This research delves into the domain of construction and development activities in Durban, with a particular focus on building plan approvals during the initial quarter of the 2023/24 fiscal year. This report aims to offer valuable insights into the dynamic landscape of construction within the city. By examining the patterns, trends, and key factors influencing building plan approvals, this research seeks to illuminate the constantly evolving construction sector in Durban, ultimately enhancing our comprehension of its economic consequences and prospects for development
The value of building plans approved experienced a significant decline over the last three quarters. The highest value was recorded in Q2 2022/23 at R6,5 billion, while the lowest was in Q1 2023/24 at R1,5 billion. The highest number of plans approved was in Q2 2022/23 with 1376, while the lowest was in Q3 2022/23 with 849 followed by Q1 2023/24 with 979. When comparing year-on-year data, the value of building plans increased by 21.4%, going from R11.3 billion in Q2 21/22 - Q1 22/23 toR13.7 billion in the cumulative period the aggregate of Q2 22/23 - Q1 23/24. In contrast, the year-on-year number of approved building plans decreased by 7.7%,falling from 4,685 to 4,322 in the same Q2 22/23 - Q1 23/24 period. This shift reflects a similar degree of instability in construction activity, emulating the volatility trend observed in the economic growth of the construction sector.
Figure1: Building plans approved
Sources: Stats SA, building plans passed by larger municipalities at the current price, 2023
North: In Q1 2023/24, the North region experienced a substantial decline in the building plans approved. The total value of approved plans decreased from R1.1billion in Q1 2022/23 to R741,3 million in Q1 2023/24, signifying a significant slowdown in investment. However, the number of approved plans also saw a slight increase, rising from 371 to 379. The North is still the fastest-growing region despite the decline during Q1 2023/24. In the year-on-year comparison, the North region experienced a significant decline in the value of building plans, going from R3,4 billion in Q2 2021/22 - Q1 2022/23 to R1,8 billion in Q22022/23 - Q1 2023/24. However, in terms of the number of building plans approved, there was a modest but positive year-on-year growth, with approvals increasing from 1,294 to 1,370 in the same timeframe.
South: While the South region has experienced growth in terms of value, it did show a decline in the number of building plans approved. In Q1 2023/24, the total value of approved plans increased significantly from R113,8 million in Q12022/23 to R238,7 million. However, the number of approved plans decreased from124 to 112. In the year-on-year comparison, the South region saw a substantial increase in the value of building plans, surging from R794,8 million in Q2 2021/22 - Q1 2022/23 to R2,9 billion in Q2 2022/23 - Q1 2023/24. However, in terms of the number of building plans approved, there was a decrease from 447 to 332 in the same year-on-year comparison. The South still put more investment during this period, with a focus on rebuilding the flood damages and maintaining construction activity.
Central: The Central region exhibited a notable decline in the total value of approved plans, dropping from R823.5 million in Q1 2022/23 to R150.7, million in Q12023/24. This decrease in value might indicate a shift in priorities or projects in this region. The number of approved plans also decreased from 354to 149. In the year-on-year comparison, the Central region also experienced a notable increase in the value of building plans, rising from R4,3 billion in Q2 2021/22 - Q1 2022/23 to R6,9 billion in Q2 2022/23 - Q1 2023/24. This indicates substantial expansion in construction activity within this region. In contrast, the number of building plans approved decreased from 1,130 to 989 in the same year-on-year period. While it experienced a decline in activity, the Central Region remains important in terms of construction and development, even though it is facing a slowdown.
Inner West: The Inner West region saw a decrease in the total value of approved plans, from R262,5 million in Q 2022/23 to R171,7 million in Q1 2023/24. This decrease may be attributed to a re-evaluation of construction projects in the area. However, the number of approved plans also decreased from 300 to 164. In the year-on-year comparison, the Inner West region witnessed a decrease in the value of building plans, dropping from R846,6 million in Q2 2021/22 - Q12022/23 to R806,3 million in Q2 2022/23 - Q1 2023/24. In terms of the number of building plans approved, there was a modest year-on-year growth, with approvals increasing from 862 to 925.
