Housing emerging as key market for South African engineering sector

13 October 2015

While the pipeline of infrastructure projects promised under government’s National Development Plan remains largely empty, the country’s housing and human settlements sector is emerging as a key market pillar for the consulting engineering sector, providing around 11% of the industry’s earnings in the first half of the year, the media heard on Monday.

This represented impressive year-on-year growth on the 6% of total earnings it accounted for in the first half of 2014 and was largely attributed to a shift towards mixed-use ‘mega’ human settlement developments, as directed by government’s spatial transformation agenda.

“I’m quite excited about the housing sector,” construction market intelligence firm Industry Insight’s Elsie Snyman said during a presentation of the findings of a bi-yearly report commissioned by sector body Consulting Engineers South Africa into the state of the industry in the first six months of the year.

“We are seeing a lot of big projects, including townhouses, mixed-use developments and increased focus on ‘mega’, mixed-use development, which is like a buffet for an engineering firm.

“The commercial construction industry remained the largest source of revenue for the engineering sector – accounting for 28% of its R24-billion a year earnings – and remained bolstered by higher levels of investment in owner-occupied developments, offices and mixed-use developments.

Projects in Africa, which Snyman asserted still offered “fantastic” opportunities, accounted for 13% of overall earnings, while 21% of profits had been accrued outside of South Africa.

Projects offered by the private sector remained the largest earnings contributor, at 43%, while 25% emerged from local government, 14% from parastatals and 13% from provincial government.

Central government was starting to play an increasingly smaller role in terms of opportunities offered to the engineering industry, with local government emerging as a more important client.

“This is why it’s very important that whatever blockages there are in terms of partnerships between the public and the private sector are being addressed,” she said.

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