Lacklustre public construction

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RESIDENTIAL CONSTRUCTION: Is making good progress.

STELLAR progress in the real estate construction sector is being offset by the lacklustre evolution of public construction works, which is preventing the industry from enjoying the fruits of a new housing boom and reaching its full potential. 

The anaemic growth of new public works contracts means that, while the home-building industry is ramping up its efforts, there still isn’t enough demand for raw materials to take residential construction to another level. 

The sales industry is in rude health with more than 100,000 purchases in the second quarter of 2016 alone, the highest level since 2011, while employment in the real estate sector has jumped 15 per cent this year. 

Analysts expect that between three and four million new homes will need to be built over the next few years to account for rising demand and an expanding young middle class, but the raw material figures paint a somewhat contradictory picture.

Cement consumption and concrete production are both down, with cement consumption approaching low levels not seen since 1965. This is largely because residential and commercial buildings account for a mere 20 per cent of cement business, meaning that the entire industry is being negatively impacted by weak public construction contracts which normally account for the bulk of the sector’s profits. 

 

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