making sense of the building, construction and property market in the vuca environment: sept 2013...

1 © BMI-BRSCU© BMI-BRSCU

TowardsMaking sense of the Building-, Construction- and Property-Industry

In the

VUCA ENVIRONMENT

Dr. Llewellyn B. LewisSeptember 2013

THE STRATEGIC FORUMA place of assembly

for strategic conversations

THE STRATEGIC FORUMwww.strategicforum.co.za

BMI

Studium Ad Prosperandum

Voluntas in Conveniendum

BUILDING RESEARCHSTRATEGY CONSULTINGUNIT cc

Reg. No. 2002/105109/23

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STRATEGY CONSULTING

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Reg. No. 2002/105109/23

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2

Volatility, Uncertainty, Complexity and Ambiguity will be the order of the day. We can accept that the new normal is also underway in South Africa. It is evident that it is not technical issues bedevilling the Industry. Many Political, Economic and Social issues affect the trends in the Industry, most of which are out of control of the Industry as the following facts and anecdotes illustrate. As Mamphela Ramphele said in 2008, it was astounding that SA’s business sector had remained largely silent, even on failures that directly affected it. “The private sector is too scared to upset (the government) ... but its silence is creating the seeds of social instability.”

she said. (Business Day, 3 December 2008).

THE VUCA ENVIRONMENT: THE NEW NORMALwww.strategicforum.co.za

3

Across every sector of society, decision makers are struggling with the complexity and velocity of change in an increasingly interdependent

world.

The context for decision-making has evolved,

and in many cases has been altered in revolutionary ways. In the decade ahead, our lives will be more intensely shaped by

transformative forces, including economic, environmental, geopolitical, societal and technological seismic shifts.

The signals are already apparent with the

rebalancing of the global economy, the presence of over seven billion people and the societal and environmental challenges linked

to both.

The resulting complexity threatens to overwhelm countries, companies, cultures and communities.

Klaus SchwabFounder and Executive ChairmanWorld Economic Forum


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15

THE INDUSTRY DASHBOARD: MORTGAGE ADVANCES

YTD Actual YTD FC

-2.43% 4.13%

-3.82% 1.72%

-52.61% -20.70%

-3.50% 3.73%

1.51% 2.70%

0.66% 2.99%

Jul-13 2013 vs 2012

MORTGAGE ADVANCES (VALUE)

Mortgage Advances on Existing Buildings

Mortgage Advances on Construction of New Buildings

Mortgage Advances on Vacant Land

Total Gross New Mortgage Loans and Re-advances

Total Mortgage Loans Outstanding

Mortgage Advances Weighted Average

PROGNOSIS: YTD ACTUAL VS FORECAST: MORTGAGE ADVANCES

16

THE INDUSTRY DASHBOARD: MORTGAGE ADVANCES, TOTAL GROSS: 2013

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Y/Y Cum Actual 2007 30 111 71 925 116 917 153 368 199 882 233 827 270 620 307 387 339 290 376 890 413 167 441 410

Y/Y Cum Actual 2012 16 758 40 402 63 876 82 716 102 296 122 292 141 944 160 781 179 147 200 723 221 734 238 146

Y/Y CUM Actual 2013 15 597 34 362 53 754 74 682 96 973 118 009 138 756 160 759 182 301 205 994 228 833 247 038

Y/Y Cum % Change Actual 2013 vs 2012 -6.93% -14.95% -15.85% -9.71% -5.20% -3.50% -2.25% -0.01% 1.76% 2.63% 3.20% 3.73%

-20%

-15%

-10%

-5%

0%

5%

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

R M

illio

ns

Y/Y Cum Actual Total gross new Mortgage Loans and Readvances:2013 vs 2012 and 2007 by month: January - Dec

(Source: SARB, BMI-BRSCU Workings)

