Non-residential pulls down South African building plans
· The South African
Non-residential pulled down South African building plan in the first two months of 2026. This followed a poor start in January. The real value of building plans completed plummeted by 33.1% year-on-year in January. Surprisingly, there was a recovery in February. The real value of building plans completed rose by 19.0% year-on-year in February.
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These contrary changes were probably caused by weather. There was widespread flooding in Limpopo and Mpumalanga in January. This was followed by a more normal rainfall pattern in February.
The South African Weather Service said Wepener in the Free State had the most rain in the country in February at 216 mm. This compared with Graskop in Mpumalanga which received 646 mm of rain in January after 600 mm in December. Tshanowa in Limpopo reported the most rain in January with a torrential 1 011 mm.
Building plans passed
Unfortunately, the Statistics South Africa data showed the opposite trend for building plans passed. The 2.2% year-on-year decline in January was followed by a 13.3% year-on-year decrease in February. Building plans passed are not weather dependent. Consequently, they provide a better measure of construction activity.
Non-residential plans declined by 22.0% year-on-year in the first two months of 2026. On the other hand, residential plans rose by 1.7%. Contrarily, additions and alterations fell by 12.8%.
Prospects
Economists were expecting a reduction in borrowing costs this year. Unfortunately, the start of the Iran war on 28 February upended this prospect. Instead, rising fuel costs could lead to higher borrowing costs. This may impact South African building plans in the coming months.
Despite the impact of uncertainty, the South African Chamber of Commerce and Industry (SACCI) in its commentary on the March Business Confidence Index (BCI) said the future is future is bright, strong and filled with opportunity.
SACCI noted that although the BCI eased to 131.3 in March from 134.6 in February, the first quarter 2026 average was 7.6% higher than a year ago. It was also the highest in more than a decade.
SACCI noted the dark clouds caused by the Middle East conflict. It noted that the global economy was impaired by the effect of the war in the Middle East and subsequent economic effects.
Furthermore, it said the effect on the South African economy has been less harsh given the price of precious metals and the relatively stronger rand exchange rate.
Non-residential buildings are not that sensitive to rising borrowing costs. On the other hand, residential buildings are sensitive. Additions and alterations tend to be more income sensitive.
Project listing
The Nedbank Project Listing was released in early February. That showed a 16.4% increase in fixed investment plans in 2025. The value of new projects announced rose to R705.6 billion from R606.3 billion in 2024.
The electricity, gas, and water sector dominated investment plans, with projects totaling R415.6 billion. The strength reflects ongoing efforts to address South Africa’s energy crisis. Additionally, it highlights plans to incorporate renewable energy in the generation mix.