Outer West: Q1 2023/24 witnessed a decline in the total value of approved plans in the outer West region, decreasing from R279,0 million in Q1 2022/23 to R244,9million. The number of approved plans also decreased from 188 to 175. In the year-on-year comparison, the Outer West region also experienced a decline in the value of building plans, moving from R1,9 billion in Q2 to2021/22 - Q1 2022/23 to R1,3 billion in Q2 2022/23 - Q12023/24. Similarly, the number of building plans approved decreased from 952 to 706 in the same year-on-year comparison, suggesting a decrease in construction projects or approvals in this region. R115,9
In Q1 2023/24, the most significant and least significant contributors to the City's local investment are as follows:
Figure2: Local investment per property type
Sources: Stats SA, building plans passed by larger municipalities at the current price, 2023
Additions and Alterations: In Q1 2022/23, the total Additions and alterations resulted in an investment of R1,1 billion, making it the largest contributor in this category. In Q1 2023/24, the value of approved plans experienced a decline of R930,8 million, even though additions and alterations remained a major contributor. The North region saw an increase from R488,3 million in Q1 2022/23 to R526,8 million in Q1 2023/24, indicating growth in this area. Conversely, the Central region experienced a substantial decrease from R311,4 million in Q1 2022/23 to R123,9 million in Q1 2023/24, signifying a decline in Additions and Alterations. The Inner West also showed a decrease from R155,6 million in Q1 2022/23 to million. The South region displayed growth, with the value rising from fromR59,8 million in Q1 2022/23 to R78,2 million in Q1 2023/24. The Outer West region had a decrease from R105,6 million in Q1 2022/23 to R85,9 million. Therefore, in Q1 2023/24, the North and South regions were the fastest-growing areas for Additions and Alterations in terms of the value of building plans
Residential Buildings: The residential sector witnessed noteworthy changes during this period. In Q12022/23, the total value of approved building plans at R654,1 million, which decreased to R419,3 million in Q1 2023/24. In Q1 2022/23, North held the leading position with a substantial value of R220,5 million, showcasing its prominence in residential construction. However, Q1 2023/24 witnessed a change in the landscape as North's contribution decreased to R160,4 million. Conversely, the South demonstrated growth in this sector, increasing its contribution from R31,6 million in Q1 2022/23 to R44,1 million in Q1 2023/24, indicating a growth in the residential market. Meanwhile, the Central region’s contribution plummeted from R206,7 million in Q1 2022/23 to R26,7 million in Q12023/24, marking a substantial decline. The Inner West region also experienced a dip in its contribution, falling to R47,4 million in Q1 2023/24 from Q12022/23. On the other hand, Outer West saw an upswing, becoming a more significant player with a contribution of R140,8 million. Therefore, in 2023/24, the South and Outer West regions were the fastest-growing areas for Additions and Alterations in terms of the value of the building plan
Industrial and Warehouse Space: When comparing the figures for Industrial and Warehouse space in Q1 2022/23 and Q1 2023/24, there is a significant shift in the total value of building plans, as well as within each region. In Q12022/23, the total value for this property type was R475,0 million, but it saw a substantial decrease to R27,9 million in Q1 2023/24. Among the regions, the North stood out with a significant decrease from R340,5 million in Q1 2022/23 to R16,7 million in Q1 2023/24. The South region also experienced a decline from R22,4 million to R11,1 million during the same period. In contrast, the central region witnessed a complete halt in building plans for Industrial and warehouse space, going from R108,6 million in Q1 2022/23 to zero. The Inner West and Outer West regions showed minimal activity, with the Inner West decreasing from R3,4 million in Q1 2022/23 to R133,000 in Q1 2023/24 and the Outer West remaining at zero for both quarters. Therefore, in Q1 2023/24,the North region was the fastest-growing area for Industrial and Warehouse space, while there was a concerning dramatic fall in building activity in the Central resulting in a complete halt. fastest-growing
Shopping Space: In Q1 2022/23, the total value for Shopping space was R140,4 million, which decreased to R116,8 million in Q1 2023/24. Notably, the North region saw an i from R9,6 million in Q1 2022/23 to R11,5 million in Q1 2023/24, making it the fastest-growing region for Shopping space during this period. The South region experienced a substantial surge, going from zero in Q1 2022/23 to R105,3 million in Q1 2023/24, marking it as another notable contributor. On the other hand, the Central region showed a decrease from R76,1 million to zero in Q12023/24, while the Inner West and Outer West regions remained at zero for both quarters in terms of Shopping space. Therefore, in Q1 2023/24, the North and South regions emerged as the fastest-growing areas for Shopping space, despite the overall decrease.
Office and Banking Space: In Q1 2022/23, the total value for this property type stood at R26,8 million, which saw a significant increase to R50,7 million in Q1 2023/24. The most striking change occurred in the North region, where there were no plans in Q1 2022/23, but it surged to R25,3 million in Q1 2023/24, making it the fastest-growing region for Office and banking space during this period. In contrast, the South region showed no activity in both quarters. The Central region also remained stagnant with no activity in both periods. The Inner West region experienced a decrease from R26,8 million to R8,2 million in Q1 2023/24. Finally, the Outer West region displayed growth, rising from zero in Q1 2022/23 to R17,2 million in Q1 2023/24. Consequently, in Q1 2023/24, the North and Outer West regions emerged as the fastest-growing areas for the Office and banking space, contributing to the overall increase.
Other Non-Residential Buildings: In Q1 2022/23 and Q1 2023/24 highlights significant shifts in various regions, particularly within the public sector investment category. In Q1 2022/23, the total value for this property type was R120,6 million, which saw a substantial increase to R1,6 million in Q1 2023/24.Notably, the North region showed a remarkable transformation, shifting from zero activity in Q1 2022/23 to R687 000 in Q1 2023/24, making it the region for Other non-residential buildings during this period. Meanwhile, the South region also displayed growth, rising from zero in Q12022/23 to R9 000 in Q1 2023/24. On the other hand, the Central region, which had accounted for the entirety of the value in Q1 2022/23, experienced a complete shift, showing no activity in Q1 2023/24. Additionally, the Inner West region remained static with no recorded activity in either quarter, while the Outer West region displayed growth, increasing from zero in Q1 2022/23 to R930000 in Q1 2023/24. Consequently, in Q1 2023/24, the North and Outer West regions emerged as the fastest-growing areas for Other non-residential buildings, contributing significantly to the overall increase, mainly associated with public sector investments.
In summary, the analysis of building plans across various property types and regions indicates an overall decrease in both the total value and the number of building plans approved for Q1 2023/24. This decline is observed in categories such as Residential buildings, Additions and Alterations, Industrial and Warehouse space, Shopping space, and Office and Banking space. The potential factors contributing to this decline may encompass a rise in vacant land rates, concerns regarding service delivery that have eroded business confidence, and as a result, there is a notable decrease in the approval rate for building applications. This highlights the importance of the SNDB program to drive automation that streamlines business processes, fostering a more conducive environment for economic growth and development.
1. Subnational Doing Business (SNDB): an independent report of the global Doing Business study, benchmarks 27 locations, covering five Doing Business indicators: starting a business, dealing with construction permits, registering property, paying taxes and enforcing contracts, World Bank report, 2021
2. Stats SA, building plans passed by larger municipalities at the current prices, 2023
