South African builders are flourishing in Australia
A trend towards high-rise-apartment living in Australia has been good news for several South African construction firms.
According to financial results released this week reputed South African building companies like Wilson Bayley Holmes-Ovcon (WBHO), Aveng and Murray and Roberts (M&R) doing business in Australia is proving to be very profitable.
These companies have been contracted in various large scale projects including skyscraper apartment buildings and multi-billion Rand shopping complexes. South African contractors such as WBHO, Aveng, and Murray & Roberts (M&R) now generate substantial portions of their revenue in Australia, where the slowdown in mining investments is impelling contractors to diversify those businesses, reported the Business day this week.
Results of a Barclays Research survey, taking stock of the Australian housing market, noted that "there is a growing backlog of homes under construction as builders have not kept pace with demand".
"This is largely due to a structural shift towards highrise apartments, which now account for a record 25% of (residential building) approvals."
The Barclays research survey also found that total construction fell in both the first and second quarters of the year, with mining-related construction continuing a downward trend.
However, their report found that, "housing continues to do well" and the non-residential building market appears to be recovering.
Australia’s growth in the building market is apparently being fuelled by added Asian investment and interest in residential apartments said WBHO. The trend is further helped along by retail developers starting to deliver large developments to the construction market. WBHO says that by the end of June this year it has secured Australian building projects to the value of more than R22.9 billion. This is double the amount of a year earlier, which came in at R10.8 billion.
Amongst WBHO’s projects are three large-scale retail projects in Melbourne, two of which are worth more than R3.5bn. Probuild who secured the business deal, is one of the most successful subsidiaries in the WBHO’s stable, is also the preferred contractor on a number of residential towers. Their projects include a 77-storey block.
WHBO’s success was boosted even further when more recently than June Probuild also clinched a R2.97billion building contract in Brisbane.
Speaking for WBHO the group’s CEO Louwtjie Nel said that Australian building projects already contributed to as much as 25% of the company’s operating budget and the firm plans to increase this contribution to their books to at least 33% within the next two years.
M&R on the other hand also reported last week that the investment boom in Australia’s liquefied natural gas sector was slowing down, and the firm was doing fewer greenfields projects in the sector but more short-term service work. M&R is SA’s largest listed contractor and has a big presence in Australia’s oil and gas and commodities sectors through its Clough subsidiary.
While Aveng reported that despite the slowdown in mining-related infrastructure spend in Australia, "the market still offers good opportunities, particularly in transport-related infrastructure, and oil and gas pipelines".