Focus shifts to smaller building projects

Posted On Wednesday, 20 June 2001 03:01 Published by Commercial Property News
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AFTER a year in which the GrandWest Casino and Canal Walk projects, coupled with work associated with those projects, saw the big contractors kept pretty busy.

AFTER a year in which the GrandWest Casino and Canal Walk projects, coupled with work associated with those projects, saw the big contractors kept pretty busy, it is hardly surprising if this year has seen a downturn in their workloads.

For those such as WBHO, which has been awarded the contract for Cape Town's new Convention Centre, no doubt the year looks good. Murray & Roberts, too, still busy on the Arabella Sheraton Hotel at Hermanus and the Clock Tower Precinct at the Waterfront, and with some further work in prospect, are probably comfortable enough.

And with other work around, such as a new hotel to be built adjacent to the Convention Centre, commercial development along the Waterfront Canal, the upgrading of the International Departures Lounge at Cape Town International Airport and the much talked of completion of the Foreshore Freeway, some companies which have been suffering will breathe easier in the months ahead.

Some companies, however, have been living through the first half of the year on the remains of last year's contracts, which will soon need to be replaced. Some have already taken the step of not replacing senior staff when they reach retirement age, or of transferring key people to other parts of the country where their (national) company is busier. Not a very healthy state of affairs, and one that is causing some uneasiness.

If things could be better for the big companies, this has to some extent been balanced out by an upsurge in the residential property market. Feeling that the interest rate seems fairly steady at its present level, developers and spec builders have taken the view that now would be a good time to put up more houses, and launch badly needed low cost housing projects.

This is reflected in the fact that PPC, which supplies the Western Cape with all its cement, has seen a downturn of only 2%. After high growth last year due to the Canal Walk and Casino projects, there has been a levelling off this year, with a slight downward trend and May looking particularly quiet, says Craig Waterson, PPC's regional director for the Western Cape.

What is significant, he points out, is that there has been a shift from the industrial sector - Readymix, contractors and concrete product manufacturers - to the retail sector, which tends in the main to supply small builders.

Suppliers of Readymix confirm this trend, with a downturn for them of nearly 10%. This might have been worse, they say, but for the fact that they did have increased demand from small builders, one-off projects and even the DIY market.

Brick manufacturers, on the other hand, have fared quite well over the past couple of years. Compared with the position in 1988/99 - admittedly a low base for comparison - clay brick sales in the summer period October to March in each of the following two years have been up 13%, says Crammix director Clive Archer, or 26% over the two years.

Archer also noted an upsurge in sales in August/September last year, when, as he puts it, the builders and developers came out of their shells. So for Crammix, and other producers, the picture is by no means a negative one.

Much will depend on the next few months. If most of the hoped for projects get going, the formal sector of the building industry in the Cape will sleep more easily at night. Whether that happens or not, there is a welcome increase in smaller projects - and that, as one builder commented, is perhaps where we need it most.

Last modified on Thursday, 18 July 2013 00:57

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