MAT FORECASTACTUAL

Y/Y

Cu

m %

Ch

an

ge A

ctu

al

2013 v

s 2

012

-3.50% 3.73%Total Gross New Mortgage Loans and Re-advances

17

THE INDUSTRY DASHBOARD: GFCF RES, NON RES & CONSTRUCTION

YTD Actual YTD FC

6.08% 5.78%

6.46% 5.98%

6.31% 5.90%

6.45% -0.64%

6.31% 2.98%

GFCF Residential

GFCF Non Residential

GFCF Total Building

GFCF Construction

Gross Fixed Capital Formation Weighted Average

GROSS FIXED CAPITAL FORMATION (VALUE)

PROGNOSIS: YTD ACTUAL VS FORECAST: GROSS FIXED CAPITAL FORMATION

Jul-13 2013 vs 2012

18

THE INDUSTRY DASHBOARD: GFCF TOTAL BUILDING: Q1-Q4 2013

CumGFCF Q1

CumGFCF Q2

CumGFCF Q3

CumGFCF Q4

CUM Q/Q GFCF TOTAL BUILDING 2008 23 088 48 055 74 036 100 916

CUM Q/Q GFCF TOTAL BUILDING 2012 26 469 53 573 80 674 108 232

CUM GFCF TOTAL BUILDING 2013 28 183 56 955 85 136 114 615

CUM Q/Q % CHANGE 2013 VS 2012 6.48% 6.31% 5.53% 5.90%

5.00%

5.20%

5.40%

5.60%

5.80%

6.00%

6.20%

6.40%

6.60%

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

Cu

m Q

/Q P

erc

en

tag

e C

han

ge

R M

illio

ns

CUM Q/Q GFCF TOTAL BUILDING 2013 VS 2012 (FC)(Source: SARB, BMI-BRSCU Workings)

MAT FORECASTACTUAL

6.31% 5.90%GFCF Total Building


GFCF CONSTRUCTION: Q1-Q4 2013www.strategicforum.co.za

2013/'01 2013/'02 2013/'03 2013/'04

CUM GFCF CONSTRUCTION 2008 25 056 54 178 88 986 127 142



CUM Q/Q % CHANGE GFCF CONSTR 2013VS 2012

6.71% 6.45% 1.12% -0.64%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

200 000

Cu

m Q

/Q P

erc

en

tag

e C

han

ge

R M

illio

ns

CUM Q/Q GFCF CONSTRUCTION: 2013 VS 2012 (JUNE) (Source: SARB, BMI-BRSCU Workings)

MAT FORECASTACTUAL

6.45% -0.64%GFCF Construction

20

THE VUCA ENVIRONMENTwww.strategicforum.co.za

As we at BMI-BRSCU look ahead to 2013 and on to 2020 it is evident that we will be facing an uncertain Political, Economic and Social environment.

Nevertheless, as we analyse all published data and peruse the anecdotes in the News, we can say with some certainty that the decline in the Building Industry has been arrested and is moving sideways (in physical m2 volume) and strongly upward (in current value, which of course includes price inflation).

21 © BMI-BRSCU

RESIDENTIAL BPP & BC: 1994-2013: M2 (JUNE)www.strategicforum.co.za

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

1 000 000

1 100 000

1 200 000

1 300 000

1 400 000

1 500 000

1 600 000

1 700 00019

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Sq

ua

re M

etr

es

BPP & BC Total Residential (Including A&A): 1993-2013 by month: m2 (July)(Source: StatsSA; BMI-BRSCU: BC by Month and Type of Building: Chart 28(14))

BC TOTAL RESIDENTIAL: M2 BPP TOTAL RESIDENTIAL: M2

12 per. Mov. Avg. (BC TOTAL RESIDENTIAL: M2) 12 per. Mov. Avg. (BPP TOTAL RESIDENTIAL: M2)

21

The decline in BPP (m2) has

halted but trend is sideways

The decline in BC (m2) has SLOWED

but trend is sideways

22 © BMI-BRSCU

RESIDENTIAL BPP & BC: 1994-2013: R*1000 (JUNE)www.strategicforum.co.za

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

3 500 000

4 000 000

4 500 000

5 000 000

5 500 00019

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

R*1

000 (

Cu

rren

t V

alu

es)

