Western Cape Property Development Forum has called for public projects that are
not dependent on private sector funding to be fast-tracked after the
coronavirus pandemic has passed.
According to chairperson Deon van Zyl, this will help the industry survive and create infrastructure capacity for growth.
Van Zyl says the property development and construction sector is already under strain.
He wants a stimulus package for the industry to cushion it against losses related to the pandemic, saying that that construction-related preliminary and general payments (P&G) costs are part of project feasibilities that do not take into account the impact of the virus outbreak.
According to Van Zyl, the salaries and wages component of P&Gs is the grease that allows contractors to keep construction workers on site and ensure that money flows to staff and labour. With many private projects funded via the formal financial industry, P&Gs are generally only payable on active construction sites.
" We need stimulus packages agreed upon by the financial institutions to also look after the construction sector's labour force. We need the construction sector to survive this crisis and come out intact if we are to see our economy recover," Van Zyl said.
"The closures of these active construction sites will, therefore, see clients pull back on these payments, purely because the money will not be available from the financial institutions as per their current development finance agreements," he added.
Van Zyl believes financial support for the industry will support economic recovery.
"The technical capacity to construct infrastructure and buildings is one of the most important assets that any country [can have] as construction capacity is synonymous with growth."
He says the property and construction industry has called on President Cyril Ramaphosa to remember contractors and sub-contractors in these difficult times.
"We call on President Ramaphosa to consider the impact the Covid-19 virus is having on the civil and building construction sectors, particularly when he addresses Treasury and banking fraternity which provide development funding for public and private sector projects," he said.
"It is critical that that both private and public sector developers are given the financial latitude to be able to support contactors and sub-contractors to survive these difficult times."
He also called for any abuse of stimulus packages to receive harsh penalties.
Fin24 reported in February that local construction projects are being impacted by delayed shipments of construction material due to the impact of the coronavirus pandemic.Natalie Reyneke, a director at MDA Attorneys, said project delays have significant cost implications, while Dr Michael Ade, chief economist of Seifsa (the Steel and Engineering Industries Federation of Southern Africa) told Fin24 that the coronavirus had had a significant impact on the industry.
* Compiled by Carin Smith