the infrastructure dashboard ytd 2011 (pp presentation)
TRANSCRIPT
1 © BMI-BRSCU© BMI-BRSCU
TowardsMaking sense of the Building-, Construction- and Property-Industry: THE INFRASTRUCTURE DASHBOARD: YTD 2011
Dr. Llewellyn B. LewisDr. Llewellyn B. LewisOctober 2011October 2011
THE STRATEGIC FORUMTHE STRATEGIC FORUM
A place of assembly for strategic conversations
THE STRATEGIC FORUMwww.strategicforum.co.za
BMI
Studium Ad Prosperandum
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2 © BMI-BRSCU© BMI-BRSCU
Conditions for High Road ScenarioInvestor Confidence:• High confidence;• Risk taking propensity • GDP growth > 6% pa;• CPI in 3-6% range;• Real Interest Rates < 5%;Investment Climate: • Property a preferred investment;• FTHB Subsidies increased to 2,5-5% of Budget;• The non residential market grows in tandem with residential; • Home improvement and non residential refurbishment markets grow at > 10% pa;• Private Sector Investment as a percentage of Total Investment in Building 50-60%;Property Delivery:• Building growth 2010-2020 at > 6,5% pa;• The R1,5 Trillion Affordable Housing programme successfully implemented;• Backlogs eliminated by 2020;• Construction growth 2108-2020 at > 7,5% pa;• The R846 Billion Government Infrastructure programme is successfully implemented
““Over the next three years government will spend Over the next three years government will spend R846 R846 billion on public infrastructure.billion on public infrastructure.On transport, we will maintain and expand our road On transport, we will maintain and expand our road network.network.We will ensure that our rail network is reliable, competitive We will ensure that our rail network is reliable, competitive and better integrated with our sea ports.and better integrated with our sea ports.” (President Jacob ” (President Jacob Zuma: State of the Nation Address: 2010)Zuma: State of the Nation Address: 2010)
““Economic Development Minister Ebrahim Patel put the Economic Development Minister Ebrahim Patel put the total annual expenditure on infrastructure over the next total annual expenditure on infrastructure over the next four years at four years at R250bn a year, translating into R1-trillion for R250bn a year, translating into R1-trillion for the period the period — an 18% increase on the state’s previous — an 18% increase on the state’s previous infrastructure spending estimate of about R846bn for the infrastructure spending estimate of about R846bn for the three years to 2013.three years to 2013.” (Business Day: 16 February 2011)” (Business Day: 16 February 2011)
3 © BMI-BRSCU
Summarised MBSA Summit Decisions To investigate the establishment of a multi-representative Industry Forum that would meet 2 to 3 times per annum
To promote building as the Engine for Growth, nation building and wealth creation (through home ownership) by way of effective communication with leaders in all the economic sectors
To establish a Task Force to unpack the R846 billion infrastructure budgets and investment for all public sector work, including affordable housing; to determine the impediments to the delivery thereof; to ensure a constant work flow and uphold quality standards, measured against annually assessed programmes, and to explore and prioritise the effective implementation of national infrastructure maintenance strategies.
The formation of an inclusive forum to analyse the 8 000 projects within the Department of Human Settlements.
To maximise employment opportunities by correct retro-fitting of existing buildings; maximise reduction of carbon emissions, and pursue green best practice approaches for engineering services in line with” green building”. (February 2011)
Asking the right questions. Turning known unknowns into known knowns.
First step towards developing a Vision for the Industry?
Towards developing a Co-operative mindset and cross boundary networking for the Industry?
STRATEGIC RESPONSEwww.strategicforum.co.za
4
The purpose of the Infrastructure Dialogue on the IIMP was to acquaint stakeholders with the key findings of the 2011 IIMP study and the demand for and supply of inputs to the infrastructure sector.
The dialogue was attended by some 50 stakeholders from the public and private sectors. The following inputs were provided as part of the dialogue:
•Keynote address – Infrastructure Inputs Monitoring Project: Dr Zavareh Rustomjee (IIMP) Panelists Perspectives:
Mr Mahesh Fakir, The Presidency: DPME Dr Llewellyn Lewis: BMI
Plenary discussion focusing on key issuesMr Richard Goode: DBSA (Facilitator)
Copies of the resource documents and agenda can be found on the Infrastructure Dialogues website www.infrastructuredialogues.co.za
SEE PRESENTATION BY DR RUSTOMJEE FOR BETTER UNDERSTANDING.
Infrastructure Inputs Monitoring Project (IIMP)28 September 2011