BPP & BC Total Residential: 1993-2013 by month: R*1000 (Current Values) (July)(Source: StatsSA; BMI-BRSCU: BC Total RSA by Month and Type of Building1993-2008: TOTAL RES BC&BPP R)

BC TOTAL RESIDENTIAL: R*1000 BPP TOTAL RESIDENTIAL: R*1000

12 per. Mov. Avg. (BC TOTAL RESIDENTIAL: R*1000) 12 per. Mov. Avg. (BPP TOTAL RESIDENTIAL: R*1000)

22

The decline in BPP (R*1000) has halted

and trend is strongly upward

The decline in BC (R*1000) has been halted but trend is

SLUGGISHLY upward

23 © BMI-BRSCU

NON RESIDENTIAL BPP & BC: 1994-2013: M2 (JUNE)www.strategicforum.co.za

100 000

200 000

300 000

400 000

500 000

600 00019

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Sq

uare

Metr

es

BPP & BC Total Non Residential (Including A&A): 1993-2013 by month: m2 (July)(Source: StatsSA; BMI-BRSCU: BC by Month and Type of Building: Chart 29(14))

BC TOTAL NON RESIDENTIAL: M2 BPP TOTAL NON RESIDENTIAL: M2

12 per. Mov. Avg. (BC TOTAL NON RESIDENTIAL: M2) 12 per. Mov. Avg. (BPP TOTAL NON RESIDENTIAL: M2)

23

24 © BMI-BRSCU

NON RESIDENTIAL BPP & BC: 1994-2013: R*1000 (JUNE)www.strategicforum.co.za

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

R*1

000

(C

urr

en

t V

alu

es)

BPP & BC Total Non Residential: 1993-2013 by month: R*1000 (Current Values) (July)(Source: StatsSA; BMI-BRSCU: BC Total RSA by Month and Type of Building1993-2008: TOTAL NR BC&BPP R)

BC TOTAL NON RESIDENTIAL: R*1000 BPP TOTAL NON RESIDENTIAL: R*1000

12 per. Mov. Avg. (BC TOTAL NON RESIDENTIAL: R*1000) 12 per. Mov. Avg. (BPP TOTAL NON RESIDENTIAL: R*1000)

24

25 © BMI-BRSCU

TOTAL BPP & BC: 1994-2013: M2 (JUNE)www.strategicforum.co.za

25

500 000

600 000

700 000

800 000

900 000

1 000 000

1 100 000

1 200 000

1 300 000

1 400 000

1 500 000

1 600 000

1 700 000

1 800 000

1 900 000

2 000 000

2 100 000

2 200 000

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Sq

ua

re M

etr

es

BPP & BC Total Building (Including A&A): 1993-2013 by month: m2 (July)(Source: StatsSA; BMI-BRSCU: BC by Month and Type of Building: Chart 30(14))

BC TOTAL BUILDING: M2 BPP TOTAL BUILDING: M2

12 per. Mov. Avg. (BC TOTAL BUILDING: M2) 12 per. Mov. Avg. (BPP TOTAL BUILDING: M2)

26 © BMI-BRSCU

TOTALBPP & BC: 1994-2013: R*1000 (JUNE)www.strategicforum.co.za

26

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

7 000 000

8 000 000

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

R*1

000 (

Cu

rren

t V

alu

es)

BPP & BC Total Building: 1993-2013 by month: R*1000 (Current Values) (July)(Source: StatsSA; BMI-BRSCU: BC Total RSA by Month and Type of Building1993-2008: TOTAL BLDNG BC&BPP R)

BC TOTAL BUILDING: R*1000 BPP TOTAL BUILDING: R*1000

12 per. Mov. Avg. (BC TOTAL BUILDING: R*1000) 12 per. Mov. Avg. (BPP TOTAL BUILDING: R*1000)

27

TOTAL BUILDING PLANS PASSED (M2) ENDED 2012 AT + 0,42% COMPARED TO 2011.

