While the national construction picture may not seem too rosy, prospects for the construction sector in the Western Cape are set to continue to grow over the next few years, helped by a good dose of residential construction.

This was according to Industry Insight senior economist David Metelerkamp, who told the Cape Construction Conference and Trade Expo in Cape Town that the construction sector would be one of the biggest drivers of the Western Cape economy over the next five years.

The sector was expected to grow at around 4% in 2015, rising to 4.5% in 2017.

Metelerkamp’s analysis was based on building plans, which gave a good indication of what was happening in the market as around 80% of building plans moved to the construction phase.

“The Western Cape definitely outperforms the national average, with fantastic growth in new residential construction in excess of 70% over the past year.”

Growth was being driven by developments such as flats and townhouses, as well as privately built houses, while development-driven projects in the Western Cape had seen a growth of 50% in the last year.

The national trend was also on its way up with regard to the number of residential plans passed. However, construction growth in other provinces, including Gauteng, lagged that of the Western Cape.

There was also good news for office space growth in the Western Cape, with demand in the province still good.

“The province outpaces the rest of the country on the private side of building. If you are a private developer in office space, the Western Cape is the place to be.”

There was also some good growth reported in pockets of South Africa on the office space front, particularly, in the Free State and Mpumalanga, Meterlerkamp advised.

Nationally, the nonresidential construction picture was not looking as solid. 

Metelerkamp noted that nonresidential building growth had slumped to -1.7% nationally and 15.5% in the Western Cape for 2015.

The number of civil projects awarded across South Africa was also continuing to peter out and, while performing better, the Western Cape was also experiencing a more depressed civil environment.

A worrying factor for construction in the country was the climbing rate at which building projects were being postponed, with KwaZulu-Natal one of the provinces battling on this front.

A major obstacle was nonpayment by government and municipalities in the country. Projects were often stalled, as developers waited to be paid.

With a government squeeze on infrastructure spending, the outlook for civil construction was tight. This was a result of unsustainable debt to gross domestic product ratings and warnings from international ratings agencies, among others.

“Government’s cut in infrastructure spending has come at a bad time, with load-shedding and supply side constraints. There will be a decline in spending in health over the next two to three years, mainly the construction of hospitals and clinics,” Metelerkamp forewarned.

The building of schools was also expected to take a knock, given the drop in infrastructure spending on education, he said, while spending on roads was expected to flatten out.