2013-08-25 09:16:44 - New Construction market report from Business Monitor International: "South Africa Infrastructure Report Q3 2013"
World Cup excesses, heavy bureaucracy and continuing political wrangles have weighed heavy on South Africa's previous glories. Last quarter we highlighted factors indicating a tentative change and that view is now playing out. 2012 real growth data came in as expected on 2.5%, lending credence to our longer term outlook.However, much is left to be done to lift South Africa's struggling and debt-ridden construction sector out of its quagmire. Despite a slow return to positive territory, with a real construction industry growth of 2.9% forecast for 2013, the risks are still plentiful: policy uncertainty, cumbersome bureaucracy, intense credit rating pressure and violent clashes in relation to several strikes at minesongoing labour issues across the country.
Though South Africa's construction industry appears
to have be bottomeding out and is now seeing a slow return to growth, it is important to note that South Africa is still lagging behind many of its sub-Saharan peers. neighbours; who are all registering a strong average growth of 6% for the same time period.
Full Report Details at
- www.fastmr.com/prod/670602_south_africa_infrastructure_report_q3 ..
Following the 2010 World Cup government finances were pushed to the limit in order to complete projects on time. Hence, a drawback in funding and subsequent activity was noticed almost immediately after the tournament. Real growth decelerated from 7.8% year-on-year (y-o-y) in 2009 to 0.9% y-o-y in 2010, and continued to weigh heavily on domestic construction companies in 2011, which resulted in falling share prices. That said, growth levels are unlikely to ever return to those seen before the World Cup, as they were driven by an artificial stimulus and a front-loading of the project pipeline.
However, with economic growth now ticking up, we are seeing a gradual improvement within the wider South African construction sector. This has also been underscored by the measured improvements seen in the performances of numerous South African construction companies. Hence, our medium-term outlook for the country's construction sector is one of cautious and modest growth, with a forecasted average annual growth of 4.03.8% between 2013 and 2022. This figure has been revised upwards from 3.8% last quarter in light of better than expected housing data, and the progression made in financing Transnet's ambitious capex plans.
However, despite a more positive outlook, one major risk still looms large in the horizon: access to funding. Yet, again much of the grand new infrastructure programmes proposed by President Zuma draws upon huge capex schemes by the country's state-owned infrastructure operators, including Eskom, Transnet, Prasa and Sanral. They all have multi-billion dollar plans in the pipeline; but, financing has proved and continues to be a major obstacle. With little government funding available, huge sums are required from the international financial community. For this reason, investment is far from assured and thus we have refrained from incorporating these investment plans into our medium-term forecasts for the sector.
Report Table of Contents:
BMI Industry View
- Construction And Infrastructure Forecast Scenario
- Table: Construction Industry Data 2011-2016
- Table: Construction Industry Data 2017-2022
- Transport Infrastructure - Outlook And Overview
- Table: South Africa Transport Infrastructure Industry Data 2011-2016
- Table: South Africa Transport Infrastructure Industry Data 2017 - 2022
- Transport Infrastructure Outlook and Overview
- Table: Major Projects - Transport
- Energy And Utilities Infrastructure - Outlook And Overview
- Table: South Africa Energy & Utilities Infrastructure Industry Data, 2011-2016
- Table: South Africa Energy & Utilities Infrastructure Industry Data, 2017 - 2022
- Energy And Utilities Infrastructure Outlook And Overview
- Table: Major Projects - Energy And Utilities
- Residential/Non-Residential Building - Outlook And Overview
- Table: South Africa Residential/Non-Residential Industry Data 2011-2016
- Table: South Africa Residential/Non-Residential Industry Data 2017-2022
- Residential/Non-Residential Building - Outlook & Overview
- Table: Major Projects
Industry Risk Reward Ratings
- South Africa - Risk/Reward Ratings
- Sub-Saharan Africa - Risk/Reward Ratings
- Regional Trends
- Industry Risk Profiles Improving
- Financing Remains Biggest Obstacle
- Table: Sub-Saharan Africa Infrastructure Risk/Reward Ratings
- Competitive Landscape
- Table: EQS Data
- Murray & Roberts Group (M&R)
- Table: Still Recovering
Global Industry Overview
- Data Methodology
- Capital Investment
- Infrastructure Risk/Reward Ratings
- Table: Infrastructure Business Environment Indicators
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