THE INDUSTRY DASHBOARD: BUILDING PLANS PASSED: YTD FORECAST 2013 VS 2012

m2 R*1000

40 919 4.72% 191 824 7.09%

387 175 9.97% 2 991 293 14.24%

130 112 8.70% 1 035 711 11.98%

75 312 60.67% 874 354 141.97%

-32 705 -1.05% 339 325 2.14%

600 814 6.33% 5 432 506 11.12%

m2 R*1000

132 522 19.61% 1 128 725 23.79%

246 608 32.87% 1 670 531 38.59%

109 285 7.26% 665 489 10.27%

14 107 4.17% 175 214 9.92%

14 325 1.36% 387 602 5.84%

516 847 11.95% 4 027 560 16.81%

1 117 661 8.09% 9 460 066 13.00%TOTAL

* July 2013

Shopping

Industrial and warehouse

Other buildings

Additions and alterations

TOTAL

* July 2013

Office and banking

Dwelling-house < 80 square metres

Dwelling-house => 80 square metres

Flats and townhouses

Other buildings


TOTAL

NON RES BUILDING PLANS PASSED (BPP): SOUTH AFRICA: YTD FC 2013 VS 2012

RES BUILDING PLANS PASSED (BPP): SOUTH AFRICA: YTD FC 2013 VS 2012

Numbers m2 R*1000

5.70% 6.75% 5.64%

2.13% 12.49% 20.45%

18.81% 18.27% 31.11%

247.10% 514.17%

0.11% 5.68%

10.46% 19.96%

m2 R*1000

70.89% 86.39%

50.66% 67.73%

5.34% 9.64%

58.11% 75.48%

16.40% 26.84%

27.76% 41.70%

15.72% 26.80%GRAND TOTAL RES AND NON RES

*July 2013

Shopping

Industrial and warehouse

Other buildings


TOTAL NON RESIDENTIAL

NON RES BUILDING PLANS PASSED (BPP): CUM YTD JULY 2013 VS 2012: TOTAL RSA

Office and banking

Flats and townhouses

Other buildings

Add's and alt's

TOTAL RES

* July 2013

RES BUILDING PLANS PASSED (BPP): CUM YTD JULY 2013 VS 2012: TOTAL RSA

Dwelling-house < 80 square metres

Dwelling-house => 80 square metres

YTD Actual YTD FC

10.46% 6.33%

19.96% 11.12%

27.76% 11.95%

41.70% 16.81%

15.72% 8.09%

26.80% 13.00%

15.80% 8.12%

26.96% 13.03%

Non Residential BPP (R)

Total BPP (m2)

Total BPP (R)

Building Plans Passed Weighted Average (m2)

BUILDING PLANS PASSED (BPP) (m2 and value)

Building Plans Passed Weighted Average (R)

Non Residential BPP (m2)

PROGNOSIS: YTD ACTUAL VS FORECAST: BUILDING PLANS PASSED

Jul-13 2013 vs 2012

Residential BPP (m2)

Residential BPP (R)

28

THE INDUSTRY DASHBOARD: RES BUILDING PLANS PASSED: YTD ACTUAL 2013 VS 2012

28

5.7

0%

6.7

5%

5.6

4%

2.1

3%

12.4

9%

20.4

5%

18.8

1%

18.2

7%

31.1

1%

247.1

0%

514.1

7%

27.3

3% 70.8

9%

86.3

9%

50.6

6%

67.7

3%

5.3

4%

9.6

4%

58.1

1%

75.4

8%

47.1

9%

0.1

1%

5.6

8%

16.4

0%

26.8

4%

11.3

2%

26.8

0%

-50%

50%

150%

250%

350%

450%

550%N

o

m2

R'0

00

No

m2

R'0

00

No

m2

R'0

00

m2

R'0

00

R'0

00

m2

R'0

00

m2

R'0

00

m2

R'0

00

m2

R'0

00

R'0

00

m2

R'0

00

m2

R'0

00

R'0

00

R'0

00

< 80m2 > 80m2 Flats andTownhouses

Other Total Office andBanking

Shopping Ind&WH Other Total A&ADwellings

A&A Other A&ATot

Tot

% Difference in Cumulative Y/Y BPP: Cum YTD Actual 2013 vs 2012 by Segment (July)(Source: StatsSA, BMI-BRSCU Workings)

