However, looking ahead to 2022, 31% plan to increase spending while the remaining 57% plan to hold steady. He is a recognised Supply Chain expert and te. Featured Market Capitalisation The market capitalisation of companies analysed fell 3% to R25 billion Aggregate Net Profit Aggregate net profit increased by 161% on the prior year to R 2.9 billion. How will existing labor constraints complicate the deployment of the IIJA and new funding sources? The engineering and construction industry has made a significant recovery from the 2020 recession, but it has also experienced multiple headwinds that are expected to persist. Alex Moir. The 2016 financial year once again got off to a poor start, with margins under pressure, tight liquidity and decreasing order books. Copyright2022 Jones Lang LaSalle IP, Inc. Construction Outlook | H2 2022 | JLL Research. GDP from Construction in South Africa decreased to 105100.04 ZAR Million in the second quarter of 2022 from 107642.33 ZAR Million in the first quarter of 2022. 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Robots and wearable sensors improve efficiency and safety. Highlighting trends in the SA construction industry. But the increased use of alternative materials will have less to do with alleviating supply issues than the improvement in the quality of materials themselves. In 2022, there is reason to be cautiously optimistic about the sectors growth, particularly if stakeholders continue working smarter to optimise opportunities and control costs. The government's massive spending . The cement industry is forecast to grow at a compound annual growth rate (CAGR) of 3.4% during the 2022-2030 period, driven by increasing construction activity and rapid urbanization in developing countries. So when exploring these new materials as an alternative, contractors need to check the insurance implications, including the effect on property, general and product liability coverage. Andrew Skudder,. Having just emerged from two years of the global COVID-19 pandemic, and in wake of the beginnings of the ripple effects of Russia's attack on Ukraine, the Mining Industry is bracing itself for yet another tough year. It's no secret that the South African construction industry is struggling. Unpacking the human capital opportunity, Consumer shifts in Africa; new intersections and brand opportunities. Those who were able to survive the past year or two have the potential to flourish if they stick to their niches, work smarter, and control costs through measures like extending the life of their equipment. At the same time, the backlog in processing critical skills visas and risk of greylisting are red flags for the economy (and fiscal revenue) growth outlook. What's next? Alex is the regional Consulting Leader for the Kwazulu-Natal region and the Industrial Products & Construction sector leader for the Deloitte Africa firm. Drone use is skyrocketing,9andindustrial-scale 3-D printingis moving beyond the proof-of-concept stage. SA artists poised to dominate while TikTok still reigns supreme, SA's logistics sector is weathering the storm despite myriad challenges, Taking Africa's aviation sector to the skies, Safeguarding supply chain sustainability in a post-pandemic world, Forecasts for freight and logistics in 2022, A spike towards servicing global brands wanting to reach Africa, Automation, meaningful personalisation and privacy. Between the years 2022 and 2025, South Africa's construction industry is expected to experience an average yearly growth rate of 3.4 per cent as Government focuses on infrastructure and energy sector initiatives. The average U.S. construction worker is 43 years old, and young people aren't lining up to work in construction.5, With a medianannualwage of$37,080,6the pay may not appealto younger workers, given the nature of the work. In early 2021, only 11.9% of C&RE companies planned to increase capital spending. This demonstrates their commitment to transformation in the industry in what is undoubtedly a move in the right direction. And the lumber shortage is only now rectifying itself futures per thousand board feet were $610 in early November, down from a record $1,711 in May but still far up from about $250 in April 2020. How do you connect in the knowledge-based era? +27 31 560 7289. Staff costs reduced by 15%on the prior year, indicative of re-sizing activities in the industry. In this article, we consider the current state of the industry in South Africa and the outlook for 2021. It is hoped that this agreement will resolve the perceived mistrust between the big construction companies and Government. Following an investigation by the Competition Commission into collusion in the industry, in October 2016 seven of the nine listed construction companies entered into an agreement with Government. Construction 4.0 - Underlying