Mega building boost for Durban
MEGA-PROJECT ACTIVITY FOR GREATER DURBAN
DEVELOPMENT worth more than R7 billion in the greater Durban area is set to ignite the performance of the construction industry, which has been struggling for growth.
And it is just this kind of infrastructure boost that the Durban Chamber of Commerce and Industry says is “imperative” for the local construction sector.
By the third quarter of last year, Durban had seen relatively low performance and low growth in the sector, with only a 0.94% year-on- year growth compared with increases of 1.77% in KwaZulu-Natal and 1.46% nationally.
Chamber chief executive Dumile Cele attributed this low growth to the poor economic performance by the South African economy, and said this had resulted in a negative financial impact on business and investor confidence, and had limited demand for capital projects and infrastructure.
“For perspective, the sector contributes 5% – R13.3bn annually – to the GDP of Durban and about 4.5% – R108.7bn annually – to the KZN Provincial GDP,” Cele said.
“It is imperative that infrastructure becomes the facilitation partner to development, but in such a way that the costs are not prohibitive either to government or developers,” she said.
Although brownfield developments were not “a core” for Durban, Cele said the city still had a host of “competitive advantages”.
These include its “attractive tourism sector” and the Port of Durban for warehousing and distribution related construction.
However, the biggest driver of growth has been on the residential establishments in the northern areas of Durban, such as developments at Sibaya,
Cornubia, Kindlewood, and Bridge City.
Cele said the 2022 Commonwealth Games and developments relating to the Point Waterfront also represented significant opportunities for local companies.
From a provincial construction point of view, the FNB/BER Building Confidence Index’s rise to 40 points in the fourth quarter of last year took it to its best level in 12 months, and this, said Dolly Tembe, the president of the KZN Master Builders Association and Director at Sakhisizwe Development Training, boded well for Construction Industry Development Board grade 8 and 9 construction companies who were able to tender for the multi-million rand projects that were driving the industry and keeping the province “ahead of the curve”.
“With 15 of the 17 (National Development Plan) Strategic Infrastructure Projects directly involving the province, it is predicted that mega-project activity will facilitate improved performance. As a result of infrastructure development, the KZN construction sector is faring comparatively well with the rest of the country.”
For small to medium contractors though, the situation is not as encouraging. Tembe said reports from those members of the association, especially those who targeted private residential work, suggested they were struggling to sustain themselves, as private sector work was “scarce” owing to the high cost of building and finance restrictions.
“The smaller contractors are battling to compete as there are many who are under-quoting just to keep their businesses going… Interest rates are predicted to rise by 2% and with this in mind it is envisaged that the smaller- to medium-size contractors will feel the impact.”