29

4.0

7%

4.7

2%

7.0

9%

2.7

1%

9.9

7%

14.2

4%

11.1

1%

8.7

0%

11.9

8%

60.6

7%

141.9

7%

15.3

9%

19.6

1%

23.7

9%

32.8

7%

38.5

9%

7.2

6%

10.2

7%

4.1

7%

9.9

2% 20.9

3%

-1.0

5%

2.1

4%

1.3

6%

5.8

4%

3.2

5% 12.9

9%

-15%

5%

25%

45%

65%

85%

105%

125%

145%

165%N

o

m2

R'0

00

No

m2

R'0

00

No

m2

R'0

00

m2

R'0

00

R'0

00

m2

R'0

00

m2

R'0

00

m2

R'0

00

m2

R'0

00

R'0

00

m2

R'0

00

m2

R'0

00

R'0

00

R'0

00

< 80m2 > 80m2 Flats andTownhouses

Other Total Office andBanking


A&A Other A&ATot

Tot

% Difference in Cumulative Y/Y BPP: Cum YTD FC 2013 vs 2012 by Segment (July)(Source: StatsSA, BMI-BRSCU Workings)

THE INDUSTRY DASHBOARD: RES BUILDING PLANS PASSED: YTD FORECAST 2013 VS 2012

29

30

RES BUILDINGS COMPLETED (M2) ENDED 2012 AT – 1,21% COMPARED TO 2011.

THE INDUSTRY DASHBOARD: RES BUILDINGS COMPLETED: YTD FORECAST 2013 VS 2012

RES BUILDINGS COMPLETED (BC): YTD JULY 2013 VS 2012

m2 % R*1000

Dwelling-house < 80 square metres 480 972 -2.53% 1 292 043

Dwelling-house => 80 square metres 1 646 349 2.80% 8 868 218

Flats and townhouses 689 585 21.60% 3 888 543

Other buildings 55 380 304.23% 283 226

Additions and alterations 1 086 327 24.81% 5 024 486

TOTAL 3 958 613 11.63% 19 356 516

NON RES BUILDINGS COMPLETED (BC): YTD JULY 2013 VS 2012

m2 % R*1000

Office and banking 479 813 136.22% 3 322 510

Shopping 312 452 -13.11% 1 533 632

Industrial and warehouse 486 821 -22.37% 2 117 683

Other buildings 166 180 18.18% 781 825

Additions and alterations 459 073 40.26% 393 725

TOTAL 1 904 339 14.88% 8 149 375

GRAND TOTAL 5 862 952 12.66% 27 505 891

* July 2013

RES BUILDINGS COMPLETED (BC): YTD FORECAST 2013 VS 2012

m2 R*1000

Dwelling-house < 80 square metres 21 272 2.36% 144 132 6.17%

Dwelling-house => 80 square metres 101 647 3.62% 1 048 310 7.19%

Flats and townhouses 129 439 11.71% 1 011 688 17.29%

Other buildings 42 138 92.70% 185 961 60.95%

Additions and alterations 285 392 19.46% 1 358 010 19.77%

TOTAL RES 579 889 9.17% 3 748 102 12.52%

NON RES BUILDINGS COMPLETED (BC): YTD FORECAST 2013 VS 2012

m2 R*1000

Office and banking 190 536 41.18% 1 418 036 45.01%

Shopping 84 506 16.92% 232 072 8.32%

Industrial and warehouse -209 011 -18.52% -744 870 -15.80%

Other buildings 73 683 36.64% 320 162 30.19%

Additions and alterations 181 744 33.10% 931 496 28.10%

TOTAL NON RES 321 457 11.32% 2 156 895 14.35%

TOTAL RES & NON RES 901 346 9.83% 5 904 997 13.13%

* July 2013

YTD Actual YTD FC

11.63% 9.17%

18.31% 12.52%

14.88% 11.32%

20.86% 14.35%

12.66% 9.83%

19.19% 13.13%

12.67% 9.84%

19.13% 13.14%Buildings Completed Weighted Average (R)

Total BC (m2)

