Construction & Real Estate
From The Report: South Africa 2016
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Although South Africa’s construction industry remains a major economic engine, the industry has struggled to maintain pre-2010 highs, when work related to the 2010 FIFA World Cup propelled sector growth into the double digits. The interim has been marked by project delays, labour unrest and a subdued macroeconomic environment, which saw employment figures, profits and new projects decline in 2014 and 2015. Despite these challenges, the industry’s long-term forecast remains positive, with major new investment expected in the coming years under the government’s National Infrastructure Plan and contractors benefitting from steady expansion in the residential real estate sector. Although far from the conditions of the early 2000s, South Africa’s property market has remained resilient in spite of challenging macroeconomic conditions. Rising demand for affordable housing and a host of “new city” projects have kept the residential market steady, while A-grade commercial space – albeit on the verge of oversupply in some areas – is poised for strong growth. Although rising electricity prices are having an impact on the real estate market, the country’s burgeoning e-commerce, transport and logistics segments are expected to improve vacancy and rental rates across all property segments.

This chapter contains an interview with Eric Vemer, CEO, Group Five.

Articles from this Chapter

Overview

Weathering the storm: Infrastructure and residential projects give cause for optimism
OBG
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Although South Africa’s construction industry remains a major economic engine, the industry has struggled to maintain pre-2010 highs, when World Cup-related work kept annual growth in double digits. The years since have been marked by project delays, labour unrest and a subdued macroeconomic environment which saw figures for employment, profits and new projects decline in 2014 and 2015. Despite these challenges, the industry’s long-term forecast remains positive, with major new investment expected…

Interview

Demanding better: OBG talks to Eric Vemer, CEO, Group Five
OBG
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Interview: Eric Vemer How would you rate the progress of the government’s strategic infrastructure projects (SIPs)? ERIC VEMER: The National Development Plan (NDP), the associated Presidential Infrastructure Coordinating Commission and the targeted SIPs provide a sound framework for public and private sector engagement for the planning and implementation of nationally supported key infrastructure projects. To date, however, the pace of tangible progress towards final project scoping, detailed…

Overview

Finely poised: The real estate sector has strong long-term potential, despite some short-term challenges
OBG
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Although far from the conditions of the early 2000s, South Africa’s property market has remained resilient, despite challenging macroeconomic conditions. Rising demand for affordable housing and a host of “new city” projects unveiled in the past year have kept the residential market steady, while A-grade commercial space – albeit on the verge of oversupply in some areas – is poised for strong growth. Although all segments of the real estate market have struggled with rising electricity…

Analysis

Steady returns: The residential segment is becoming an increasingly attractive proposition for investment
OBG
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While real estate investment trusts (REITs) are relative newcomers to the South African market, with the regime governing the investment vehicle codified for the first time in 2013, they have outperformed other classes of assets in the first three quarters of 2015. Looking ahead, the residential component of the property market, which has yet to be tapped by REITs, offers new opportunities for growth and provides a further boost to the investment appeal of trusts. Bucking The Trend REITs posted…