factors that are seeping into the market in the form of a rising number of plans being passed and far easier access to mortgage bonds. In addi- tion, the allure of Government’s R800-bil- lion infrastructure investment plan for the period up to 2020 and its promise to build 1,5 million RDP houses by the same period (at a cost of over R30-billion per annum), is proving to be a big incentive for investment According to a recent report compiled by BMI on behalf of the Southern Africa Readymix Association (Sarma) and the closely allied Aggregate and Sand Producers Association of Southern Africa (Aspasa), tough market conditions since the worldwide recession has led to under utilisation of manufacturers in the building materials industry. Investment returning

CONSTRUCTION WORLD JUNE 2015