The International Construction Market Survey (ICMS) for 2022 has been released by Turner & Townsend, an independent professional services firm active in the worldwide real estate, infrastructure, and natural resources sectors.
The ICMS is Turner & Townsend’s largest and most in-depth research, addressing the opportunities and challenges given by the economic market circumstances that affect the construction industry.
It draws on data and expertise from 90 global markets.
According to the report, while most markets have somewhat recovered from the COVID-19 pandemic’s effects and the lockdowns that followed, Russia’s invasion of Ukraine and fresh lockdowns in China are starting to have an impact on the construction industry.
Some African cities, such as Johannesburg, Cape Town, Gaborone, Harare, Nairobi, Kigali, Kampala, and Lagos, have significantly recovered.
However, additional growth is necessary to reach the market’s full potential and return the gross domestic product (GDP) to pre-pandemic levels.
Additionally, it is probable that the continent-wide inflation rate would lower consumer demand, further affecting growth in 2022.
The research highlights that during the past year, activity in the construction sector has slowed.
The cost of building, which has increased as a result of supply-chain constraints brought on by the pandemic and the conflict in Ukraine as well as the growing price of electricity, is a significant contributing element.
Due to bottlenecks in the supply of materials, these variables have raised risk for contractors and pushed forward project completion dates.
Project teams have been compelled to implement strategies to mitigate this, such as early procurement, early contractor payment, or contracts where the client sources and issues their own materials.
Positively, the ICMS survey reveals that the residential and social housing construction sector in Africa is still robust, and that the industrial, manufacturing, and logistics sectors are expanding at some of the fastest rates ever.
The rapid expansion of e-commerce websites in Africa has boosted warehousing and the transit of goods, and the spread of remote working has resulted in an increase in the need for data centers across most countries.
Additionally, the expansion of renewable energy in Africa offers the construction sector a number of options.
There are many areas of Africa where the local population still lacks access to electricity, and decentralized renewables present the opportunity to provide affordable local electricity.
The continent is rich in hydro, solar, and wind energy, making the use of renewables a more appealing scenario for many African nations.
Furthermore, many countries would no longer be dependent on the importation of fossil fuels if they switched to renewable energy, which would also provide energy security in the future.
The research indicates that the IMF claims that sub-Saharan Africa would need to treble its anticipated growth rate to match the growth witnessed in the post-pandemic period in other industrialized economies.
A construction-led recovery in Africa faces numerous difficulties this year. High inflation and rising debt levels deter foreign investment, which has the knock-on effect of making financing circumstances challenging.
Turner & Townsend forecasts that 2022 will be another challenging year, although some drivers of inflation-easing, such as gasoline, transportation, import, steel, and raw material costs, as well as costs of imported commodities, may significantly help the African nations resume economic recovery.
Distributed on behalf of Turner & Townsend by APO Group.
Contact Stephen McCartney, Regional Managing Director for Africa, at stephen.mccartney@turntown.com or visit TurnerAndTownsend.com for more information.
Turner & Townsend is an independent provider of professional services with a focus on program, project, cost, and advice management in the real estate, infrastructure, and natural resource sectors.
With 112 offices spread over 45 nations, we are able to control risk while maximizing performance and value during the development and management of our clients’ assets.