The shutdown of exports from the epicentre of the coronavirus outbreak,Wuhan in Hubei province – the Chinese hub for supplying metal, mechanical, electrical, electronics and solar products – is beginning to affect construction and development sites in Cape Town.
Experts say the lockdown in the east is affecting supply of, among other goods, lifts; escalator components; bathroom and kitchen finishings; tiles; generators; transformers and glass.
Developers on contract deadlines, unable to source materials from their regular suppliers, have been left scrambling to find other options – at added cost. “It’s that last third of the construction programme that will be affected,” says Deon van Zyl, chairman of the Western Cape Property Development Forum.
Bricks and mortar are produced in South Africa, but finishes involving Chinese imports are hard hit. “Developers will make feasibility studies to see how long they can wait without materials for which they have likely already paid.
If desperate, they’ll have to fork out again to ensure a project is completed in good time,” says Van Zyl. Bill Rawson, chairman of Rawson Properties, says it’s bigger developments where contractors have to abide by the architects’ specifications that are most likely to be hit.
“Fortunately, many products are still made in Europe. However, Italy has now been affected, so some products could be delayed.”
Allen Bodill, executive director of Master Builders Association Western Cape, says, at this point, members are beginning to report isolated concerns around delayed deliveries from China. While the supply side was being affected, the property market was, for now, taking a “wait and see” approach.
However, experts are all aware the virus implications for the market can become “very serious, very quickly”. In a worst-case scenario, if the virus spreads rapidly, construction firms might have to close sites and quarantine workers.
While Bodill believes it is too early to accurately predict the effect on the local construction contracting market, he says high absenteeism rates – should the virus spread among the workforce – “is certainly likely to have a detrimental effect”.
“Given the labourintensive nature of the industry and the means of travel most workers employ to reach their work sites each day, it is probably fair to assume they are likely to have a high risk of exposure to the virus.”
Rawson, like other developers, has addressed construction workers on the virus and precautions they need to take to keep safe and he says this week they will also introduce structures to manage the situation, should there be any outbreak on their sites. This multifaceted impact is the last thing the industry, already hard hit by a stuttering economy and bound together by red tape, needs.
Nevertheless, it’s an adept market, used to market changes, strikes and bureaucracy and knows how to ride the punches. Estate agents indicate they have not yet experienced any sale cancellations as a direct impact of the coronavirus, Van Zyl believes “the imminent Moody’s downgrade will probably affect the market more than the virus right now”.
FNB’s John Loos agrees. “Yes, the virus is likely to have an impact on the market, but it is tough to isolate that impact from the many other negative factors already playing a major role in the property development and building construction industry.
“These areas are already under significant pressure because of the jagged impact on property demand from years of economic stagnation.” Other experts aver the virus might affect the tourism industry; Cape Town’s short-term rental market could be negatively impacted by a major slowdown in visitors.
On the plus side, some believe the shutdown in China will give the country the impetus to relook at local manufacturing and production. That, says Loos, is a great idea but “getting manufacturing going in a far bigger way requires a whole lot of problems to be fixed”.