Total BC (R)

Buildings Completed Weighted Average (m2)

BUILDINGS COMPLETED (BC) (m2 and value)

Residential BC (m2)

Residential BC (R)

Non Residential BC (m2)

Non Residential BC (R)

PROGNOSIS: YTD ACTUAL VS FORECAST: BUILDINGS COMPLETED

Jul-13 2013 vs 2012

3131

-4.7

5%

-2.5

3%

-1.4

0%

0.5

1%

2.8

0%

9.7

0%

20.1

2%

21.6

0%

32.7

5%

304.2

3% 374.3

5%

15.7

4%

136.2

2%

158.6

5%

-13.1

1%

-24.4

7%

-22.3

7%

-15.5

2%

18.1

8%

8.2

5%

18.5

2%

24.8

1%

26.3

4%

40.2

6%

28.5

3%

27.0

7%

19.1

9%

-200%

-100%

0%

100%

200%

300%

400%

500%

No

m2

R'0

00

No

m2

R'0

00

No

m2

R'0

00

m2

R'0

00

R'0

00

m2

R'0

00

m2

R'0

00

m2

R'0

00

m2

R'0

00

R'0

00

m2

R'0

00

m2

R'0

00

R'0

00

R'0

00

Dwellings <80m2

Dwellings >80m2

Flats and TH Other Total Office &Banking


A&A Other A&ATotalTotal

% Difference in Cumulative Y/Y BC: Cum YTD Actual 2013 vs 2012 by Segment (July)(Source: StatsSA, BMI-BRSCU Workings: Chart BC 59)

THE INDUSTRY DASHBOARD: RES BUILDINGS COMPLETED: YTD ACTUAL 2013 VS 2012

3232

THE INDUSTRY DASHBOARD: RES BUILDINGS COMPLETED: YTD FORECAST 2013 VS 2012

0.5

4%

2.3

6%

6.1

7%

1.9

7%

3.6

2%

7.1

9%

12.9

6%

11.7

1%

17.2

9%

92.7

0%

60.9

5%

10.3

7%

41.1

8%

45.0

1%

16.9

2%

8.3

2%

-18.5

2%

-15.8

0%

36.6

4%

30.1

9%

10.5

7%

19.4

6%

19.7

7% 33.1

0%

28.1

0%

22.4

8%

13.3

1%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%N

o

m2

R'0

00

No

m2

R'0

00

No

m2

R'0

00

m2

R'0

00

R'0

00

m2

R'0

00

m2

R'0

00

m2

R'0

00

m2

R'0

00

R'0

00

m2

R'0

00

m2

R'0

00

R'0

00

R'0

00

Dwellings <80m2

Dwellings >80m2

Flats and TH Other Total Office &Banking


A&A Other A&ATotalTotal

% Difference in Cumulative Y/Y BC: Cum YTD FC 2013 vs 2012 by Segment (July)(Source: StatsSA, BMI-BRSCU Workings: Chart BC 59)

33

DOMESTIC CEMENT SALES (TONNES) ENDED 2012 AT + 2,89% COMPARED TO 2011


Cum YTD sales: 2012 779 003 1 663 70 2 637 34 3 510 50 4 486 60 5 552 46 6 488 79 7 465 47 8 528 70 9 615 29 10 789 9 11 559 5

Forecast 2013 773 583 1 652 12 2 619 00 3 468 18 4 417 49 5 454 09 6 364 71 7 314 58 8 348 62 9 405 39 10 547 8 11 296 2

% Change FC 2013 VS 2012 -0.70% -0.70% -0.70% -1.21% -1.54% -1.77% -1.91% -2.02% -2.11% -2.18% -2.24% -2.28%

-3%

-2%

-2%

-1%

-1%

0%

0

2 000 000

4 000 000

6 000 000

8 000 000

10 000 000

12 000 000

14 000 000

To

nn

es

Domestic Cement Sales: YTD FC 2013 vs 2012 (March)(Source: Cement & Concrete Institute; BMI-BRSCU Workings)

Cu

mu

liti

ve %

Ch

an

ge:

YT

D 2

013 v

s 2

012

YTD FORECASTACTUAL

THE INDUSTRY DASHBOARD: DOMESTIC CEMENT SALES: 2012

-0.70% -2.28%DOMESTIC CEMENT SALES (Tonnes)

PROGNOSIS: YTD ACTUAL VS FORECAST: CEMENT SALES

Jul-13 2013 vs 2012

34

LOCAL BUILDING LUMBER SALES (M3) ENDED 2012 AT + 0,38% COMPARED TO 2011.

