SA’s construction activity gathered momentum in the third quarter as businesses rebuilt factories and warehouses that were damaged during the July unrest, which cost the economy about R50bn.
The construction index, compiled by economist Roelof Botha and backed by Afrimat, rose 2.8% in the three months to end-September compared with the preceding quarter and 4.5% from the same period a year ago.
Building materials retailers such as Cashbuild and Massmart’s Builders Warehouse benefited from the repair of damaged infrastructure.
“It is also important to note that the affected businesses would have identified weaknesses in the physical security. So they might have spent a little more to tighten their security so as to prevent future incidents such as the one we have seen in July,” Botha said on Thursday.
Home improvements, motivated in part by the work-from-home trend that has persisted amid new waves of Covid-19 infections, also contributed to construction activity. The share of alterations and additions rose to a quarterly record high of 29%, having averaged 15% in 2019.
Citing property market experts, Botha said this phenomenon may become permanent due to “semigration”, a term used to describe the migration of South Africans to smaller towns, something that has grown in popularity as employers embrace flexible working conditions due to the pandemic.
Houses in these areas are seldom suited for people used to a fast-moving urban environment and usually require substantial renovation, especially in the area of creating a de facto home office.
The index uses nine sub-indices, including salaries and wages in the construction sector, the value of buildings completed and sales of building materials, as well as the passing of building plans.
The standout performers during the review period were building material sales, hardware retail sales, the volume of building materials produced and the value of buildings completed in the country’s larger municipalities.
Botha said efforts to rebuild the facilities damaged during the July unrest should continue to boost construction-related activity during the fourth quarter, though tougher lockdown restrictions to contain the spread of the Omicron variant could disrupt activity early in 2022.
However, he is confident that the momentum of recovery in the construction sector will carry through to 2022, driven by the dire need to repair and maintain infrastructure that has fallen behind schedule as a result of lockdown regulations.
“Our most recent results show a correlation to the results of this index, with our construction materials and industrial minerals segments returning closer to pre-Covid volumes and margin levels,” Afrimat CEO Andries van Heerden said.
“However, we do remain cautiously optimistic that additional momentum will come to the fore during the course of 2022, driven by the much-anticipated infrastructure projects.”
Updated: December 9 2021
This article has been updated throughout with additional information
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