South Africa’s construction industry ranks among the top GDP and employment contributors in the country, making it as crucial to the economy as it is to the country’s physical expansion and advancement. As such, it’s important for sector participants to have an idea of what to expect from the industry throughout the next year.
The Gap Infrastructure Corporation (GIC) – a leading South African infrastructure development company with operations throughout Africa – predicts mostly positive trends for the construction industry in 2024.
“The construction sector faced some challenges over the past year as it continued its slow recovery from a severe drop in investment and project allocation during the Covid-19 pandemic and lockdown period. The industry was further beset by global supply chain disruptions caused, in large part, by the ongoing wars in Ukraine and Israel,” notes Roelof van den Berg, CEO of GIC.
“This said, 2023 continued the positive growth trends from the past couple of years, giving cause for optimism as we kickstart 2024.”
Consequently, van den Berg predicts that three trends will take centre stage in discussions about the industry’s growth in the year ahead:
1. Slow but stable growth
When determining the industry’s future growth potential, it’s prudent to consider market trends from the past couple of years, he says.
Amidst many global challenges such as rising interest rates and heightened geopolitical tensions, the South African economy and construction sector came under some pressure.
However, it’s important to note that despite a difficult macroeconomic environment, the industry faired relatively well in 2023 compared to 2022 as South Africa gradually recovered from the impacts of the pandemic.
In fact, Statistics South Africa estimates that the construction industry added some R332 billion to the local economy between January and September 2023, compared to R324 billion in the same period in 2022. While the final quarter’s GDP results have yet to be released, this demonstrates a positive upward trajectory.
“As for 2024, all things being equal, we should continue to see a gradual increase in project allocation and investment in construction in line with the steady growth we’ve been experiencing.”
2. Incremental rise in sector employment
As with GDP growth, the industry saw some growth in sector employment last year, as by the end of the third quarter of 2023, construction employment had increased by 11% year-on-year. GIC predicts that this trend will continue as construction companies rehire workers that the industry lost following the pandemic lockdowns.
Of note, the sector employed some 1.2% more women in 2023 than the previous year, indicating a positive trend for more women and diversity in construction.
“The number of women working in the construction sector is still fairly low, but we’re seeing more young women, especially, develop an interest in construction work, particularly in the engineering fields,” adds van den Berg.
“And as more women in the field inspire others to follow in their footsteps, we hope to see a snowball effect. We also believe that awareness efforts by companies such as GIC to encourage more women to join the engineering and construction fields will continue paying off in 2024, as graduates begin to enter the workforce.”
3. Widespread adoption of AI for risk management activities
The industry itself will change considerably due to advancements in artificial intelligence (AI) technology. GIC has already invested in and developed its own AI, and van den Berg predicts that more large companies will utilise this technology in 2024 to identify and manage construction risks, including financial and physical onsite risks.
AI algorithms have the ability to analyse vast amounts of data and predict cost overruns, delays, or on-site safety issues, and propose preventative strategies that may be included in the project planning phase. AI can also be incorporated in the planning and design stages to optimise designs and lower costs, increase efficiency, and maintain a high level of sustainability throughout the project’s lifecycle.
As the technology becomes more prominent, more AI models with specific case uses will be developed in 2024. The construction industry is ideally positioned to benefit from this step forward in terms of fourth industrial revolution modernisation.
“The sector is in a period of slow but steady growth. We are consistently rebuilding industrywide while creating more job opportunities and attracting more investments into new projects. This is even as we continue to adapt and improve the way we plan, engineer, and construct new buildings and infrastructure.
“The industry, by every indication, should grow considerably stronger over the next year, which means that there will be many opportunities for both large and small businesses to benefit,” he concludes.