THE DBSA INFRASTRUCTURE DIALOGUESwww.infrastructuredialogues.co.za
5 © BMI-BRSCU© BMI-BRSCU
GFCFR521,6 BILLION(22% OF GDP)
BUILDING INV.R108,5* BILLION(20,8% OF GFCF)
CONSTR. INV.R174,9 BILLION(33,5% OF GDFI)
GDPR2663 BILLION
GOVERNMENT BUDGETR798,9 BILLION(30% OF GDP)
TRANSFER DUTYR8- R9 BILLION PA
FTHB SUBSIDIES(1,9% OF BUDGET = R13,8 BILLION)
(500 000 HOUSING UNITS)INVESTMENT IN AFFORDABLE HOUSING
(R1,4 TRILLION 2010-2020)
RESIDENTIAL AND NON RES BPP AND
BUILDINGS COMPLETED (BC)
PRIMARY AND SECONDARY PROPERTY MARKET
R267 BILLION PA MORTGAGE ADVANCES PA
R1000 BIO MORTGAGES O/S
LISTED PROPERTY SECTOR MARKET CAPITALISATION
> R100 BILLION
ANNUAL HOUSINGNEED
(POP. GROWTH ONLY)250 000
INTEGRATED HOUSING
EMPLOYMENTIN BUILDING & CONSTRUCTION
> 1 000 000 PEOPLE
* When the UNRECORDED Home Improvement and Affordable Housing is taken into account Building Investment = 30,5% of GFCF
PROPERTY OWNERSHIPENGINE FOR GROWTH
AND WEALTH CREATIONR4,8 TRILLION RES PROPERTY
R1,7 TRILLION NON RES PROPERTY(Land included)
URBAN HOUSINGBACKLOG > 2,3 MILLION
UNITS IN 2010
GOVERNMENT INFRASTRUCTURE SPEND (R846 BILLION 2010-2020)
6 © BMI-BRSCU© BMI-BRSCU
GFCFR521,6 BILLION(22% OF GDP)
BUILDING INV.R108,5* BILLION(20,8% OF GFCF)
CONSTR. INV.R174,9 BILLION(33,5% OF GDFI)
GDPR2663 BILLION
GOVERNMENT BUDGETR798,9 BILLION(30% OF GDP)
TRANSFER DUTYR8- R9 BILLION PA
FTHB SUBSIDIES(1,9% OF BUDGET = R13,8 BILLION)
(500 000 HOUSING UNITS)INVESTMENT IN AFFORDABLE HOUSING
(R1,4 TRILLION 2010-2020)
RESIDENTIAL AND NON RES BPP AND
BUILDINGS COMPLETED (BC)
PRIMARY AND SECONDARY PROPERTY MARKET
R267 BILLION PA MORTGAGE ADVANCES PA
R1000 BIO MORTGAGES O/S
LISTED PROPERTY SECTOR MARKET CAPITALISATION
> R100 BILLION
ANNUAL HOUSINGNEED
(POP. GROWTH ONLY)250 000
INTEGRATED HOUSING
EMPLOYMENTIN BUILDING & CONSTRUCTION
> 1 000 000 PEOPLE
* When the UNRECORDED Home Improvement and Affordable Housing is taken into account Building Investment = 30,5% of GFCF
PROPERTY OWNERSHIPENGINE FOR GROWTH
AND WEALTH CREATIONR4,8 TRILLION RES PROPERTY
R1,7 TRILLION NON RES PROPERTY(Land included)
URBAN HOUSINGBACKLOG > 1,5 MILLION
UNITS IN 2010
GOVERNMENT INFRASTRUCTURE SPEND (R846 BILLION 2010-2020)
It is estimated that for every R1 spent on infrastructure, R1.40 is added to a country’s gross domestic product. PPP’s are the ideal vehicle for funding the gaps in infrastructure in Africa. (Deloittes research, May 2011)
“Unless the Housing Market recovers, the Economy will not recover.” (Warren Buffet, CNN, 4 October 2011)
7 © BMI-BRSCU© BMI-BRSCU
GFCF BY TYPE OF ASSET: 1993 – 2010: R MIOwww.strategicforum.co.za
INVESTMENT IN BLDNG AND CONST BY SECTOR AS % OF GFCF: 1993-2010 (CURRENT VALUES)(Source: SARB, BMI-BRSCU Workings)
0%
10%
20%
30%
40%
50%
PE
RC
EN
TA
GE
RES/GFCF 11.17% 10.36% 9.67% 9.40% 8.95% 8.17% 8.13% 9.61% 9.69% 9.16% 8.90% 10.60% 12.68% 12.39% 10.89% 9.17% 8.58% 8.44%
CONSTR/GFCF 15.19% 14.31% 12.31% 13.48% 14.14% 14.27% 15.14% 14.61% 12.60% 13.37% 15.57% 15.53% 15.45% 16.39% 19.91% 24.64% 31.30% 33.54%
NR/GFCF 11.87% 12.24% 13.01% 12.20% 11.70% 10.68% 10.98% 11.32% 11.85% 10.54% 10.27% 10.19% 10.07% 10.13% 10.30% 10.23% 11.44% 12.36%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
8 © BMI-BRSCU© BMI-BRSCU
GFCF BY TYPE OF ASSET: 1993 – 2010: R MIOwww.strategicforum.co.za
GFCF AS % OF GDP:1993-2010: CURRENT PRICES(Source: SARB, BMI-BRSCU Workings)
0%
5%
10%
15%
20%
25%
30%
GFCF/GDP 14.69% 15.15% 15.88% 16.28% 16.51% 17.09% 15.29% 14.93% 14.80% 14.70% 15.48% 15.98% 16.79% 18.34% 20.15% 23.07% 22.20% 19.59%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
25% - 30% GFCF % OF GDP REQUIRED FOR DEVELOPING COUNTRIES
INFRASTRUCTURE EROSION IF RATIO < 20%
9 © BMI-BRSCU© BMI-BRSCU
BUILDING & CONSTRUCTION INVESTMENT
R334 068 MILLION BUILDING INVESTMENT
R159 123 MILLIONCONSTRUCTION INVESTMENT
R174 944 MILL
CONTRACTOR (50,8%)
R67 882 MIOCONTRACTOR (50,8%)
R67 882 MIO
SUBCONTRACTOR (49,2%)
R65 744 MIOSUBCONTRACTOR (49,2%)
R65 744 MIO
LABOUR (40%)
R133 627 MIO
LABOUR (40%)
R133 627 MIO
DIRECT TO USER (40%)
R80 176 MILLIONDIRECT TO USER (40%)
R80 176 MILLIONMATERIAL (60%)
R200 441 MIOMATERIAL (60%)
R200 441 MIO
INDIRECT VIA DISTRIBUTION (60%)
R120 264 MILLION
INDIRECT VIA DISTRIBUTION (60%)
R120 264 MILLION
LARGE IND BUILDERS MERCHANT (10%)
R20 044 MILLION
LARGE CHAIN BLDRS MERCHANT(25%)
R50 110 MILLION
LARGE CHAIN BLDRS MERCHANT(25%)
R50 110 MILLION
HYPERMARKET/SUPERMARKET(5%)
R10 022 MILLION
HYPERMARKET/SUPERMARKET(5%)
R10 022 MILLION
SPECIALIST SHOP(5%)
R10 022 MILLION
SPECIALIST SHOP(5%)
R10 022 MILLION
LOCAL HARDWARE STORE(15%)
R30 066 MILLION
LOCAL HARDWARE STORE(15%)
R30 066 MILLION
RESIDENTIAL INVESTMENT
R12 775 MILLION
NON RESIDENTIAL INVESTMENT
R60 206 MILLION
UNRECORDEDADDITIONS AND ALT’S INVEST**
R39 500 MILLION
* 2010 Prices** Residential and Non Residential
