LUCIA MUTIKANI, Johannesburg | Thursday
SOUTH African builders expect the industry to expand by at least 3.5% over each of the next three years, but warn that Aids could cut demand for housing in half by 2010.
”The building industry can look forward to a significant period of sustainable growth,” said Building Industries Federation of South Africa (Bifsa) director Ian Robinson.
The building industry shrank five percent last year after domestic interest rates were hiked to a decade high of 25.5% during the 1998 emerging markets crisis.
It was expected to recover by four percent in 2000, but a sharp depreciation of the rand against the dollar and pre-election violence in neighbouring Zimbabwe blew it off course and it is now expected to show no growth.
”We see zero growth for this year. However, from the middle of next year we will see improvement which is hoped to last at least two to three years. For the first time in many years we are going to see some steady growth,” said Robinson.
However, he said crime, which has deterred investment, and Aids could restrain future growth.
”Aids is expected to have a significant impact as the demand for housing could be cut in half by the year 2010,” said Robinson.
The Medical Research Council warned this week of an ”Aids Holocaust” and said that the disease would claim between five and seven million South Africans in the next 10 years.
Factors seen supporting growth in the building industry, which employs nearly 128 000 people, include an increase in the number of tenders, the value of building plans passed and a pick up in the residential sector.
The number of contracts put to tender during the first eight months of 2000 rose 33%, with the value of building plans passed increasing 3.7% in the first half of this year.
”The decline in the industry appears to have slowed down, mainly driven by the residential sector, and should the central bank maintain its current monetary policy, conditions in this sector should improve,” said Robinson.
The industry – which lags the rest of the economy by between six to 18 months – is also seen benefiting from expected acceleration in economic growth and sideways move in interest rates next year. – Reuters