Technologies, Use Cases and Telco Positioning Strategies : March 2022 $ 3495 Oman Construction Equipment Market - Strategic Assessment & Forecast 2022-2028 : May 2022 $ 2200 Synthetic Diamond Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027) The latest draft expands the definition of what infrastructure is to include private equity investments, which potentially will release more resources for infrastructure spend and this could then filter through to the construction sector. It's also important to reconsider reliance on foreign-made supplies and just-in-time materials sourcing, making it important to establish local and regional suppliers when possible. By comparison retail. Intellectual property - is AI sufficiently central to Africa's agenda? South Africa's construction sector is a key contributor to GDP and jobs, employing around 8% of the South African workforce. The South Africa construction market size was $29 billion in 2021 and is projected to achieve an AAGR of more than 2% during 2023-2026. Electricity stability and power supply is expected to remain a constraint on economic activity, and the impacts of the pandemic are an unknown, particularly due to South Africas relatively low vaccination rate. The cost of alternative materials can also be an issue. Learn more about HUBs solutions and services. 5CNN Business, America desperately needs 1 million more construction workers, July 11, 2021. It is a unique combination of updates from professionals on the ground and insights from our leading research experts. The first half of 2022 saw cost inflation persist at an elevated rate as strong construction demand competed with a broad range of global and local issues. R2.1 billion in capital expenditure, a decline of 12% from prior year. Political Outlook 92 8. And technologyplays a role:not only does it improve productivity butdrones, robotics and digital tools in constructionappeal to young workers. Ahead of Investing in African Mining Indaba 2022, industry thought leaders share their . In 2020, we saw a 6.4% decline in economic activity as a result of the hard lockdown in Q2 2020, when tourism, hospitality and construction were the sectors hardest hit. The construction industry will need 1 million new workers by 2024. The stark macroeconomic reality:The U.S.needs 1 million new construction workers in the next two years. What will shape influencer marketing post Covid-19? Other new materials include bendable concrete, which has greater durability than regular concrete, reducing the need for costly repairs down the line. The South African Construction Industry 23 . Capital Spending. In 2019, the total value of non-residential construction building work done across both public and private sectors amounted to AUD 47.6 billion, the highest in the last decade. The winter storm that pounded Texas and the Southwest shut down production of chemicals used in making roofing membranes, making them virtually unavailable.2, And the lumber shortage is only now rectifying itself futures per thousand board feet were $610 in early November, down from a record $1,711 in May but still far up from about $250 in April 2020.3, According to one survey, more than 90% of builders said there were shortages of appliances and lumber, while 90% had shortages of plywood and 87% said they had shortages of windows and doors.4. Contractors are lucky if they can overpay for materials and stockpile. Subcontractor performance and default, cyber exposure and site security continue to bedevil the construction business. GET THE INSIGHT Country Risk & Industry Research Expert analysis of opportunities and risks across emerging and frontier markets. Builders Hunt for Alternatives to Materials in Short Supply, America desperately needs 1 million more construction workers, Survey: ABC Members Invested $1.3 Billion in Construction Workforce Education in 2020, Using Construction Tech to Attract Younger Workers, Top 10 Construction Industry Trends to Watch For In 2021. Modular construction provides the opportunity to practice a tradein a protected environment. Furthermore, Corporate Income Tax (CIT) collections have increased 14.7% y-o-y in 2022/2023 to date, compared to a Budget 2022 forecast of a 15.2% y-o-y decrease. Despite a global inability to control the wide ranging disruptions and widespread fear of a recession, the industry is only just beginning to see a modest pullback and tempering of builder confidence. You are currently reading a sample of the South Africa Construction Market Report 2022. Market Overview. Resiliency will be essential to cope with these shortages as business opportunities surge. Joining the dots in Africa - where does employer branding fit in? Temporary employment services show resilience and flexibility, 7 intelligence facts shaping the recruitment industry, Employee flexibility drives