Abacus DIVISIONS September 2012 News !
No signs of a fast turnaround in fortunes for stakeholders in the building construction industry - Abacus DIVISIONS
Building costs and prices as per tenders for buildings to commence in January 2013 have now plummeted another 15% below what quantity surveyors estimated they would be, indicating that there are no real signs of a fast turnaround in fortunes for the stakeholders in the building-construction industry, said Org Geldenhuys, managing director of property development and marketing company, Abacus DIVISIONS .
“A large number of construction companies remain in dire straits and many are tendering for projects at cost price just to keep machines and salary costs running – or covered – until the market picks up. But there is unlikely to be any major move upwards in the near future,” said Geldenhuys.
He said while growth in the building-construction industry remain muted, “now is the time to seize the opportunity to build - and reap the benefits of lower pricing”.
Geldenhuys said there are only four stands left for sale in the R2 billion office park development in Irene – Route 21 Corporate Park. Abacus DIVISIONS is one of the key companies marketing the office park – and has been doing so for the past 10 years, accumulating an property investment portfolio in the office park now valued at more than R80 million.
“We expect prices on stands to go up as stock is diminishing – and re-sales will be minimal as we have had no speculators buying stands in this area for some time now. Most were owner occupiers or investors wanting to develop.”
Despite favourably low interest rates, business confidence is taking a knock. A diminished sentiment among business decision makers possibly points to companies cutting back on additions to fixed capital. “If one considers that private enterprise makes up as much as 60% of fixed capital formation, which, in turn, makes up 20% of the total expenditure on gross domestic product (GDP), then any prolonged weakness in business sentiment among business decision makers is not a good overall sign for the South African economy.
“In fact,” said Geldenhuys, “with South Africa’s economic growth seemingly coming under threat, there is a good chance that the Monetary Policy Committee will drop the interest rate when next it meets.”