Government projects, particularly the development of integrated rapid public transport networks in South Africa are likely to drive the construction sector over the medium term, according to professional services firm Ernst & Young.
Ebrahim Dhorat director of assurance and construction lead at Ernst & Young told I-Net Bridge: "Construction and upgrades for the World Cup are over but Government is expected to invest more than R14.5 billion ($1.96billion) on the development of integrated rapid public transport networks in the country, according to transport minister Sibusiso Ndebele.
"The Government would invest the funds over a period of three years.
"The Government has pledged R6 billion ($811.62million) for the public transport network in FY10/11 and is expected to allocate an additional R8.5 billion ($1.15 billion) over the next two years.
"This will keep the sector on track," he said.
Construction entity Group Five (GRF) said on Tuesday that it would target South African government's public works programme, specifically in the areas of power generation, transport, water and housing, as potential areas for further growth.
The group said it would also adopt a geographic expansionary stance as the African outlook continues to improve, while the Middle East also shows promise.
Speaking at the release of the group's results in Johannesburg, Group Five CEO Mike Upton said: "We will continue to grow our expertise and capacity in areas where we have developed a multi-disciplinary delivery capability, namely power, transport and water, mining and large
infrastructure works, with a geographic expansionary stance.
"In terms of growth areas, the South African government's public works programme, specifically in the areas of power generation, transport, water and housing, has the potential to create opportunities within the South African construction sector.
"The African outlook for private sector fixed investment and primary infrastructure has started to improve, but spending is likely to only come through slowly during the 2011 calendar year, with more certainty emerging from 2012," Upton said.
Dhorat said that although business in the construction and infrastructure sector had dwindled recently, this dearth would be compensated to an extent by mining projects, which are taking off through buoyant commodity demand.
Materials handling equipment distributor Bell Equipment on Tuesday announced a profit for the first six months of 2010, having taken a knock in 2009 as a result of the global recession.
The group's profit for the period amounted to R10.7 million after a loss of R186.9 million a year ago.
Bell Equipment chief executive, Gary Bell underlined a four year-plan to roll out new models, which would provide a base for continuing local market share expansion.
"We would also like to see government supporting an effective buy South African campaign through their own purchases and projects they fund at national, provincial and local government, as well as parastatal levels.
"Given the uncertainties relating to the current global economic recovery and local investment into new mining ventures and civil infrastructure, the company will remain cautious in its forward planning," said incoming chairperson, Mike Mun-Gavin.
Bell said it was well positioned to take advantage of any increase in mining ventures, infrastructure spend and improved economic outlook.
Dhorat said that companies like Bell would likely source equipment and machinery to mining projects.
"Management will continue focus on order books, margins and cash flow, all the time optimising operational flexibility.
"Smaller construction projects have a better chance of being approved than major projects during this year's second quarter," he said.
