A WEE DRAM
CHRIS GILMOUR: Construction groups under pressure as projects dwindle
Improved sentiment has not yet metamorphosed into benefits on the infrastructure front
The South African construction industry continues to experience extremely tough conditions. There is not nearly enough work to sustain it and no new large-scale projects are on the horizon. There is consolidation to stay alive, the most recent example being the announcement that Murray & Roberts and Aveng are exploring the possibility of merging operations. There are some worrying signs on the construction front. The government talks of massive sums of money being spent on infrastructure, throwing around figures of R800bn. However, if those kinds of funds were being spent, the order books of South African construction firms would be far healthier than the meagre levels at which they sit, and casual observers would be aware of pervasive construction activity. It appears SA is reaching saturation point as far as new shopping malls are concerned. And when the flurry of activity in the Sandton CBD ends, most of the buildings will be new and unlikely to be torn down and rebuilt any time ...
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