Building and construction sector poised for better days?

South Africa’s building and construction sector appears set for better days.

Elsie Snyman, CEO of construction market intelligence firm Industry Insight, says the first quarter of 2026 provided some evidence that the prolonged downturn in construction activity may be approaching a lower turning point.

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Snyman notes that 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,” she adds.

“Mining of building materials has also increased for 12 consecutive months.”

Challenges

The latest construction sector data however presents a mixed yet stabilising picture, according to Snyman – and while South Africa’s long-term construction opportunities continue to improve, the short-term operating environment remains challenging.

She says the recovery also remains highly uneven, with the Western Cape and parts of Mpumalanga continuing 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.

Watch/read: Infrastructure execution, not funding, is SA’s biggest growth challenge

“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.”

The latest Afrimat Construction Index revealed further signs of recovery in South Africa’s construction sector, with the index reporting a third consecutive quarter of growth.

Government has also renewed its commitment to infrastructure investment and its plans to facilitate about R1 trillion in public infrastructure investment over the next three years.

Building sector

Master Builders South Africa (MBSA) CEO Roy Mnisi says there has been a minor improvement in the building and construction industry, but the views of contractors are mixed and depend on the type of work they are targeting.

He says there was an 11% increase or 74 000 new jobs created in the sector between the first quarters of 2025 and 2026 – but the industry still has a lot of concerns about the availability of work and economic growth.

According to Mnisi there are still many project cancellations and postponements – some because contractors are challenging the supply chain management of project awards, particularly with bigger organisations, such as the South African National Roads Agency (Sanral), Eskom and the Trans-Caledon Tunnel Authority.

Read: Sanral engineering consultants panel award declared unlawful

“If we were to deal with that, it will make a huge difference in regard to the implementation of those projects,” he says.

Mnisi adds that MBSA is optimistic that a lot of things will happen because massive projects are being rolled out or are pending in all provinces.

“It’s just that the pace at which they are coming is very slow. If we were to get them running … it will make a huge difference to the sector.”

Infrastructure realities

Industry Insight highlighted the significant gap between infrastructure ambition and infrastructure delivery.

Infrastructure South Africa (ISA) acting head Simphiwe Ndlovu told parliament’s Select Committee on Infrastructure last week that  government had underspent on the allocated budget of R1 trillion in public infrastructure investment over three years by R52 billion in the 2024/25 to 2025/26 financial years.

He said most advertised tenders are still being cancelled or not awarded, there are construction mafia-related disruptions and delayed payments to contractors, while limited access to finance continues to constrain project execution.

Ndlovu told the committee that a recent high-level analysis revealed that more than 70% of the total number of advertised tenders had been either cancelled or closed.

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Top 10 entities according to number of tenders cancelled in 2025:

• Eskom (159)
• Passenger Rail Agency of South Africa (150)
• Transnet (129)
• Department of Water and Sanitation (96)
• Road Accident Fund (80)
• Public Works (69)
• Department of Forestry, Fisheries and the Environment (62)
• South Africa Civil Aviation Authority (60)
• Johannesburg Water (53), and
• Airports Company of South Africa (51).

Ndlovu said the critical issue is that gross fixed capital formation is currently at 13.1% as opposed to the National Development Plan target of 30% by 2030.

He said this results in a huge investment gap and the government would need to invest about R1.6 trillion year on year to close that gap by 2030.

Ndlovu said there is currently also a decline in public sector capital spending.

He said about R52 billion was returned to National Treasury over the mid-term budget period, which resulted in a loss in opportunity to pave 5 000km of low volume rural roads based on some of Infrastructure SA’s data analytics.

Read: Building South Africa’s digital future: Infrastructure, skills, and the AI opportunity

Ndlovu said the other big issue is that of the current pipeline, only 2.6% represents public-private partnerships and this needs to be significantly ramped up to attract private sector funding and financing.

“It technically means we delay roads, water, energy, human settlement and economic opportunities for the country.”