Building blues  life after 2010?: Free article on March 09 handy DIY tips and advice

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Building blues life after 2010?
Topic: Current Affairs » March 09 Author: Moneyweb

The shortage of building materials such as cement, steel and electricity in early 2008 hampered commercial and government spending on building projects.

If two years ago the South African building industry was the forerunner of our booming economy. The residential market was flourishing, government expenditure on long awaited infrastructure development was flying and plans to get SA 2010 ready were in full swing.

The building boom was so exciting and so lucrative that many smaller South African companies with little building experience filled the demand gap for expertise and raw materials.

Then demand in the construction industry slowed dramatically in 2008. The steady rise in interest rates and tightening of credit availability dampened residential demand somewhat.

The shortage of building materials such as cement, steel and electricity in early 2008 hampered commercial and government spending on building projects.

Global markets are predicted to recover only towards the end of 2009 and the drop in interest rates have the potential to assist a recovery in the building industry's drastic downturn.

Some construction companies have pinned their hopes on the industry's revival on the 2010 World Cup. However the construction for projects in preparation 2010 will begin tailing off from the middle of 2009.

Another area that has seen massive growth is in residential property development. Despite interest rates predicted to drop by as much as four hundred basis points this year, it will take the residential market some time to recover from government's inflation targeting policy that has been in place for the last 12 months.

Home improvements however are likely to start picking up within the next quarter as home owners focus on improving their current assets.

The commercial market sector is however showing signs of resilience with investors focusing much of their attention and money on developing commercial property as it shows the best return of investment in the current market environment.

The biggest relief for the industry has however come from government with a further R94-billion being allocated to infrastructure development across the board. This will help stabilise and boost the industry through another tough year.

It must however be noted that reliance on government and large projects such as the 2010 infrastructure build is not sustainable. Companies within the building industry need to make medium to long-term plans around sustainable growth in order to avoid the inevitable slump following the completion of these projects and the aftermath of 2010.