A new report by Timetric reveals that the construction industry in South Africa is projected to expand at a compound annual growth rate (CAGR) 2.62% from 2016 to 2020. The growth is a slight improvement over the CAGR of 2.33% recorded between 2011 and 2015.

Titled ‘Construction in South Africa – Key Trends and Opportunities to 2020‘, the report details that the government’s investment in infrastructure construction projects, including airports, will propel growth in the country’s construction sector. The government plans to develop the country’s port infrastructure and rail networks by 2050 under the National Transport Master Plan.

"South African authorities are modernising airports and facilities to handle an expected rise in passenger, cargo and air traffic in the near future."

South African authorities are modernising airports and facilities to handle an expected rise in passenger, cargo and air traffic in the near future. The Pietermaritzburg airport in the Msunduzi municipality is currently being expanded to include a terminal building, a new parking area and drop-off zone, roads, a larger taxiway connecting to the aircraft apron, and other related infrastructure.

The government has allocated ZAR813.1bn ($67.3bn) from its 2015 budget to renovate and develop transport, water and energy infrastructure.

The Timetric report also mentions that the government’s investment in other sectors, such as housing and energy, and modernisation of infrastructure will have a positive impact on the country’s economy and construction industry.

Investments in affordable housing and educational infrastructure segment have also been announced, with the authorities investing ZAR8.3bn ($767.8m) in educational building construction by 2023. Plans have also been initiated to promote renewable energy infrastructure.

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By GlobalData

Although the outlook for the South African construction industry is promising, there are certain factors that may adversely affect the predicted growth, says Timetric. These include labour union strikes, power crisis, high youth unemployment and a weak currency.