The emergence of construction mafias, which gained prominence a decade ago, has put a serious dent on SA’s real estate sector, driving up costs, delaying projects and deterring investments, with corporate law firm Cliffe Dekker Hofmeyr (CDH) warning the lawlessness poses a risk to the industry.
A senior associate in CDH’s real estate law practice, Lulama Lobola, said the impact of these groups had been profound and had had a “chilling effect” on investment in the real estate sector.
“Both local and international investors are wary of committing funds to projects that may be subject to extortion or disruption. This hesitation affects the availability of capital for new developments and can slow down the growth of the sector,” Lobola said.
“One of the most immediate impacts of the construction mafia is the delay of projects. Developers are forced to halt construction when sites are invaded or when contractors refuse to work under threat. These interruptions lead to significant cost overruns, as delays can result in penalties, increased labour costs and the need for heightened security measures.”
Since 2015 SA’s construction sector has faced well-organised mafias, dubbed as local “business forums”, that invade construction sites and demand a ransom or a stake in development projects, often violently.
These groupings, which emerged in KwaZulu-Natal, initially targeted smaller projects, but their reach has since expanded to major infrastructure developments, residential complexes and commercial properties.
The latest FNB/BER civil confidence index shows that, while confidence among civil contractors has reached its best level in eight years, concern over construction mafias is growing.
Public works & infrastructure minister Dean Macpherson has promised a crackdown on construction mafias.
Lobola said the government should consider policy reforms that made it easier for developers to comply with local participation requirements in a way that benefited the community and the project.
“Clearer guidelines on community involvement in construction projects can help prevent the manipulation of these processes by criminal groups,” she said.
“Developers should engage more effectively with local communities to ensure that legitimate concerns are addressed. By fostering genuine partnerships with local businesses and workers, developers can reduce the influence of criminal elements that exploit community grievances.
“A concerted effort is required from both the public and private sectors to combat this scourge and restore confidence in the industry. Only through a combination of law enforcement, community engagement and policy reform can the construction mafia be effectively countered, ensuring a safer and more prosperous future for SA’s real estate sector.”
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