Construction & Materials
The North West is growing.
The construction industry in South Africa and North West Province has benefited from a massive state-led infrastructure development programme (valued at a total of R787-billion), and from preparations for the 2010 FIFA World Cup South Africa™.
The stimulus provided by these two large projects has been a vital element in retaining the health of the sector through the tough recessionary times. Building contractors had to cut margins during 2008 and 2009 and only started seeing a recovery in the second half of 2009. Despite this, a large construction company, Wilson Bayly Holmes-Ovcon (WBHO), was still able to report that its order book stood at R15.3-billion in the final quarter of 2009. Approximately R2-billion of this work stems from the soccer tournament and a good proportion of the balance is state work. This is a reflection of the relative difficulty that private developers are having in gaining access to finance.
The health of South Africa’s construction industry is important to the North West, not least because of the concentration of cement companies operating in the area between Mafikeng and Lichtenburg. A new company, Sephaku Cement, listed on the main board of the JSE in
2009 and intends being in full production by 2012. A capacity of 5 500 tons per day will see 2.3 million tons per annum being produced. The company expects demand for cement to grow, noting that only 9% of the demand for cement is driven by the 2010 FIFA World Cup South Africa™; the balance is driven by demand for housing and infrastructure, which South Africa is going to have to continue to build for several decades.
Public stimulus
The North West provincial government’s Provincial Growth and Development Strategy is strongly focused on manufacturing and manufactured exports but critical spatial and infrastructural interventions will also play a role in boosting the province’s economy. Examples of this are the various Spatial Development Initiatives (SDIs), spanning the major routes of the province, which will encourage cluster development and improve property prices in the targeted areas.
The Treasure Route SDI focuses on the already welldeveloped
eastern edge of the province, including the towns of Klerksdorp and Potchefstroom. The Platinum SDI takes in the main road west out of Johannesburg towards Botswana. Investment opportunities have been
identified in tourism (lodges, golf estates), manufacturing, agriculture and mining. The Western Frontier SDI links these routes via the development node of Mafikeng.
The specific tools of economic growth in Mafikeng are the international airport and the associated Mafikeng Industrial Development Zone (MIDZ). Mafikeng is strategically located within the Southern African
region and along key trade routes. Investment in these initiatives will boost the construction sector and cause property values to rise in the
province’s capital city.
A mining-supply park at Rustenburg will have a similar effect, as will the initiative of the City of Madibeng (Klerksdorp) to expand the operations of its airport into a multi-nodal transport hub.
The upgrading of the Royal Bafokeng Sports Palace to make it ready for the 2010 FIFA World Cup South Africa™ provided construction companies with an extended period of work, as did the construction of the two hotels on the site of the Bafokeng Sports Campus.
Property development
New mining projects and the growth of the tourism and leisure markets are distinctive features behind the growth of the North West’s property market. By way of example, Rustenburg’s population doubled in the five years to 2008 as a result of increased activity at platinum mines and the launching of new mines.
The attraction of expanding mine operations has drawn work prospectors from neighbouring provinces, and the demand for residential property has nearly doubled as a result. More people
has meant more business and, as such, demand for commercial
property has also increased in the city.
Mafikeng’s property market has also done relatively well, compared to the national trend. Demand for residential, industrial and commercial property has been good in recent times. The North West government has budgeted R15-million over three years to help municipalities speed up delivery of housing.
Smallholdings along the Pretoria-Brits corridor have become popular among buyers looking for a rural lifestyle. The new and improved Bakwena highway has made this corridor more accessible as residents are now able to comfortably commute to jobs in Pretoria and Johannesburg.
An important trend in residential property development is illustrated by the popularity of the Pecanwood Golf Estate on the Hartebeespoort Dam. The North West has several golf estates and this leisure and lifestyle market seems set to continue to grow.
