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Construction Monitor May 2026

Western Cape airport pushes civil awards up in April, construction cost inflation on the rise with lower economic growth expectations. 

May 2026 reinforced a theme that has become increasingly evident over the past year: South Africa's long-term construction opportunities continue to improve, but the short-term operating environment remains challenging.

Government remains firmly committed to infrastructure-led growth, with significant investment still planned in energy transmission, logistics, water infrastructure, renewable energy and industrial development, despite falling in real terms over the past decade. The policy direction remains encouraging. Major reforms in the energy and logistics sectors continue to advance, private-sector participation is gradually increasing. Across many provinces, we continue to see new project announcements and  investment interest. The property sector  has seen real house price growth, with demand for new housing on the upswing.

However, the reality on the ground remains more complex. Economic growth expectations have weakened; inflation has accelerated and the Reserve Bank responded with a 25-basis-point increase in interest rates during May. Higher oil prices, global uncertainty and ongoing infrastructure constraints continue to weigh on business confidence and investment decisions. While South Africa recorded a healthy trade surplus during the first four months of the year, the economy is still struggling to convert favourable commodity prices and investment commitments into stronger growth and broader economic momentum.

For the construction sector, the latest data presents a mixed yet stabilising picture. The first quarter of 2026 provided some evidence  that the prolonged downturn in construction activity may be approaching a lower turning point. Investment in construction works, which includes roads, water, energy and other civil engineering infrastructure, increased by 5.1% year-on-year during the first quarter, while non-residential building investment returned to growth. Importantly, wholesale sales of construction materials continue to outperform retail sales, suggesting that larger projects and infrastructure programmes are increasingly supporting activity, even as household-driven construction remains subdued. Public-sector infrastructure expenditure also showed signs of improvement, while tender activity remains relatively healthy in several provinces. Mining of building materials have also increased for 12 consecutive months.

That said, recovery remains highly uneven. The Western Cape and parts of Mpumalanga continue to benefit from strong investment pipelines, while provinces such as Gauteng, the Eastern Cape and KwaZulu-Natal continue to face significant infrastructure, governance and funding challenges. Across much of the country, the biggest constraint is no longer a lack of planned projects, but rather the ability to convert plans, budgets and investment announcements into physical construction activity. Delays in implementation, weak municipal finances, ageing infrastructure and service-delivery failures continue to undermine growth opportunities and construction market performance.

Cost pressures also remain a concern. Construction material inflation accelerated further during April, driven largely by energy-sensitive and imported products such as electrical cable, pipes, cement and road-building materials. At the same time, construction-sector liquidations remain significantly higher than a year ago, highlighting the difficult trading conditions still facing many contractors and suppliers. While activity is improving in some areas of the market, competition remains intense and margins remain under pressure.

Looking ahead, there are reasons for cautious optimism. The volume of announced projects, the recovery in infrastructure-related investment, improving procurement activity and continued structural reform momentum suggest that the foundations for an imminent recovery are gradually being established. However, sustainable growth will ultimately depend on execution. South Africa does not suffer from a shortage of plans, strategies or investment commitments. The challenge remains implementation (mainly at local government level), delivery and maintaining momentum in an increasingly uncertain global environment.

At Industry Insight our objective remains to help clients navigate these changing market conditions by providing independent, data-driven insight into where opportunities are emerging, where risks are increasing and how the construction market is evolving. While the road to recovery remains uneven, those businesses positioned in the right sectors, regions and project pipelines are likely to find increasing opportunities as the market continues to stabilise.

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