The South African construction industry has seen slow but steady improvement over the last few years. Civil confidence was at an eight-year high in Q3 2024.
While growth may be slow at times, the industry has good reason to be positive about the future despite some decline in the past year.
In this article, we look at how the industry performed over 2024 and what the outlook for the South African construction industry is for 2025.
The South African construction industry in 2024
Reduced economic activity, high inflation, decreased construction of residential buildings, and weak civil construction activity all negatively impacted the construction industry in 2024.
In real terms, construction output is anticipated to have declined by 4.2% in 2024 due to these challenges.
The Afrimat Construction Index (ACI) saw a decline of 1.3% in the third quarter of 2024. However, there was improvement in many of the indicators that comprise the index, including buildings completed (up 23.3%), employment in construction (up 14.6%) and sales values of building material (up 5.9%).
What is expected for the construction industry in 2025/26?
Expectations for South Africa’s construction industry are cautiously positive for 2025 and 2026.
According to analysts, South Africa’s construction industry is expected to rebound and record average annual growth of 2.9% from 2025 to 2028.
This is due to anticipated private investments in renewable energy and government investment in the country’s transportation infrastructure.
Government also wants renewable energy sources to make up 26% of overall electricity supply by 2030. As such, Eskom plans to invest R106 billion in the construction of renewables.
It also plans to boost infrastructure development by encouraging public-private collaborations and partnerships with regional governments.
In August last year, government announced projects worth an annualised R393.3 billion.
Business confidence and investment in 2025
Economic recovery may be in its infancy but business confidence has seen a surge according to the latest RMB/BER Business Confidence Index (BCI), which rose to 45 index points in the fourth quarter of 2024.
This is good news for local businesses, but there’s a long road ahead. This increase still puts overall confidence in negative territory (below the neutral score of 50).
However, 45 is a significant increase from 38 in Q3. It marks the third consecutive increase. Furthermore, when you look at subsectors, wholesale, retail and building contractors all have confidence above the 50-neutral level.
Opportunities in the construction industry in 2025
One of the biggest opportunities in the construction industry is green energy and renewables investment. South Africa is projected to need 150 GW of renewable-energy generation by 2050, which means we need to build about six GW of renewable-energy capacity each year.
In 2024, South Africa had added 961 MW of private solar capacity by October and the total solar capacity for the country increased to 8.97 GW. This is an 11.9% increase compared to the previous year.
Afrimat CEO Andries van Heerden is encouraged by the latest ACI data. He said despite no massive uptick in infrastructure development maintenance, pockets of demand are opening up in the construction industries in 2025.
He said South Africa’s ports and rail logistics need improvements and these sectors could provide much-needed jobs. A generally higher economic growth rate would also stimulate the economy further.
Challenges in the construction industry
Loadshedding has been less of an issue in 2024 compared to previous years and will hopefully remain that way. However, Eskom’s planned tariff increase for 2025 and the following years could put extra pressure on the industry.
Construction materials prices are also a potential challenge for construction companies, as well as a mass exodus of skilled workers due to potentially unsafe worksites.
Organised crime remains a big problem in the construction industry. Intimidation and violence by the so-called construction mafia has led to a decline in international investment. It is also a threat to job creation.
The inaugural national summit for crime-free construction sites in November 2024 brought together construction industry stakeholders to discuss strategies to combat organised crime.
How KH Plant can help construction companies
Despite the challenges, KH Plant remains positive about the future of the construction industry. Across many years of economic challenges in South Africa, construction companies continue to prove they are versatile and adaptable.
Investing in affordable and reliable equipment is one way to ensure your construction company isn’t burdened by unnecessary financial strain. Instead of buying untested second-hand equipment that can be a risk, consider rebuilt machines.
At KH Plant, we rebuild Caterpillar 140G, 140H and 140K motor graders and grader components from the frame up. Rebuilt graders look, perform and last like a new machine, but at a much lower price than a new machine.
Contact us for more information about our rebuilt motor graders and how they can help your construction business thrive in the South African construction industry in 2025 and beyond.