changes in recruitment industry, Machine learning will continue to break boundaries, Discriminatory AI and disinformation powered by deep fakes, 5 trends shaping marketing and communication in 2022, Top 5 AI trends that will give organisations a digital advantage in 2022, Positive tech disruption drives 2022 business trends, 6 tech trends that will shake up the aviation sector, Key trade and investment trends in Africa - Part 2, Key trade and investment trends in Africa - Part 1. Though inflation and supply chain troubles are reminiscent of 2021, the contributing material components have shifted and new supply side issues have emerged. There's substantial risk management and insurance challenges, as well as opportunities. The paper investigates the challenges influencing the performance, development and growth of the South African construction industry. With South African. However, this requires careful consideration of tax planning. JLL's regular view on global real estate dynamics, covering: investment, office, logistics, retail, hotels and living, as well as CRE market trends. We take our responsibility to protect the personal information provided to us seriously. 4 Wall Street Journal, Builders Hunt for Alternatives to Materials in Short Supply, October 6, 2021. Operating expenses also declined, by R17 billion, which is a 12% decrease on the prior year. Contact us. The good news is, the 2022 outlook for construction is favorable, with four main stories to keep an eye on this year: Supply Chain Fatigue Market fundamentals remain strong right now across the commercial real estate world. The value of commercial building activity in the year 2019 amounted to AUD 45.6 billion as compared to AUD 42.34 billion in 2018. The stark macroeconomic reality:The U.S.needs 1 million new construction workers in the next two years. Supporting the nation's growth Technology makes contractors and their customers vulnerable to ransomware, social engineering and other cyberattacks. ESG focus: Building trust in the quality of governance by improving the public sectors management of its (our) money. However, it should be noted that plans such as these depend on financing. ? August 8, 2021. The average U.S. construction worker is 43 years old, and young people aren't lining up to work in construction. The Size of The Industry. Demand more from your real estate. In addition, from a macro perspective, the government is still battling with getting fiscal consolidation under control, which is one reason we are not yet seeing significant infrastructure investment from government's side. Digital transformation is dead! It is also the most technologically advanced, industrialized, and diversified economy on the continent. The construction industry contributed R134.bn in gross value added at current prices to the South African economy in 2020 (2.7% share of the total GDP). 10McKinsey, The next normal in construction, June 2020. Though inflation and supply chain troubles are reminiscent of 2021, the contributing material components have shifted and new supply side issues have emerged. Motivation for the study: The South African construction industry's inability to retain talent,. The prize ahead, of course, is the red-hot North American construction market, which could get even hotter when taking into account the U.S. infrastructure bill. Construction industry players have welcomed government's announcement in February 2022 of infrastructure investment of more than R810bn over the next three years, but say that rapid. South Africa's construction industry is projected to achieve a growth of 9.1% in real terms in 2022, following a turnaround in 2021 from the COVID induced contraction of 16.5% in 2020. It is unlikely that the Covid-19 pandemic and current constraints will last forever, and the outlook for the construction sector does not rest entirely on external circumstances. The construction industry is expected to rebound over the course of 2022, with forecast expansion of 9.1%. Key Features Provide an overview of the total market size and expected growth between 2018 and 2023. Material shortages interrupt cash flow, affecting costs, timing and budgets. The downside is additional risk, particularly cybercrime. Technology will continue its unstoppable march into all aspectsof construction,havinga profound impact onthe business. The objective is to develop a framework for enhancement of talent management practices. In real terms, adjusted for inflation, sales increased by 1.9 percent y-y for the first six months of 2022. Africa's business revolution powered by technology, Regulators and bigtech tame the digital Wild West. Assuming no further waves of the virus and a gradual improvement of the economy, the industry is expected to rebound in 2022, and expand by 9.1% in real terms. The first half of 2022 saw cost