BUILDING: Better Times Expected For 2010
Recent Western Cape Business News
WHILE overall building activity levels are not expected to recover to the highs experienced in the first half of 2007, a generally positive upward trend in building activity is expected for 2010, continuing into 2011.
This year past has been marked by diminished activity in a number of sectors of the building construction industry. Most notably private residential building activity has been subdued. Non-residential, commercial public and private building activity has however been resilient and provided many opportunities for industry products.
Dirk Meyer, managing director of Corobrik, points out that the Reserve Bank’s composite leading indicator for the building industry recorded a lower turning point in May 2009. Such turning points anticipate upturns in building activity levels 6-9 months in advance, pointing to an upturn commencing 2010. The Reserve Bank has reduced repurchase interest rate by 5.0% since December 2008, resulting in the prime lending rate declining from a peak of 15.5% in December 2008 to 10.5% at the end of September 2009.
Lower interest rates, coupled to banks relaxing mortgage lending criteria to a certain extent, appears to have boosted the FNB Property Barometer. Residential estate agents are reporting an increase in the number of show days and increased levels of successful sales of existing and new housing stock, Meyer says.
It is anticipated that a moderate recovery in building activity will continue through 2010, following evidence in the last quarter of 2009 of renewed activity levels in new residential developments, particularly for units selling below R1 million. The much anticipated flow of residential and non-residential projects from the Public Sector following the general elections in April 2009 is now beginning to materialise. It is anticipated that Public Sector projects being awarded will continue to increase during 2010, making up an increasing share of total building activity.
In the run up to the 2010 Soccer Cup, the cities of Cape Town, Johannesburg and Durban who are hosting games have embarked on significant urban renewal programmes, upgrading pedestrian walkways, public spaces and inner city areas. Fired clay pavers have been used in significant quantities and to great affect in enhancing urban environments, providing a welcome outlet for Corobrik clay paver products throughout 2009. The surge in off-take to meet contract deadlines is expected to continue through the first quarter of 2010, according to Meyer.
Private sector non-residential building activity is coming off its current base, with evidence of approved projects shelved 12-24 months ago being awarded towards the end of last year. This applies particularly to warehousing and distribution centers, shopping centers and new stores for major retailers. It is anticipated that private non-residential building activity in the sectors comprising warehousing and distribution, retail outlets and shopping malls and commercial parks will continue to grow at moderate levels throughout 2010.
Corobrik has invested in excess of R400 million throughout its operations since 2004, this investment directed at reducing the carbon footprint of the business whilst increasing capacity, efficiencies and tweaking the quality of products.
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