RESIDENTIAL INVESTMENT
R59 418 MILLION
CURRENT REALITY OF BUILDING & CONSTRUCTION: CURRENT REALITY OF BUILDING & CONSTRUCTION: 2010*2010*
10 © BMI-BRSCU© BMI-BRSCU
TOTAL INVESTMENT IN BUILDING & CONSTRUCTION BY SECTOR: 2010
Sector R*Million % m2*1000 %Private Sector 80,735 67.49% 19,109 56.69%Public Sector 38,889 32.51% 14,598 43.31%TOTAL INVESTMENT IN BUILDING 119,623 100.00% 33,707 100.00%
Investment in Building by Sector: 2010
Segment R*Million %Roads, Streets, Bridges 48,984 28.00%Waterworks 16,357 9.35%Sewerage Works 8,082 4.62%Other Construction Works 44,611 25.50%Private Sector 56,909 32.53%TOTAL INVESTMENT IN CONSTRUCTION 174,944 100.00%
Investment in Construction by Segment: 2010
Sector R*Million %Private Sector 177,143 53.03%Public Sector 156,923 46.97%TOTAL 334,067 100.00%
Investment in Bldng and Constr by Sector: 2010
11
R*Million % % R*Million Change (%) R Million Change (%) R*Million % Change (%)PRIVATE RESIDENTIAL Dwelling-houses < 80 m2 2,538 1.68% 0.79% 2,504 -1.32% 3248 29.70% 2,595 1.65% -20.10% Dwelling-houses > 80 m2 15,653 10.38% 4.87% 15,447 -1.32% 18435 19.34% 16,008 10.15% -13.16% Townhouses & Flats 7,965 5.28% 2.48% 6,156 -22.71% 12340 100.47% 6,834 4.33% -44.62% Other (Incl. hotels & casinos) 1,083 0.72% 0.34% 1,143 5.50% 461 -59.63% 1,139 0.72% 146.89% Additions & alterations 11,442 7.59% 3.56% 11,611 1.47% 11648 0.32% 11,389 7.22% -2.22%PUBLIC RESIDENTIAL Affordable Housing 13222 8.77% 4.11% 18742 41.74% 20755 10.75% 20,924 13.27% 0.81% Public authorities. 4,983 3.31% 1.55% 3,784 -24.06% 6044 59.72% 3,904 2.48% -35.41% Public corporations 9 0.01% 0.00% 32 266.67% 34 5.82% 22 0.01% -35.57%TOTAL RESIDENTIAL 56894 37.74% 17.70% 59,418 4.44% 72966 22.80% 62,814 39.83% -13.91%PRIVATE NON-RESIDENTIAL Offices 7,678 5.09% 2.39% 8,205 6.86% 8643 5.35% 6,937 4.40% -19.74% Shops 10,517 6.98% 3.27% 8,029 -23.65% 12695 58.11% 7,345 4.66% -42.14% Industrial & warehouse 9,437 6.26% 2.94% 10,662 12.97% 16206 52.01% 10,202 6.47% -37.05% Other 2,199 1.46% 0.68% 2,852 29.67% 1215 -57.38% 2,448 1.55% 101.43% Additions & Alterations 10,157 6.74% 3.16% 14,128 39.09% 15261 8.02% 13,874 8.80% -9.09%PUBLIC NON-RESIDENTIAL Public Authorities 14,752 9.79% 4.59% 11,941 -19.06% 14478 21.24% 11,713 7.43% -19.10% Public Corporations 4,202 2.79% 1.31% 4,390 4.47% 5630 28.25% 3,615 2.29% -35.79%TOTAL NON RESIDENTIAL 58,942 39.10% 18.33% 60206 2.14% 74130 23.13% 56,134 35.59% -24.28% Unrecorded Res Add's and Alt's 24,090 15.98% 7.49% 24,445 1.47% 24370 -0.31% 23,979 15.20% -1.60% Unrecorded Non Res Add's and Alt's 10,823 7.18% 3.37% 15,054 39.09% 16262 8.02% 14,784 9.37% -9.09%TOTAL BUILDING 150,749 100.00% 46.89% 159123 5.55% 187727 17.98% 157,711 100.00% -15.99%
CONSTRUCTION Roads Streets, Bridges etc 46,958 27.50% 14.61% 48,984 4.32% 34052 -30.48% 39,722 29.00% 16.65% Waterworks 15,368 9.00% 4.78% 16,357 6.44% 12599 -22.97% 13,013 9.50% 3.28% Sewerage 8,111 4.75% 2.52% 8,082 -0.35% 5448 -32.59% 6,164 4.50% 13.13% Other Construction Works 41,835 24.50% 13.01% 44,611 6.63% 36776 -17.56% 35,613 26.00% -3.16% Private Sector 58,484 34.25% 18.19% 56,909 -2.69% 47333 -16.83% 42,462 31.00% -10.29%TOTAL CONSTRUCTION 170755 100.00% 53.11% 174944 2.45% 136209 -22.14% 136,974 100.00% 0.56%TOTAL BLDNG AND CONSTR 321,505 100.00% 334,067 3.91% 323936 -3.03% 294,685 -9.03%Materials 192,903 200,440 194,362 176,811
SECTOR AND SEGMENT20112009 2020
INVESTMENT IN BUILDING: 2009-2010: LMR SOYUZ SCENARIO: R MILLION (CONSTANT 2010 VALUE)2010
© BMI-BRSCU© BMI-BRSCU
TOTAL INVESTMENT IN BUILDING & CONSTRUCTION BY SEGMENT: 2009, 2010, 2011,2020 (R MILLIONS)
12 © BMI-BRSCU
Total Mortgage Loans and Readvances by application: 1979-2010 (Current Values) (Source: SARB, BMI-BRSCU Workings)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1979
1980
1981
1982
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1990
1991
1992
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2008
2009
2010
R M
illi
on
s (
Cu
rre
nt
Va
lue)
-80%-70%-60%-50%-40%-30%-20%-10%0%10%20%30%40%50%60%70%80%90%100%110%120%130%
Gol
d bo
om
SA
SO
L II
SA
SO
L III
Aus
terit
y pa
ckag
e
Rub
icon
spe
ech
Deb
t sta
ndst
ill
Eco
nom
ic r
ecov
ery
Man
dela
's r
elea
se
Dem
ocra
tic E
lect
ion
Tra
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on to
Dem
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cy
Cur
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y co
llaps
e
Wor
ld T
rade
Cen
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BN
G H
ousi
ng P
rogr
amm
e
Sub
Prim
e C
risis
(N
CA
)
Defining Events
Y/Y
Per
cen
atag
e C
han
ge
R233 Billion taken out of the system
in two years!
© BMI-BRSCU
The deleveraging by the Banks and the loss of consumer spending power could only mean lost growth: mortgage repossessions, business failures, and personal bankruptcies . . .
