Real Estate & Construction
From The Report: South Africa 2012
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South Africa’s real estate sector felt the full force of the global economic crisis in 2008. The sector has been hit by a lack of demand stemming from weakened consumer confidence, rising inflation and obstacles to credit growth. However, the market is benefitting from the growth in urban middle-class consumers, a fact reflected in the emerging property supply and prices. South Africa’s young, and increasingly wealthy, population should offer many opportunities for investors and developers in all facets of the real estate sector in the next decade.

The construction sector remains a critical component of the economy. The contribution of the sector to GDP was estimated at 3.2% in 2010. However, as the economy slowed and the flow of work linked to the hosting of the FIFA event dried up, growth came to an abrupt halt and contractors were left to make do with a dwindling list of projects. Developer caution persists, suggesting that this trend may remain for some time. As such, contractors are looking to the government and its ambitious infrastructure programme for future work.

This chapter contains an interview with Samuel Ogbu, Chief Executive, Liberty Group Properties.

Articles from this Chapter

Overview

Challenging times: Middle-income and affordable segments are expected to drive growth
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After several years of successive growth, South Africa’s real estate sector felt the full force of the global economic crisis in 2008. The industry has been no more able to avoid the economic shockwaves than its counterparts around the world. Although the 2010 FIFA World Cup offered some respite, 2011 has seen a downturn and little appetite among investors for property. Caution is the current watchword. However, short-term tentativeness is offset by a general belief in the industry that the…

Analysis

Taking stock: Demand for office space expected to follow economic recovery
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Although the country has avoided the worst aspects of the global downturn, business confidence has been hit and many of the key indicators for business growth and subsequent office demand do not look promising. South Africa’s GDP growth is expected to be 2.7% in 2012, down from 3.1% in 2011, according to the 2012 budget speech. This lower estimate follows earlier cautious projections by the IMF, which suggest GDP would grow only 3% in 2012. A steady improvement in the economic outlook would…

Interview

OBG talks to Samuel Ogbu, Chief Executive, Liberty Group Properties
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Interview:Samuel Ogbu How can the government encourage growth in the country’s first-home market? SAMUEL OGBU: The price points for entry into the housing market are not unreasonable when considering average incomes. The big issue in housing is the so-called gap market, which deals with employed individuals who do not qualify for subsidised housing programmes, but also do not earn enough to qualify for a bank loan. It is not the government’s responsibility to provide financing for first…

Overview

Cautious steps: Limited growth to come from investments in infrastructure
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While the 2010 football FIFA World Cup continues to crop up in conversation across industries in South Africa, it dominates the narrative in the construction sector unlike any other. The event, for which the government invested R28bn ($3.4bn), has become the major reference point for contractors, a peak from which their fortunes rapidly declined. A heavy inventory of infrastructure and real estate projects in preparation for the football tournament sustained South Africa’s construction industry…

Analysis

Down to delivery: Government projects will give the sector a boost, if they go to plan
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Infrastructure development has been placed at the heart of South Africa’s new economic transformation plan. For the National Planning Commission, it is seen as a silver bullet that will get the economy moving once again and create jobs in a country that historically suffers from chronic unemployment. However, the response thus far has been muted. It seems that a raft of postponed government projects and diminishing spend on infrastructure over the past three years has left most contractors…