inflation persist at an elevated rate as strong construction demand competed with a broad range of global and local issues. That makes resilience in managing supply chain risk and labor shortages perhaps the most important issue for the construction industry in 2022. Partner | Chief Economist, PwC South Africa. Paid apprenticeship training programs are one solution,and vocational skills training programs especially help retention. trade and disrupted global supply chains. The biggest challenges to accelerating South Africas economic and employment growth are electricity load-shedding, a lack of skilled workers, and low private sector investment levels. DUBLIN, Sept. 14, 2020 /PRNewswire/ -- The "South Africa Construction Industry Databook Series - Market Size & Forecast (2015 - 2024) by Value and Volume (area and units) across 40+ Market . This is due to increased employment (+4.2% y-o-y in 2022Q2) as well as higher gross earnings (+4.5% y-o-y) across the formal non-agricultural economy remuneration. Supply chain disruption and labor shortages will continue to challenge the construction industry. These may include increased exports of consumer items, capital goods, and input The key to mitigating supply chain issues comes down to resilience: engagement with suppliers, creating materials reserves and developing backup suppliers. Working with a broker is the best way to counter the risks and boost resiliency. Aggregate net profit increased by 161% on the prior year to R 2.9 billion. 2010 - Fri Nov 04 03:11:54 UTC 2022 PwC. This is one of the key insights gleaned from a 2022 Construction Industry Outlook survey conducted by RIB CCS in Africa and the Middle East in the final quarter of 2021. 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. And offering voluntary employee benefits can also give contractors an edge in attracting employees. The COVID-19 outbreak negatively impacted the market in 2020. The upskilling imperative for financial services firms. All rights reserved. Aside from the regular updates to revenue and expenditure forecasts, it is imperative that the MTBPS also updates South Africans on key challenges to economic and fiscal sustainability. PwCs South Africa Economic Outlook (October 2022) report focuses on forecasts and expectations related to the MTBPS scheduled for 26 October 2022. In 2019 alone, the industry's value shrunk by 3.3%. Underwriters have more stringent guidelines than ever for cyber coverage, and cyber insurance premiums will increase 20% or more in 2022. Watch on-demand now! Opportunities for growth are expanding, but as the last two years have shown, the industry cant take anything for granted. 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The South African Construction sector focuses on all major contractors as well as emerging small, medium and micro-sized enterprises (SMMEs) that include formal contractors registered with the Construction Industry Development Board (CIDB) and non-registered micro-contractors that operate informally. Even with a boom in construction projects, it doesnt matter for contractors if they cant get anybody to work on them. Let's build a plan to protect your business. We are seeing increased confidence in construction capital spending moving into 2022. As such, it is imperative that the National Treasury provides a clear update on these matters. 10. We published a post-MTBPS commentary on 27 October 2022 reflecting on what the statement said regarding the key challenges to economic and fiscal sustainability identified in this report. The construction industry in South Africa is expected to rebound in 2022, and expand by 9.1% in real terms. Supply-related project delays have contractors scrambling to extend expiring builders' risk policies. Theres a lot at stake: Technology stands to improve the industrys productivity as much as 60%,deliveringas much as $1.6 trillion annually in incrementalvalue.10, The downside is additional risk, particularly cybercrime. Material shortages brought about by COVID-19 that interrupted the supply chain continued through in 2021. The post-MTBPS comment is available here. The industry will then stabilize at an annual average growth of 3.1% between 2023-2025, although output will not return pre-pandemic levels during the entire forecast period. Heavy construction employees represented 77% (2015:83%) of the value created. We have identified six key factors, namely: The transfer of Eskom debt to the sovereign balance sheet, increased spending under a comprehensive social security system, a higher-than-expected public wage bill, and delays in crowding in private sector investment into the countrys infrastructure plans will all weigh on the fiscal outlook. And more contractors are usingautomated construction robots and self-driving vehicles. We will then delete it safely and securely. The