TOTAL MORTGAGE LOANS & RE-ADVANCES: 1979-2010www.strategicforum.co.za
13
GFCF RESIDENTIAL BUILDING: Q1 1993-Q2 2011: CURRENT VALUESCUMULATIVE YTD Q ON Q (PREVIOUS YEAR) % CHANGE
(Source: SARB; BMI-BRSCU Workings)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1993
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R M
ILL
ION
S (
CU
RR
EN
T V
AL
UE
S)
-20%
-10%
0%
10%
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30%
40%
50%
Dem
ocra
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lect
ion
Tra
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Dem
ocra
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Cur
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G H
ousi
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rogr
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Sub
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Soc
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up
Defining Events
CU
M Q
/Q (
PR
EV
IOU
S Y
EA
R)
% C
HA
NG
E
CUM YTD Q1 2011 VS 2010 = - 0,17%
CUM Q4 2010 VS 2009 = R44 014 MIO VS R45 649 MIO = - 3,58%ON TOP OF DECLINE OF - 4,41% IN 2009 VS 2008
© BMI-BRSCU© BMI-BRSCU
GFCF RESIDENTIAL BUILDING: Q1 1993-Q2 2011www.strategicforum.co.za
14
GFCF NON RESIDENTIAL BUILDING: Q1 1993-Q1 2011: CURRENT VALUESCUMULATIVE YTD Q TO Q (PREVIOUS YEAR) PERCENTAGE CHANGE
(Source: SARB; BMI-BRSCU Workings)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
1993
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2011
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2011
/'04
R M
ILL
ION
S (
CU
RR
EN
T V
AL
UE
S)
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Dem
ocra
tic E
lect
ion
Tra
nsiti
on to
Dem
ocra
cy
Cur
renc
y C
olla
pse
Wor
ld T
rade
Cen
tre
BN
G H
ousi
ng P
rogr
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e
Sub
Prim
e C
risis
Soc
cer
Wor
ld C
up
Defining Events
CU
M Y
TD
Q/Q
% C
HA
NG
E
CUM YTD Q1 2011 VS 2010 = + 3,21%
2010 VS 2009 = R64 288 MIO VS R60 880 Mio = + 5,93%ON TOP OF GROWTH OF + 6,51% IN 2009 VS 2008
© BMI-BRSCU© BMI-BRSCU
GFCF NON RESIDENTIAL BUILDING: Q1 1993-Q2 2011www.strategicforum.co.za
15
GFCF TOTAL BUILDING BY QUARTER: Q1 1993-Q2 2011: CURRENT VALUESCUMULATIVE YTD Q TO Q (PREVIOUS YEAR) PERCENTAGE CHANGE
(Source: SARB; BMI-BRSCU Workings)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1993
/01
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2006
/04
2007
/01
2007
/02
2007
/03
2007
/04
2008
/01
2008
/02
2008
/03
2008
/04
2009
/01
2009
/02
2009
/03
2009
/04
2010
/'01
2010
/'02
2010
/'03
2010
/'04
2011
/'01
2011
/'02
2011
/'03
2011
/'04
R M
ILL
ION
S (
CU
RR
EN
T V
AL
UE
S)
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Dem
ocra
tic E
lect
ion
Tra
nsiti
on to
Dem
ocra
cy
Cur
renc
y C
olla
pse
Wor
ld T
rade
Cen
tre
BN
G H
ousi
ng P
rogr
amm
e
Sub
Prim
e C
risis
(N
CA
)
Soc
cer
Wor
ld C
up
Defining Events
CU
M Q
/Q (
PR
EV
IOU
S Y
EA
R)
% C
HA
NG
E
CUM YTD Q1 2011 VS 2010 = + 3,59%
2010 VS 2009 = R108 502 MIO VS R106 529 MIO = + 1,85%ON TOP OF GROWTH OF + 1,54% IN 2009 VS 2008
© BMI-BRSCU© BMI-BRSCU
GFCF TOTAL BUILDING: Q1 1993-Q2 2011www.strategicforum.co.za
16 © BMI-BRSCU© BMI-BRSCU
BPP & BC TOTAL BUILDING: 1993-2011www.strategicforum.co.za
BPP & BC Total Building: 1993-2011 by month: R*1000 (Current Values) (July)(Source: StatsSA; BMI-BRSCU: BC Total RSA by Month and Type of Building1993-2008: TOTAL BLDNG BC&BPP
R)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
6,500,000
7,000,000
7,500,000
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
R*1
00
0 (
Cu
rre
nt
Va
lue
s)
BC TOTAL BUILDING: R*1000 BPP TOTAL BUILDING: R*1000
12 per. Mov. Avg. (BC TOTAL BUILDING: R*1000) 12 per. Mov. Avg. (BPP TOTAL BUILDING: R*1000)
17 © BMI-BRSCU© BMI-BRSCU
CUM Y/Y % CHANGE BPP & BC TOTAL BUILDING: 1993-2011www.strategicforum.co.za
Cum Y/Y % Ch: BPP and BC: Total Building (Incl A&A): 1993-2011: R*1000 (Current Values) (July) (Source: StatsSA; BMI-BRSCU: BC Total RSA by Month and Type of Building1993-2008: % CUM BC BY SEGM & MNTH: Chart 15(2))
-50%-45%-40%-35%-30%-25%-20%-15%-10%-5%0%5%
10%15%20%25%30%35%40%45%50%55%60%
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
% CUM BC BY SEGM& MNTH % CUM BPP BY SEGM& MNTH
12 per. Mov. Avg. (% CUM BC BY SEGM& MNTH) 12 per. Mov. Avg. (% CUM BPP BY SEGM& MNTH)
Total BC turned at about – 20% and will move to positive growth by third to fourth quarter 2011 . . .
Total BPP has turned at - 30% and breached zero in early 2011 . . .
18 © BMI-BRSCU© BMI-BRSCU
NET BUILDING IN THE PIPELINE TOTAL BUILDING: 1993-2011www.strategicforum.co.za
Total Building: BC: 1993-2011: Net Building in the Pipeline (NBIP): by Month: R*1000 (Current Values) (July)
(Source: StatsSA, BMI-BRSCU: BC Total RSA by Month and Type of Building1993-2008: NBIP (BPP-BC): Chart 16)
-1,000,000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
Total Building NBIP (BPP-BC) Total Building BC
12 per. Mov. Avg. (Total Building NBIP (BPP-BC)) 12 per. Mov. Avg. (Total Building BC)
Total BC Trend-break occurred in mid 2006.
Recovery is on the way.
19
AFFORDABLE HOUSING DELIVERY AND BACKLOG: 2002-2010LOWER MIDDLE ROAD SOYUZ AND HIGH ROAD COLUMBUS SCENARIO: 2011-2020
(Source: StatsSA and BMI-BRSCU Workings)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
AN
NU
AL
HO
US
ING
DE
LIV
ER
Y (
UN
ITS
)
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
2,200,000
2,400,000
2,600,000
AN
NU
AL
HO
US
ING
BA
KL
OG
(U
NIT
S)
DOH Delivery: Lower Middle Road Soyuz Scenario DOH Delivery: High Road Columbus Scenario
Annual Housing Backlog under Columbus Scenario Annual Housing Backlog under Soyuz Scenario
© BMI-BRSCU© BMI-BRSCU
THE ROLE OF AFFORDABLE HOUSING IN BUILDING: 2011-2020www.strategicforum.co.za
If 3,64 Million houses could be built in next 10 years and
Backlog will be reduced to I million by 2020.
