Project postponements, cancellations and funding gaps impact SA’s construction sector
13-05-2025
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Nominal investment in SA’s construction sector only edged up by 0.4% in 2024 with a notable decline in residential activity and a growing reliance on public-led commercial property development, according to Industry Insight’s Construction Monitor for April 2025.
Although tender awards surged to R44.7 billion during Q1 2025, driven by large projects in transport and water, this masks a deeper weakness in the pipeline, marked by project postponements, cancellations, and funding gaps.
Building plan approvals fell sharply in February 2025 with public tender values down across most provinces. High project postponements and cancelation rates, particularly in KwaZulu-Natal and the North West, highlight the sector’s structural constraints, worsened by political uncertainty, stalled reforms, and a weakening fiscal outlook.
As government prepares to table a revised budget in May 2025, concerns are rising that cuts to social infrastructure could further erode momentum in an already pressured construction market.
Provincial capex on buildings and other fixed structures as at March 2025
South Africa’s provinces collectively spent R29 billion on buildings and other fixed structures during the 2024/2025 financial year, up 7.9% from the previous year despite a R1.5 billion underspend against budget.
The Western Cape achieved the highest budget execution rate at nearly 100%, with a strong 18% rise in actual expenditure, while KwaZulu-Natal also improved spending despite a reduced budget. Conversely, Gauteng’s capex has deteriorated sharply since 2019, dropping from R10 billion to R3.5 billion (real terms), reflecting broader infrastructure decline and service delivery failures. Provinces like North West and Eastern Cape showed solid spending increases, but overall concerns remain around poor revenue collection, delayed payments, and declining infrastructure investment in key economic hubs.
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