Economist Mike Schussler said the construction industry was the strongest sector in Gauteng

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Wits professor Francois Viruly looked at the rise of shopping mall construction in Soweto

Standard Bank chief economist Goolam Ballim expects R1,2-trillion to flow through the construction and related industries in the next few years

Construction sector drives Gauteng The boom in the construction industry is expected to gather pace, fuelling a rise in skills and a decline in inner city vacancy rates. June 4, 2007 By Ndaba Dlamini VACANCY rates in the inner city of Johannesburg are dropping, largely because of the boom in construction and peripheral industries in Gauteng. This is the view of property economist Francois Viruly, who was speaking at a breakfast meeting organised by the Gauteng Business Barometer (GBB) and Standard Bank in Germiston on Tuesday, 29 May. Viruly said the property market in the Johannesburg CBD was getting more competitive by the day because of a robust construction industry. In April activity levels in the province were nearly 20 percent higher than in the same month last year. "The availability of A Grade office space in the city centre has declined from 1,2-million square metres in 1996 to 700 000m2 in 2007. A significant number of building plans have been approved by the council, translating into quite a number of building projects going up in the inner city. These include industrial, office and retail space." This positive development was the result of high levels of confidence exhibited by investors towards the inner city, Viruly added. Inner city housing was a sector that had good potential to turnaround the fortunes of the inner city. "Local government, however, should come to the party for this sector to develop adequately." Based on the performance of the GBB for April, a unique index that measures Gauteng's economic activity on a monthly basis, approximately R1,2-trillion was expected to flow through the construction and related industries in the next few years, in sharp contrast to the R700-million that was spent in the past three years, according to Goolam Ballim, Standard Bank's chief economist. The R1,2-trillion represented a composite figure that included activity in the extended supply chain of the construction industry, in the residential and commercial fields, he added. Reiterating Ballim's statement, economist Mike Schussler said the construction industry was the strongest sector in Gauteng, growing at 18 percent year-on-year. It was also the largest employer of unskilled and semi-skilled workers in the province, he added. "Construction, which contributes about 3,6 percent to the Gauteng economy every year, should stay robust but higher interest rates and land costs will make 2007 a slower year than 2006." The growth of the sector was largely reflected in the rise in shopping mall construction, especially in Soweto. Viruly noted that three years ago, there was only one shopping mall in the township but by the end of this year, it would boast five big shopping malls. In the lead up to the 2010 Fifa World Cup™ and Gautrain, there would be a boom in the construction industry. Viruly said the construction of the Gautrain was already influencing development along its route. "The monorail has potential to see development growing along the whole axis from the Johannesburg CBD to Soweto," he added. Turning to industrial development, Viruly said that instead of looking for greenfield sites, developers would increasingly turn to brownfield sites, which included land that had already been developed in one form or another. "What is also starting to happen is that land in the Johannesburg area is beginning to become scarce. That scarcity of land will ultimately push up building costs and for the tenant it will translate into higher rentals." The construction boom, however, should be matched by skills development in the industry. Schussler described the current skills shortage as "par excellence" and called on the government to start empowering construction industry workers with the necessary skills to complement the boom in the industry. "The construction boom is an opportunity for small, medium and micro enterprises in the country to get involved in all the sectors. It is also an opportunity for construction companies from across the country's borders to enter the field," he said. Permission to use web site material Publishers may use material from this site free of charge, as long as: Credit is given to either the "City of Johannesburg website (www.joburg.org.za)" or to "Johannesburg News Agency (www.joburg.org.za)"; If the article is used online, a link is provided to the original article on this website; The name of the article's author is acknowledged; The webmaster is informed of how and where the material is used (fill in this brief online form). Johannesburg News Agency is operated by BIG Media at 011-484-1400 Print this Page E-mail this article to a friend Help using Joburg.org.za