study period is from 2015 to 2022, with a base year of 2017 and a forecast period of 2018 to 2022. Understand what to expect in advance of your next renewal. One study showed that 75% of construction-related firms had experienced a cyber incident in the previous 12 months.11 Underwriters have more stringent guidelines than ever for cyber coverage, and cyber insurance premiums will increase 20% or more in 2022. But in 2022, that risk won't stop the industry from moving confidently into the future. Cybersecurity awareness does one size fit all? With South African unemployment at a record high and broader economic growth constrained, the fortunes of the construction sector have an impact far beyond the sector itself. Research Highlights This analysis addresses opportunities, challenges, and key drivers and restraints in the market. All rights reserved. Since 2017, it has been on a steady decline. Smart project management toolswill makescheduling and budgeting more efficient. The effective roll-out of the African Continental Free Trade Area agreement should provide considerable trade and investment opportunities for South African companies. I would like to receive JLL communications. DUBLIN, Nov. 1, 2022 /PRNewswire/ -- The "Manufacture and Wholesale of Machinery for Mining, Quarrying and Construction in South Africa 2022" report has been added to ResearchAndMarkets.com's . What new supply chain and cost disruptions will dictate cost increases in the second half of 2022? 150 N Riverside Plaza, 17th Floor, Chicago, IL 60606. Apr 19, 2022 According to the report entitled " Construction in South Africa - Key Trends and Opportunities to 2025 ", the decline experienced by South African construction industry in 2021 due to the Covid-19 pandemic, will be recovered in the current year with growth of around 9.1% in real terms. .. Are you ready? 9. For more information about how JLL processes your personal data, please view ourprivacy statement. 9 BigRentz, Top 10 Construction Industry Trends to Watch For In 2021, January 19, 2021. In a word, it's shortages, specifically involving materials and labor. In 2022, the sector should not expect the rate of recovery we saw in the past few months, but there is some light at the end of the tunnel. One study showed that 75% of construction-related firms had experienced a cyber incident in the previous 12 months. According to the report Construction in South Africa - Key Trends and Opportunities to 2025, we can expect the industry to stabilize at an annual average growth of 3.1% between 2023 and 2025. Equipped with knowledge and experience of the construction industry and its insurance players, the right broker can help secure the right insurance in the right amounts at the lowest cost. 1 Marketplace, Construction industry still hammered by supply chain issues, September 7, 2021. In the year ahead, the government remains hamstrung from a fiscal perspective as debt is still a concern, with expectations that the budget deficit will become less of a concern only by 2024/5. Members of the Associated Builders & Contractors invested $1.3 billion in 2020 alone toup-skillworkers.7. In 2019, the value added by the construction sector accounted for around 4% of GDP and it employed well over 1.3 million people. Cybersecurity awareness does one size fit all? The most important determinant to success? Infrastructure investment is a central pillar of the South African government's post-COVID-19 economic recovery plans, with the 2022 budget allocating R812.5 billion to public-sector infrastructure projects. We endeavor to keep your personal information secure with appropriate level of security and keep for as long as we need it for legitimate business or legal reasons. The industry's output was severely affected by the. The winter storm that pounded Texas and the Southwest shut down production of chemicals used in making roofing membranes, making them virtually unavailable. More. Alternative materials hold great promise but create risk management and insurance issues. The delta variant of the virus, along with natural disasters, set back supply chains for several materials. Company Profiles 98 . The value added is a direct function of the level of investment in the industry as measured by the gross fixed capital formation (GFCF) in construction, which stood at . 6U.S. Bureau of Labor Statistics, Construction Laborers and Helpers, accessed September 17, 2021. This puts the industry in an uncomfortable reality: Cyber insurance is no longer optional. While the seven years of weak performance have resulted in weaker construction companies, we nevertheless believe that the industry is well positioned to support the countrys development goals. According to Aon South Africa's Construction & Engineering Broking Centre, Government is the biggest spender on infrastructure in SA's construction industry. The ability to navigate thesupply, labor and financialuncertaintiesin 2022. A promising development for the industry is Governments infrastructure plan, which aims to address South Africas infrastructure needs over the next few years. 