The target remains the eradication of all slums, or informal settlements, by 2014. For this to happen, some 500 000 new units a year must become available, according to the Department of Housing’s Strategic Plan.
20
Zoning Type Density )Gross) Units m2/Unit Total m2 R/m2 R/Unit Stand Total R Million* %Giveaway RDP Residential 2 Row Housing 90 Units/Ha 408,000 45 18,513,017 2,192 99,450 9,945 109,395 40,576 3.63%Giveaway RDP Residential 3 Walk-ups 125 Units/Ha 1,814,164 45 82,317,670 2,192 99,450 9,945 109,395 180,419 16.13%Upgraded RDP Residential 1 1 House/Stand 200 m2-450 m2 1,418,946 68 96,488,359 4,422 300,685 30,069 330,754 426,656 38.15%
Total BNG 3,641,110 177,872 647,651
Residential 1 Semi-Detatched 190 m2 258,497 113 29,080,951 4,422 497,457 49,746 547,203 128,591 11.50%Residential 1 1 House/Stand 1 per 350 m2 126,274 180 22,729,255 4,422 795,931 79,593 875,524 100,505 8.99%
384,771 385 148,298,564 1,545 595,410 59,541 595,410 229,096 78.39%Total Affordable Housing 4,025,881 217,778 876,747
Zoning Units m2/Unit Total m2 R/m2 R/Unit Stand Total R Million* %Business 3,000 5,000 25,000,000 6,151 30,756,224 3,075,622 33,831,847 92,269 8.25%Industrial 3,000 5,000 25,000,000 4,039 20,195,000 2,019,500 22,214,500 60,585 5.42%Business 6,000 5,000 50,000,000 2,960 14,800,000 1,480,000 16,280,000 88,800 7.94%
12,000 8,333 100,000,000 2,417 20,137,806 6,575,122 72,326,347 241,654 21.61%248,298,564 1,118,401 100.00%
* Land excludedEmployment created per annum for Residential AH and Non Residential Integrated Development 245,240Employment created per annum for Affordable Housing Market 192,251Employment created per annum for one Affordable House 0.0478Employment created per annum for 1000000 Affordable Houses 47754
245,240
(Source: BMI-BRSCU Estimate)
Non Residential (m2)Offices & Banking
Grand Total
Industrial and WarehousingShopping & CommercialTotal Non Residential
ESTIMATED NON RESIDENTIAL INVESTMENT IN SUSTAINABLE INTEGRATED DEVELOPMENTS
ESTIMATED RESIDENTIAL INVESTMENT IN SUSTAINABLE INTEGRATED DEVELOPMENTSResidential
Bonded (FSC)Total Middle
BNG Housing
GAP Housing
© BMI-BRSCU© BMI-BRSCU
*) Subsidy and stand included because affordability is determined in this way.
Investment in Sustainable Integrated Housing Developments:www.strategicforum.co.za
If the 4,03 million houses can be built in the next 10 years this will result in investment of R877 Billion (land excluded) and R241 Billion in Non Residential Building.And . . . Create 245 000 additional jobs in the process.
21 © BMI-BRSCU© BMI-BRSCU
THE ROLE OF AFFORDABLE HOUSING IN BUILDING: 2011-2020www.strategicforum.co.za
The Department of Human Settlements was unable to address the burden of the housing backlog on its own, Sexwale said at the launch
of the “Each One Settle One” campaign at the JSE yesterday.
The campaign aims to mobilise various stakeholders, including the top 200 JSE-listed companies, to assist the
department in providing decent shelter to more than 2 million households living in squatter camps, as well as in informal settlements.
Sexwale said the number of informal settlements in the country
had grown from 800 when he was Gauteng premier to 2 500 today.
The housing backlog under his watch had increased from 2.1
million houses when he became minister to 2.3 million, despite his
department building 200 000 houses a year.
Sexwale attributed this situation to the increasing number of households and the decrease in the size of households, admitting that the government had got itself into “a very tight situation since 1994” by providing free houses for the poor.
“It was not the best thing to do. We can’t provide free housing forever but we have got to do that because we can’t turn our backs against the poor. It’s not their fault they are in that situation,” Sexwale said.
BUT . . . has the story changed?
22
Sexwale warned that if there was a second recession in the country it would introduce social instability.
“The protests of our people are beginning to get violent every day. It’s worrying. The police are shooting every day. Let’s work together to try and stem the tide.”
Sexwale said housing was not just a social expenditure item but an economic dynamo because it contributed massively to economic growth.
“It stimulates the whole financial system and when it doesn’t happen, the world starts burning and we just don’t know where it ends.”
He said it was easy for firms to hide behind corporate social investment but it would “not keep this problem at bay”.
A social investment desk had been created in the department to manage the activities of the campaign and projects on a project-by-project basis.
Khanyisile Kweyama, the executive head of human resources at Anglo American Platinum, said it embraced the
campaign and was contributing R1.4 billion towards facilitating the building of 20 000 houses for its employees over the next 10 years.
