The moving annual total of cement sales in South Africa increased 5.8% year-on-year (y/y) in January 2008 from the 7.4% y/y increase reported in December, according to Cement and Concrete Institute (CNCI) data released on Monday.

At the end of January 2008, cement sales were reported up to 15.290 million tons from the 14.448 million tons reported a year earlier.

Total sales in January, however, amounted to 982,424 tons from 1.008 million tons in January 2007, a decrease of 2.5%.

Exports of cement in January decreased 79.7% to 6,713 tons from 33,430 tons a year earlier.

Sales to Botswana, Swaziland, Lesotho and Namibia amounted to 1.191 million tons of the total sales in January, up from 1.030 million tons a year earlier.

Cement sales in South Africa grew 6.6% in 2007 to a record 14.1 million tons. This followed an 11.0% rise in 2006, an 11.6% gain in 2005, a 17.4% surge in 2004 and a 7.0% climb in 2003.

The 2010 soccer World Cup stadia, some new dams and the Gautrain project have been adding to cement demand.

Until recently the office sector of South Africa's property market was generally in the hands of tenants, with an oversupply of office space keeping a firm lid on rental growth. In some cases landlords even had to lower their asking rentals once leases came up for renewal in order to retain tenants

South Africa’s R16bn investment in next-generation pebble bed modular reactor technology does not seem to have born fruit

Known as Ytong blocks internationally this innovative product has been used successfully worldwide for over 80 years.

Although new to South Africa, Ytong blocks made additional floors added to an existing 71 Loop Street structure not only possible but set a new building precedent. A combination of locally manufactured lightweight panels and imported Ytong blocks were used to reduce weight, add thermal insulation, and avoid costly scaffolding.

We needed a light material that was easy to work with on top of the existing Loop Street building,” said Petra Wiese from PWS property solutions when asked why she felt it was necessary to ship this material in, at twice the actual cost, for this project.

“Using Ytong blocks dramatically sped up the building process, as the blocks are light, create less mess, are non-toxic and offer a 100 percent finish. Each 400 x 600mm block is 25% of the weight of standard bricks and mortar and has an even higher load bearing capacity” added Wiese.

“As well as being incredibly easy to work with, it is an excellent acoustic barrier. The air bubbles that stop sound from traveling through it, also act as insulators, giving Ytong blocks 6-10 times better thermal insulation than normal bricks and concrete.  Similarly this provides twice the fire protection of normal concrete. It is impervious to rot or pest infestation, has excellent workability and, as if that is not enough, is earthquake and hurricane resistant,” explained Chris Hayman of ETC who also project managed the refurbishment and additions to the building.

The developer Morngleam Investments first upgraded and renovated all existing levels and then added on six additional units: two simplexes and four duplexes to the top of the existing structure. 

“Although town living is convenient and vibrant there are a number of problems that come with inner city living. We took all these into consideration at the design phase. For a start, one usually looses all sense of outdoor living, which is a significant inhibition of lifestyle. The city is also noisy, and the higher one goes, the noisier it gets, so penthouse dwellers usually suffer from noise pollution. Privacy, effective use of space, and access are also issues which come into play when designing a building in the city,” says Wiese.

According to Wiese, using Ytong blocks gave them the freedom to create the most user friendly space possible facilitating a seamless flow of indoor – outdoor living. Firstly all new apartments have a super large balcony as well as a deck, offering mountain, city and harbour views from all units. 

Having both a balcony and a deck is a first for city apartments which often have severe space restraints.  Ceilings of all new units are three metres high on both the first and second floor; all windows are double glazed to save energy, cut out noise pollution and provide more insulation.  All windows are imported, UV resistant and European style opening to the inside to cope with the Cape wind and the sliding doors also tilt to allow for added ventilation. All units have a combination of under floor heating and air-conditioning and has it’s own solar heating system.

“South Africa is finally becoming more energy conscious,” says Wiese. “Buildings must be properly insulated so that heating and air conditioning are not used unnecessarily. This is effectively building towards a healthy environment.”

 Both simplexes and one duplex have been sold already. Three duplexes between 100 – 150 sqm are available ranging from R2,6 to R3,75 million. The building boasts 24-hour security, wireless broadband connectivity and the promise of an eco friendly and comfortable lifestyle in the heart of the City. 

The development is due for completion in March 2008.

The FNB CPF Commercial Property Building Cost Index, constructed by Industry insight, has seen slowing growth over the past 18 months, but this slowdown is expected to be a temporary reprieve for the construction industry.

Good old scarcity is accounting for much of the pricing pressure which developers are encountering. Demand for commercial space is outstripping supply and developers are hard pressed to bring new projects on stream.

 “What we have noticed,” states Neno Haasbroek, CEO of Sycom Property Fund, “is that there has been some improvement in the pricing on smaller jobs – those in the R20m region – but for the larger projects – the R500m or R1bn developments – it is hard to find competitive pricing.” The large construction companies have their hands full with the infrastructure projects under way in South Africa and this is likely to continue over the coming years.

Some impact from the higher interest rates is filtering through, but the underlying trend of too little supply to satisfy the growing demand means that costs are expected to see building inflation turning up again.

Although the cost of materials is rising – cement, for example, is currently being imported –contractors and service providers are raising their rates at well above inflation levels. With significant expenditure on infrastructure (such as the World Cup Stadiums, Gautrain and the Coega industrial development zone) competing with commercial developers for resources, there is likely to be renewed pressure on building costs in the years ahead.

Pity the developer outside the main metropolitan areas. If there is a large project, which cannot be handled by local contractors, they will be pushed to find anyone to deal with the development. “Even if they can get a contractor,” notes Haasbroek, “the quotes are likely to be rather uncompetitive.”

For an investor in PUTs, this represents encouraging news. “With costs escalating at present rates,” says Craig Hallowes, spokesperson for the Association of Property Unit Trusts (APUT), “rentals for existing properties will be rising as they come up for renewal.”

Haasbroek gives an example: “We can’t bring a new office block on line in Sandton for under R120/m2 at present. Although I don’t think that we are yet at the point where rentals will be running at replacement cost, if the rent is currently R70/m2 or R80/m2, then I think that you can expect a 20% rise when renegotiation takes place. This is more of an issue than it has ever been before.”

In the past, the lead time to bring an office block on stream was about 12 months, while land was readily available and rezoning took place rapidly. This meant that supply could respond to increases in demand relatively rapidly. Now, however, councils have tightened up markedly on rezoning. Add to that building cost inflation and it is easy to see that supply is no longer as flexible as it was historically.

In the case of retail developments, a higher number of subcontractors are used for specialist items such as glass and aluminium. This is placing additional strain on retail developments as the specialists are notably scarce at the moment.

Rail utility Spoornet would spend an extra R1,6bn in the next four years to build new railway lines linking Coega and Lephalale (Waterberg) coal mines to its national rail network

Alcan and the government have agreed that only 5,5% of the 720000 tons of aluminium to be produced by Alcan’s planned R21bn smelter at Coega in Eastern Cape will be earmarked for use in the domestic market

A 524ha prime freehold site in the heart of the Coega Industrial Development Zone near Port Elizabeth is being marketed by Pam Golding Commercial (PGC) for R40 million

A Singapore company would invest nearly R6bn in a chlorine manufacturing plant in Port Elizabeth, the Coega Development Corporation said yesterday.

As South Africa prepares to begin major construction projects around the country, heated disputes are set to erupt over the rights to develop lucrative sites