Construction booming in South Africa

Liberty Properties, one of South Africa’s largest property groups, has announced a R1.77-billion ($0.25-billion) revamp to one of its most strategic assets - the Sandton City mall.

The construction project would see one of Johannesburg’s premier malls extended between 2008 and 2012 in order to accommodate more shops.

Liberty said the project was currently at tendering stage. Several of South Africa’s biggest construction companies, including Group Five, Aveng and Murray & Roberts were benefiting from an increased infrastructure spend ahead of the 2010 Fifa World Cup. Currently, the construction and infrastructure sector is the fastest growing economic sector.

Several of the country’s top property experts believe the boom will outlast 2010 by several decades based on years of under-spending on infrastructure. Absa’s head of construction and infrastructure at Absa Corporate and Business Bank, Peter Steyn says, “It's not a 2010 story alone - South Africa has been under-spending.”

Styen further noted that while residential properly was experiencing a slowdown as a result of global concerns, the fact that “we are running out of production capacity” bodes well for the sector, especially if the country want to continue supporting growth rates of close to 5 percent.

While the boom has been supported mainly be private spending over the last few years, government’s planned R600-billion infrastructural investments over the medium term will see private business taking the backseat.

Government investments are mainly in the areas of power generation, road infrastructure and water services.