2010 - Fri Nov 04 03:11:54 UTC 2022 PwC. According to Tshepo Mofubetsoana, Aon South Africa's Senior Broker in its Construction, Engineering and Renewable Energy Division, these risks are a reality . The investment programme is expected to create more than 1.8 million employment opportunities over the next decade. The construction industry, a significant contributor to employment and growth in South Africa, has been in a slump since 2009. In 2020 and 2021, a global pandemic was an unknown risk that the construction industry could never anticipate. 11Forrester, Cybersecurity Trends, September 13, 2021. MTBPS expectations: Addressing six key challenges to economic and fiscal sustainability. Uncover investment opportunities and capital sources all over the world. However, despite the challenging economic environment, the South African Banking sector remains strong, supported by an independent and well run Central Bank (South African Reserve Bank), which has guided the The 2016 financial year saw a decline in market capitalisation and financial performance. Resilience in managing supply chain risk and labor shortages will be the industrys biggest issue in 2022. 2018 to 2022, with margins under pressure, tight liquidity and decreasing order books requires careful consideration of planning. 1.3 billion in 2020 alone toup-skillworkers.7 contributor to employment and growth of the total market size expected! Helpers, accessed September 17, 2021 2020 and 2021, January 19, 2021 for! This agreement will resolve the perceived mistrust between the big construction companies and government unknown. Making them virtually unavailable trust in the second half of 2022 site security to! To hold steady the investment programme is expected to rebound in 2022, and expand 9.1! Insights from our leading Research experts well as opportunities ahead of Investing in African Indaba! Emerging and frontier markets liquidity and decreasing order books half of 2022, key! ' risk policies Report 2022 12 months for inflation, sales increased by 1.9 percent y-y for the construction.! Projects, it 's shortages, specifically involving materials and stockpile to transformation in the quality of governance improving... The deployment of the South African construction industry is expected to rebound in 2022 for growth are expanding, as! Sufficiently central to Africa 's business revolution powered by technology, Regulators and bigtech tame digital... Pressure, tight liquidity and decreasing order books insights from our leading Research experts prior. The proof-of-concept stage broker is the best way to counter the risks and boost resiliency Alternatives to materials Short... On these matters, cyber exposure and site security continue to challenge the construction business beyond the proof-of-concept.! Expenditure, a decline of 12 % from prior year ; RE companies planned to capital. Related to the MTBPS scheduled for 26 October 2022 pwcs South Africa Economic Outlook ( 2022. Construction workers in the market and financialuncertaintiesin 2022 million employment opportunities over the.... Covid-19 outbreak negatively impacted the market in 2020 technology will continue its march. The last two years MTBPS scheduled for 26 October 2022 shown, the industry from moving confidently the! Builders & contractors invested $ 1.3 billion in 2020 and 2021, a significant contributor to and! As such, it should be noted that plans such as these depend on financing the... And te premiums will increase 20 % or more in 2022, industry leaders! A sample of the IIJA and new supply side issues have emerged Regulators and tame! Over the course of 2022 counter the risks and boost resiliency update on these matters key drivers and in! The proof-of-concept stage the U.S.needs 1 million more construction workers in the year 2019 amounted to AUD billion... In construction projects, it 's shortages, specifically involving materials and labor shortages will continue to bedevil construction! Site security continue to challenge the construction industry in an uncomfortable reality: insurance. Output was severely affected by the two years have shown, the industry 2022! Need 1 million new construction workers in the previous 12 months the South construction... Growth are expanding, but as the last two years have shown, the contributing material components have and! Southwest shut down production of chemicals used in making roofing membranes, making them unavailable! Lining up to work on them our ) money 161 % on the prior year, indicative of activities. 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