Leon van Schalkwyk, the group executive of strategic finance at Impala Platinum, said it had a proven track record in community-based housing solutions through its extensive home ownership programme in the North
West to uplift its employees, which had resulted in the construction of more than 1 500 freestanding units over a three-year period. (Business Report, 30 September, 2011)
© BMI-BRSCU© BMI-BRSCU
THE ROLE OF AFFORDABLE HOUSING IN BUILDING: 2011-2020www.strategicforum.co.za
23
GFCF CONSTRUCTION WORKS Q1 1993-Q2 2011: CURRENT VALUESCUMULATIVE Q ON Q (PREVIOUS YEAR) PERCENTAGE CHANGE(Source: SARB; BMI-BRSCU Workings)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
1993
/01
1993
/02
1993
/03
1993
/04
1994
/01
1994
/02
1994
/03
1994
/04
1995
/01
1995
/02
1995
/03
1995
/04
1996
/01
1996
/02
1996
/03
1996
/04
1997
/01
1997
/02
1997
/03
1997
/04
1998
/01
1998
/02
1998
/03
1998
/04
1999
/01
1999
/02
1999
/03
1999
/04
2000
/01
2000
/02
2000
/03
2000
/04
2001
/01
2001
/02
2001
/03
2001
/04
2002
/01
2002
/02
2002
/03
2002
/04
2003
/01
2003
/02
2003
/03
2003
/04
2004
/01
2004
/02
2004
/03
2004
/04
2005
/01
2005
/02
2005
/03
2005
/04
2006
/01
2006
/02
2006
/03
2006
/04
2007
/01
2007
/02
2007
/03
2007
/04
2008
/01
2008
/02
2008
/03
2008
/04
2009
/01
2009
/02
2009
/03
2009
/04
2010
/'01
2010
/'02
2010
/'03
2010
/'04
2011
/'01
2011
/'02
2011
/'03
2011
/'04
R M
ILL
ION
S (
CU
RR
EN
T V
AL
UE
S)
-10%
0%
10%
20%
30%
40%
50%
60%
70%
Gau
trai
n
Esk
om
Infr
astr
uctu
re
Soc
cer
Wor
ld C
up
Defining Events
CU
M Q
/Q (
PR
EV
IOU
S Y
EA
R)
% C
HA
NG
E
Gross fixed capital formation: Construction works - Total (Investment) Cum Q on Q (Previous Year) % Change
CUM YTD Q2 2011 VS 2010 = + 3,86%
2010 VS 2009 = R174 944 MIO VS R166 480 MIO = + 5,08%ON TOP OF GROWTH OF + 33,42% IN 2009 VS 2008
© BMI-BRSCU© BMI-BRSCU
GFCF CONSTRUCTION: Q1 1993-Q2 2011 (JUNE)www.strategicforum.co.za
24 © BMI-BRSCU© BMI-BRSCU
GFCF BY TYPE OF ASSET: 1993 – 2010: R MIOwww.strategicforum.co.za
GROSS FIXED CAPITAL FORMATION BY TYPE OF ASSET: 1993-2010 R*1000 (CURRENT VALUES)(Source: SARB, BMI-BRSCU Workings)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
650,000
700,000
R M
ILL
ION
S (
CU
RR
EN
T V
AL
UE
S)
GFCF Transfer Costs 24156 28601 35438 42874 48593 54667 55377 58040 64318 78317 81072 90721 100020 127176 158327 203608 163756 142856
GFCF Machinery and Equipment 24156 28601 35438 42874 48593 54667 55377 58040 64318 78317 81072 90721 100020 127176 158327 203608 163756 142856
GFCF Transport Equipment 9508 10968 13828 14202 16024 19167 15114 17841 19585 18850 25694 29219 34789 40865 46725 53469 59880 60784
GFCF Construction 9,508 10,454 10,716 13,568 16,005 18,116 18,831 20,112 19,029 23,022 30,663 35,115 40,739 53,124 80,879 129,280 166,481 174,944
GFCF Non Residential 7,428 8,939 11,322 12,282 13,243 13,554 13,656 15,586 17,897 18,145 20,232 23,059 26,565 32,821 41,850 53,654 60,880 64,488
GFCF Residential 6,990 7,567 8,415 9,464 10,134 10,366 10,120 13,228 14,635 15,772 17,541 23,983 33,455 40,148 44,235 48,127 45,649 44,014
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
25 © BMI-BRSCU© BMI-BRSCU
GFCF BY TYPE OF ASSET: 1993 – 2009: R MIOwww.strategicforum.co.za
GFCF BUILDING & CONSTRUCTION BY TYPE OF ASSET: 1993-2010 R*MILLIONS (CURRENT VALUES)(Source: SARB, BMI-BRSCU Workings)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
PE
RC
EN
TA
GE
(C
UR
RE
NT
VA
LU
ES
)
GFCF Computer Related Equipment 4.43% 5.08% 4.97% 4.84% 5.21% 6.18% 6.57% 6.62% 7.47% 7.56% 7.75% 6.61% 6.36% 5.96% 5.64% 5.08% 4.86% 4.56%
GFCF Transfer Costs 3.58% 3.84% 3.44% 3.35% 2.93% 2.52% 2.53% 2.72% 2.82% 2.92% 3.32% 4.03% 4.33% 3.28% 2.79% 1.88% 1.77% 2.05%
GFCF Machinery and Equipment 38.59% 39.16% 40.71% 42.60% 42.92% 43.07% 44.51% 42.16% 42.59% 45.49% 41.15% 40.11% 37.92% 39.24% 38.97% 38.81% 30.78% 27.39%
GFCF Transport Equipment 15.19% 15.02% 15.89% 14.11% 14.15% 15.10% 12.15% 12.96% 12.97% 10.95% 13.04% 12.92% 13.19% 12.61% 11.50% 10.19% 11.26% 11.65%
GFCF Construction 15.19% 14.31% 12.31% 13.48% 14.14% 14.27% 15.14% 14.61% 12.60% 13.37% 15.57% 15.53% 15.45% 16.39% 19.91% 24.64% 31.30% 33.54%
GFCF Non Residential 11.87% 12.24% 13.01% 12.20% 11.70% 10.68% 10.98% 11.32% 11.85% 10.54% 10.27% 10.19% 10.07% 10.13% 10.30% 10.23% 11.44% 12.36%
GFCF Residential 11.17% 10.36% 9.67% 9.40% 8.95% 8.17% 8.13% 9.61% 9.69% 9.16% 8.90% 10.60% 12.68% 12.39% 10.89% 9.17% 8.58% 8.44%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
26 © BMI-BRSCU© BMI-BRSCU
GFCF BY TYPE OF ASSET: 1993 – 2009: R MIOwww.strategicforum.co.za
GFCF BY ASSET TYPE: 2010(Source: SARB, BMI-BRSCU Workings)
TRANSFER COSTS/TOTAL, 2.05%
COMPUTER RLATED EQUIPMENT/TOTAL,
4.56%
RESIDENTIAL/TOTAL, 8.44%
NON RESIDENTIAL/TOTAL,
12.36%
CONSTRUCTION/TOTAL, 33.54%, 34%
MACHINERY & EQUIPMENT/TOTAL,
27.39%
TRANSPORT EQUIPMENT/TOTAL,
11.65%, 12%
CONSTRUCTION, RESIDENTIAL & NON RESIDENTIAL
= 54%
27 © BMI-BRSCU© BMI-BRSCU
TOTAL MORTGAGE LOANS & RE-ADVANCES: 1979-2020www.strategicforum.co.za
Total Mortgage Loans and Readvances: 1979-2010Lower Middle Road Scenario: 2011-2020 (Source: SARB, BMI-BRSCU Workings)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
R M
illi
on
s (
Cu
rre
nt
Va
lue
19
79-2
010
; C
on
sta
nt
valu
e 2
01
1-2
020
)
