South Africa construction market to be boosted by 10-15 year new city project in Modderfontein
The South African construction market is to be boosted by a new 10-15 year project funded by Chinese company, Shanghai Zendai, to build a new city in Modderfontein in eastern Johannesburg. Once compete, the city will include 35,000 new houses, an education centre, a hospital, and a sports stadium and will house around 100,000 residents.
Chinese firm Shanghai Zendai bought the 1,600 hectare plot of land back in November 2013 for R1.06 billion from South African chemical and explosive company AECI and has plans to develop the site into a world financial centre to rival New York City and Hong Kong. The project is forecast to take around 15 years to complete and will provide jobs for local contractors, engineers and other workers in its construction, as well as 100,000 jobs in the new services available upon completion. The new city site is located on the Gautrain route between the OR Tambo International Airport and the central business district of Sandton in eastern Johannesburg, and will soon include a new Modderfontein station to enable easy access.
The transaction to purchase the property was one of the single largest foreign investments ever in South Africa. Shanghai Zendai is a Hong Kong listed investment company that develops and manages property projects in northern China, Shanghai City and Hainan province and hopes that the Modderfontein project will create a new hub for Chinese firms looking to invest in sub-Saharan Africa.
South Africa is the second largest economy on the African continent and the construction sector is set for a boost due to the South African government’s National Infrastructure Plan which focuses investment in energy, transportation, telecommunication and housing sectors. The construction sector experienced a major boost in 2010 when South Africa hosted the Fifa World Cup, but the economic downturn caused a slow down of growth. Recent government focus on infrastructure development has seen a rapid urbanisation in the country and the project at Modderfontein illustrates the significant influence of foreign investment. Foreign investment is one way by which the South African construction industry is overcoming the challenge of cost overruns that many domestic companies face due to the unavailability of funds, the time-consuming roll out of labour, labour unrest, and major project delays.
Key players in the South African construction market should be aware of the upcoming trend towards ‘green’ buildings. In an effort to promote sustainable development, construction companies are increasingly focusing on developing energy-efficient buildings and sustainable construction solutions.
Source: Companies and Markets.com
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