The South African construction market is projected to achieve an average annual growth rate of more than 2% during 2023-2026. The industry’s output in the forecast period will be supported by investment in transport, energy, and housing projects, coupled with investments as part of the government’s 10-year infrastructure plan which comprises several projects in various sectors, including transport, energy, housing, and water.
There are 6 key sectors driving the South African construction market, the sector are commercial construction, industrial construction, infrastructure construction, energy and utilities construction, institutional construction, and residential construction.
1. Commercial construction
The project types in this sector include leisure and hospitality buildings, office buildings, outdoor leisure facilities, retail buildings, and other commercial construction. Forecast-period growth in the commercial construction sector will be supported by investments in data centers and logistics projects. The growth in the forecast period will be supported by a recovery in tourism activity and growth in wholesale and retail trade.
2. Industrial construction
The project types in this sector include chemical and pharmaceutical plants, manufacturing plants, metal and material production and processing plants, and waste processing plants. The sector’s growth will be supported by investments in the industrial and manufacturing sectors, as well as an increase in export activities and an improvement in the wider economy. The government’s focus on developing SEZs in the country is also expected to support sector output over the forecast period.
3. Infrastructure construction
The project types in this sector include rail infrastructure, road infrastructure, and other infrastructure projects. The sector’s growth will be supported by government plans to develop the country’s transport infrastructure. Moreover, an increase in the implementation of public and public-private partnership (PPP) projects will support the sector output over the forecast period.
4. Energy and utilities construction
The project types in this sector include electricity and power, oil and gas, telecommunications, sewage infrastructure, and water infrastructure. The growth of the sector will be supported by the acceleration of work on several energy projects under the government’s Strategic Integrated Projects (SIP) which cover social and economic infrastructure across all nine provinces. Forecast-period growth in the sector will also be supported by the government’s aim to diversify its energy mix and generate a percentage of the total energy mix from renewable sources by 2030.
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5. Institutional construction
The project types in this sector include educational buildings, healthcare buildings, institutional buildings, research facilities, and religious buildings. The sector’s output over the forecast period will be supported by investments in the educational and healthcare sectors to address the rising demand for healthcare facilities amid the pandemic. The expansion of the country’s aging population will create additional conditions for an increase in investments on new and refurbished healthcare buildings over the forecast period.
6. Residential construction
The project types in this sector include single-family housing and multi-family housing. The growth of the sector will be supported by an improvement in housing demand and public and private sector investment in affordable housing construction.
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