-80%-70%-60%-50%-40%-30%-20%-10%0%10%20%30%40%50%60%70%80%90%100%110%120%130%
Gol
d bo
omS
AS
OL
IIS
AS
OL
III
Aus
terit
y pa
ckag
eR
ubic
on s
peec
hD
ebt s
tand
still
Eco
nom
ic r
ecov
ery
Man
dela
's r
elea
se
Dem
ocra
tic E
lect
ion
Tra
nsiti
on to
Dem
ocra
cy
Cur
renc
y co
llaps
e
Wor
ld T
rade
Cen
tre
BN
G H
ousi
ng P
rogr
amm
e
Sub
Prim
e C
risis
(N
CA
)
Defining Events
Y/Y
Per
cen
atag
e C
han
ge
Strategic Forum Lower Middle Road Scenario
28 © BMI-BRSCU© BMI-BRSCU
MORTGAGE LOANS ON CONSTRUCTION OF BUILDINGS: 1979-2020www.strategicforum.co.za
Mortgage Loans on Construction of Buildings: 1979-2010Lower Middle Road Scenario: 2011-2020 (Source: SARB, BMI-BRSCU Workings)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
R M
illi
on
s (
Cu
rre
nt
Va
lue
19
79-2
010
; C
on
sta
nt
valu
e 2
01
1-2
020
)
-70%-60%-50%-40%-30%-20%-10%0%10%20%30%40%50%60%70%80%90%100%110%120%130%
Gol
d bo
omS
AS
OL
II
SA
SO
L III
Aus
terit
y pa
ckag
eR
ubic
on s
peec
hD
ebt s
tand
still
Eco
nom
ic r
ecov
ery
Man
dela
's r
elea
se
Dem
ocra
tic E
lect
ion
Tra
nsiti
on to
Dem
ocra
cy
Cur
renc
y co
llaps
e
Wor
ld T
rade
Cen
tre
BN
G H
ousi
ng P
rogr
amm
e
Sub
Prim
e C
risis
(N
CA
)
Defining Events
Y/Y
Per
ce
na
tag
e C
ha
ng
e
Strategic Forum Lower Middle Road Scenario
29
Total Mortgage Advances: 2002 - 2010The Strategic Forum Scenarios: 2011-2020(Source: SARB; MFA DATABASE, BMI-BRSCU Workings)
2675
04
2599
27
2518
37
2674
81
2888
57
3033
39
3185
37
3265
00
3330
30
3180
44
3085
02
536880
223203
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
R M
illi
on
s (C
on
stan
t 20
10 V
alu
es)
High Road New York Scenario: 2011-2020Higher Middle Road London Scenario: 2011-2020Lower Middle Road Sao Paolo Scenario: 2011-2020Low Road Harari Scenario: 2011-2020Sao Paolo Scenario:2011-2020
Sao Paolo Scenariois Current
Most likely future Scenario
© BMI-BRSCU© BMI-BRSCU
R313 Billion decline in
only 3 years!
Under the High Road it could take a decade to get
back to the 2006 level!
30
TOTAL INVESTMENT IN BUILDING: 2000-2010 THE STRATEGIC FORUM SCENARIOS: 2011-2020
(Source: SARB, StatsSA, MFA, BMI-BRSCU Workings)
15,000
40,000
65,000
90,000
115,000
140,000
165,000
190,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
R M
ILL
ION
S (
2010
VA
LU
ES
)
TOTAL BUILDINGS : 2000-2007: LOWER MIDDLE ROAD SOYUZ SCENARIO: 2008-2015
1984 PEAK LEVEL OF INVESTMENT
TOTAL BUILDINGS HIGH ROAD COLUMBUS SCENARIO
TOTAL BUILDINGS LOW ROAD CHALLENGER SCENARIO
TOTAL BUILDINGS HIGHER MIDDLE ROAD APOLLO SCENARIO
1984 PEAK LEVEL OF INVESTMENT
CURRENT MOST LIKELY SCENARIOBETWEEN SOYUZ AND CHALLENGER
© BMI-BRSCU© BMI-BRSCU
31
TOTAL INVESTMENT IN BUILDING: 2000-2010 THE STRATEGIC FORUM SCENARIOS: 2011-2020
(Source: SARB, StatsSA, MFA, BMI-BRSCU Workings)
15,000
40,000
65,000
90,000
115,000
140,000
165,000
190,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
R M
ILL
ION
S (
2010
VA
LU
ES
)
TOTAL BUILDINGS : 2000-2007: LOWER MIDDLE ROAD SOYUZ SCENARIO: 2008-2015
1984 PEAK LEVEL OF INVESTMENT
TOTAL BUILDINGS HIGH ROAD COLUMBUS SCENARIO
TOTAL BUILDINGS LOW ROAD CHALLENGER SCENARIO
TOTAL BUILDINGS HIGHER MIDDLE ROAD APOLLO SCENARIO
1984 PEAK LEVEL OF INVESTMENT
CURRENT MOST LIKELY SCENARIOBETWEEN SOYUZ AND CHALLENGER
© BMI-BRSCU© BMI-BRSCU
The difference between “high road” and “lower middle road” could be R139 Billion and 300 000 jobs over the 10 years to 2020.
32 © BMI-BRSCU© BMI-BRSCU
CONSTRUCTION CAPITAL PROJECTS IN THE PIPELINE: 1993-2010www.strategicforum.co.za
Announced value of total Capital Projects: 1993-2010 (Current Values)(Source: Capital Expenditure Project Listing: August 2011, NEDBANK Group Economic Unit, BMI-BRSCU Workings)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*
R M
illio
ns
(Cu
rren
t V
alu
e)
Private Sector Public Sector
Both Private and Public Sector Projects boosted the Construction Work in the Pipeline.
But the DECLINE from 2006-2010 raises concerns.
33 © BMI-BRSCU© BMI-BRSCU
CONSTRUCTION CAPITAL PROJECTS IN THE PIPELINE: 1993-2010www.strategicforum.co.za
Capital Expenditure announced, GFCF in Construction and Net Construction in the Pipeline (NCIP): 1993-2010 (Current Values)
(Source: Capital Expenditure Project Listing: August 2011, NEDBANK Group Economic Unit, BMI-BRSCU Workings)
-200,000
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*
R M
illio
ns
(Cu
rren
t V
alu
e)
Total Capex announced Gross Fixed Capital Formation (GFCF) Net Construction In the Pipeline (NCIP)
Large NEGATIVE GAP in NCIP raises concerns about Short- to Medium-term SUSTAINABILITY of GFCF in Construction.
34 © BMI-BRSCU© BMI-BRSCU
CONSTRUCTION CAPITAL PROJECTS IN THE PIPELINE: 1993-2015www.strategicforum.co.za
Actual Capital Expenditure projected in each year: 1993-2015 (Current Prices)(Source: Capital Expenditure Project Listing: August 2011, NEDBANK Group Economic Unit, BMI-BRSCU Workings)
0
50,000
100,000
150,000
200,000
250,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
R M
illi
on
s (
Cu
rren
t P
ric
es)
Agriculture, Forestry & Fisheries Mining & Quarying
Manufacturing Electricity & Water
Wholesale, Retail & Motor Trade, Hotels & Entertainment Transport, Storage & Communication
Finance, Real Estate & Commercial Services Community, Social & personal services
Transport, Storage & Communication is the major contributor to projected Capex.
