Construction boom props up Zim economy

The ongoing construction projects are propping up Zimbabwe’s economy with some analysts describing the level of activity as not having been seen in many years.

The industry is experiencing rapid growth, driven by public investment in infrastructure projects, private sector investment in residential and commercial projects, and the increasing demand for housing and other infrastructure in urban areas.

From peri-urban, small to bigger towns as well as cities–there is an extraordinary construction boom that will inevitably reshape the landscape of the country’s real estate.

New residential and commercial properties are being built and old buildings are being spruced up.

Apart from the development of commercial and residential properties, other several big projects are being funded by the Government including roads and dams.

“There is an extraordinary building boom in industrial, commercial, and residential properties. I would say the level of activity is just unbelievable,” said Jacob Ruzive, a technical manager with a local construction and engineering firm. “Our order book is so strong and we still have a lot of clients coming with various projects,” he added.

Ruzive said despite his company being smaller relative to other construction firms “the size of our aggregated smaller contracts is quite bigger and could actually equal that of what bigger firms would generate pre-construction industry boom.”

“We are actually overwhelmed such that we are declining to take some contracts, but of course, there are other players who are filling that gap. The business is big at the moment.”

A consultant with a Harare-based contractor told this publication the projects are no longer concentrated in urban centers.

“You will be shocked to see some of the houses or commercial centers being constructed in rural areas…standard structures, so it’s unlike where our business was previously largely concentrated by towns,” he said.

A survey by this publication in Harare showed several ongoing projects around the city.

The projects include the construction of commercial structures such as shopping malls, factory shells, service stations, warehouses, and learning centers. The survey has also revealed massive activity in the construction of houses around the city.

In several, instances some buildings are being destroyed to pave the way for the construction of new ones. There is also sprucing up of run-down properties to give them more value.

“It is interesting to also note that the boom in the construction industry is not being driven by those in the commercial sector but even individuals who are accumulating properties as investments. Unlike in previous years where people would keep money in banks, they are keeping it in brick and mortar considering what happened before,” Harare-based economist Carlos Tadya said, in an apparent reference to the hyperinflation era of between 2000 and 2008 where savings were wiped out by inflation.

“Even if one secures (a house), it doesn’t end there. People are actually looking for more land to build.”

“You will fund out many people who own more than one house.”

The booming construction industry has triggered demand for infrastructure inputs, with some suppliers failing to meet demand.

“Meeting demand is a big challenge unless we massively invest in boosting capacity,” said an official with a brick-making firm.

BETA Bricks, the leader in the brick making has invested in extra capacity to meet the rising demand.

Pretoria Portland Cement (PPC) said last month that the growth of the company would be underpinned by demand from the domestic market.

Transfers of business

The booming construction industry has resulted in the transfer of business that used to be enjoyed by bigger players, especially the contractors and hardware to smaller businesses and individuals.

“The boom is benefiting a lot of smaller companies, the hardware, and individuals.

Even bigger companies are shunning big contractors for smaller contractors,” said Ruzive.

The increasing demand for housing and other infrastructure in urban areas is expected to continue driving the construction industry going forward as cities continue expanding, with the rising demand for new housing, office space, and other infrastructure to accommodate the growing population.

However, the construction industry in Zimbabwe is also facing some serious challenges, including access to finance, shortages of skilled labour, and high cost of building materials.-ebusinessweekly