There remains a significant divergence between the housing and commercial private building industries, according to Stats SA who released the building statistics today. The commercial building industry remains in dire straits, largely due to a huge slump in demand for office space, as well as very weak demand for retail buildings. While the residential building market has shown a decent recovery over the last 12 months or so, the same absolutely cannot be said for the commercial building industry. According to Stats SA, while overall there was an increase in private building activity in November, up by 4.4 percent y-y, in terms of the number of building plans reported as completed, the non-residential industry saw a decline of 15.8 percent in the month, operating at already very low levels of activity.
What was really alarming in this month’s data release, was that there were only 395 SQM of ‘office and banking space’ reported as completed in November 2021. This is by far the lowest number ever recorded since 1994 when the data started to be collected, excluding of course the two months of hard lockdown in April and May of 2020, when the industry was forced to shut down. This segment practically came to a standstill in November. While there were just over 20 percent less SQM of retail space completed in November y-y, there was still some activity, with over 18 000 SQM completed. The industrial and warehousing segment remains the only glimmer of hope for the overall non-residential segment, and saw growth of 17 percent in November y-y, with over 80 000 SQM completed.
Activity in the private residential market was much better in November, with growth of 12.9 percent overall in November y-y, driven up by free standing homes bigger than 80 SQM segment, which saw 15 percent more plans completed in the month, which is good.
In terms of building plans approved, which is a leading indicator of building in the pipeline, the figures are similarly divergent between the residential and non-residential industries respectively. Although the figures were much better for the office and banking segment, which saw over 18 000 SQM approved, which was growth of over 200 percent off a low base. Overall, SQM approved for private non-residential buildings were however down by 32.3 percent in November y-y, with declines for both retail and industrial buildings of 69 percent and 44 percent respectively. The figures were good for the residential industry in terms of approvals, with a 7.7 percent increase reported in November y-y.
Overall it was a mixed month for the private building industry which is expected to come under increased pressure in 2022. While the industry is still recovering off the record lows of 2020, interest rates that are expected to go up a few times this year, as well as an extremely lacklustre economic recovery do not inspire hope for the future of the segment.
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