The reduction in projected Capex from 2011 to 2015 raises concerns over SUSTAINABILITY of GFCF in Construction.
35 © BMI-BRSCU© BMI-BRSCU
TOTAL INVESTMENT IN CONSTRUCTION BY SEGMENT: 2002-2020www.strategicforum.co.za
INVESTMENT IN CONSTRUCTION: 2001-2010THE STRATEGIC FORUM SCENARIOS: 2011-2020
(Source: SARB, StatsSA, MFA, BMI-BRSCU Workings)
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
225,000
250,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
R M
ILL
ION
S (
2010
VA
LU
ES
)
MOTORWAY SCENARIO: 2007-2015 HIGHWAY SCENARIO: 2007-2015 FREEWAY SCENARIO: 2001-2015
BYWAY SCENARIO: 2001-2015 Peak 1980 Level
The currentMOST LIKELY FUTURE
is theFREEWAY SCENARIO
1980 PEAK LEVEL OF INVESTMENT
36
2011-2020 Average PRIVATE RESIDENTIAL R*Million R*Million % % Dwelling-houses < 80 m2 29,472 2,947 1.69% 0.94% Dwelling-houses > 80 m2 176,887 17,689 10.12% 5.67% Townhouses & Flats 102,292 10,229 5.85% 3.28% Other (Incl. hotels & casinos) 8,420 842 0.48% 0.27% Additions & alterations 109,727 10,973 6.28% 3.52%PUBLIC RESIDENTIAL Affordable Housing 201,003 20,100 11.50% 6.44% Public authorities. 52,901 5,290 3.03% 1.70% Public corporations 309 31 0.02% 0.01%TOTAL RESIDENTIAL 681,011 68,101 38.95% 21.83%PRIVATE NON-RESIDENTIAL Offices 89,860 8,986 5.14% 2.88% Shops 103,453 10,345 5.92% 3.32% Industrial & warehouse 138,568 13,857 7.92% 4.44% Other 19,151 1,915 1.10% 0.61% Additions & Alterations 139,014 13,901 7.95% 4.46%PUBLIC NON-RESIDENTIAL Public Authorities 146,557 14,656 8.38% 4.70% Public Corporations 47,401 4,740 2.71% 1.52%TOTAL NON RESIDENTIAL 684,005 68,400 39.12% 21.93% Unrecorded Res Add's and Alt's 235,437 23,544 13.46% 7.55% Unrecorded Non Res Add's and Alt's 148,133 14,813 8.47% 4.75%GRAND TOTAL 1,748,586 174,859 100.00% 56.06%
CONSTRUCTION Roads Streets, Bridges etc 374,509 37,451 27.33% 12.01% Waterworks 126,766 12,677 9.25% 4.06% Sewerage 57,355 5,736 4.18% 1.84% Other Construction Works 365,032 36,503 26.63% 11.70% Private Sector 446,844 44,684 32.60% 14.33%TOTAL CONSTRUCTION 1,370,507 137,051 100.00% 43.94%TOTAL BLDNG AND CONSTR 3,119,092 311,909 100.00%3 years (2010-2012) 935,7285 years (2010-2014) 1,559,54611 years (2010-2020) 3,431,001
SECTOR AND SEGMENTINVESTMENT IN BUILDING & CONSTRUCTION: 2011-2020: LMR SOYUZ SCENARIO
© BMI-BRSCU© BMI-BRSCU
TOTAL INVESTMENT IN BUILDING & CONSTRUCTION BY SEGMENT: 2011-2020
37 © BMI-BRSCU© BMI-BRSCU
Conditions for High Road ScenarioInvestor Confidence:• High confidence;• Risk taking propensity • GDP growth > 6% pa;• CPI in 3-6% range;• Real Interest Rates < 5%;Investment Climate: • Property a preferred investment;• FTHB Subsidies increased to 2,5-5% of Budget;• The non residential market grows in tandem with residential; • Home improvement and non residential refurbishment markets grow at > 10% pa;• Private Sector Investment as a percentage of Total Investment in Building 50-60%;Property Delivery:• Building growth 2010-2020 at > 6,5% pa;• The R1,5 Trillion Affordable Housing programme successfully implemented;• Backlogs eliminated by 2020;• Construction growth 2108-2020 at > 7,5% pa;• The R846 Billion Government Infrastructure programme is successfully implemented
38 © BMI-BRSCU© BMI-BRSCU
Conditions for High Road ScenarioInvestor Confidence:• High confidence;• Risk taking propensity • GDP growth > 6% pa;• CPI in 3-6% range;• Real Interest Rates < 5%;Investment Climate: • Property a preferred investment;• FTHB Subsidies increased to 2,5-5% of Budget;• The non residential market grows in tandem with residential; • Home improvement and non residential refurbishment markets grow at > 10% pa;• Private Sector Investment as a percentage of Total Investment in Building 50-60%;Property Delivery:• Building growth 2010-2020 at > 6,5% pa;• The R1,5 Trillion Affordable Housing programme successfully implemented;• Backlogs eliminated by 2020;• Construction growth 2108-2020 at > 7,5% pa;• The R846 Billion Government Infrastructure programme is successfully implemented
“ “ This is the ideal time to borrow and invest heavily in This is the ideal time to borrow and invest heavily in public infrastructure public infrastructure that has been badly neglected over that has been badly neglected over the past 30 years . . . Not only to roads and bridges but the past 30 years . . . Not only to roads and bridges but also to airports and air traffic control systems, urban also to airports and air traffic control systems, urban transit, high-speed rail, schools and university facilities, transit, high-speed rail, schools and university facilities, national laboratories, national parks, smart electric grids, national laboratories, national parks, smart electric grids, broadband networks, green generating plants and health broadband networks, green generating plants and health information networks.information networks.
This forward looking approach is This forward looking approach is best defined not as best defined not as deficit spending fuelling consumption deficit spending fuelling consumption but as an but as an investment for the future investment for the future with fiscal consolidation with fiscal consolidation achieved in a way that supports jobs and growth” (Gordon achieved in a way that supports jobs and growth” (Gordon Brown: 148: 2010)Brown: 148: 2010)
39 © BMI-BRSCU© BMI-BRSCU
TowardsBuilding, the Engine for growth and wealth creation
Dr. Llewellyn B. LewisDr. Llewellyn B. LewisOctober 2011October 2011
THE STRATEGIC FORUMTHE STRATEGIC FORUM
A place of assembly for strategic conversations
THE STRATEGIC FORUMwww.strategicforum.co.za
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