THE INDUSTRY DASHBOARD: LOCAL BUILDING LUMBER SALES: 2013 VS 2012: M3 (MAY)


2012 Cum Y/Y Local Building 80 164 176 989 279 604 366 414 463 621 554 962 642 100 747 186 836 497 943 845 1 055 1 1 114 1

2013 Cum Y/Y Local Building 79 559 172 349 262 215 352 292 447 929 545 255 655 341 771 901 876 276 984 228 1 096 6 1 162 7

% Change Cum Y/Y Local Building: 2013 vs 2012 -0.75% -2.62% -6.22% -3.85% -3.38% -1.75% 2.06% 3.31% 4.76% 4.28% 3.93% 4.36%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

-

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000C

ub

ic M

etr

es

Lumber Sales by End-use: Local Building: Cum Y/Y 2013 vs 2012 (Aug)(Source: Crickmay & Associates, BMI-BRSCU Workings)

% C

han

ge C

um

Y/Y

Lo

ca

l B

uil

din

g:

20

13 v

s 2

012

MAT FORECASTYTD ACTUAL

-0.70% -2.28%DOMESTIC CEMENT SALES (Tonnes)

PROGNOSIS: YTD ACTUAL VS FORECAST: LOCAL BUILDING LUMBER SALES

Jul-13 2013 vs 2012

35

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%P

erc

en

tag

e

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13

Total Res BC Cum YTD % Change (m2) 9.85% 14.93% 9.27% 16.32% 13.49% 11.10% 11.63% 10.30% 10.97% 11.08% 9.83% 9.17%

Total Non Res BC Cum YTD % Change (m2) -30.93% 4.65% 9.70% 5.20% 3.89% 7.22% 14.88% 14.35% 9.31% 13.64% 10.61% 11.32%

Total BC Cum YTD % Change (m2) -3.17% 11.61% 9.40% 12.57% 10.19% 9.81% 12.66% 11.57% 10.43% 11.88% 10.07% 9.83%

Domestic Cement Sales (Tonnes) -0.70% -0.70% -0.70% -1.21% -1.54% -1.77% -1.91% -2.02% -2.11% -2.18% -2.24% -2.28%

Local Building Lumber Sales (m3) -0.75% -2.62% -6.22% -3.85% -3.38% -1.75% 2.06% 3.31% 4.76% 4.28% 3.93% 4.36%

Total Residential BPP (m2) -2.70% 3.89% 5.31% 10.85% 10.09% 9.58% 10.46% 9.04% 9.44% 8.55% 6.75% 6.33%

Total Non Residential BPP (m2) 84.87% 53.55% 63.12% 44.52% 35.51% 22.03% 27.76% 24.95% 21.08% 16.70% 14.37% 11.95%

Total Building BPP (m2) 20.72% 18.20% 21.09% 20.61% 17.69% 13.42% 15.72% 13.84% 13.00% 11.08% 9.11% 8.09%

Cumulative YTD Buildings Completed (BC), Domestic Cement Sales and Local Building Lumber Sales: % Change by Sector: January - Dec 2013

(Source: StatsSA; BMI-BRSCU Workings)

CUM ACTUAL CUM FORECAST

BMI-BRSCU Estimate of Cement Sales

The figures are now released by PPC on behalf of the

major producers, namely PPC, Lafarge, Afrisam, NPC,

Ash Resources, Sephaku Ash and Ulula Ash. The data

do not include exports by these firms or sales by other

cement companies or imports. (30 Aug 2013)

35

PROGNOSISwww.strategicforum.co.za

36

THE VUCA ENVIRONMENT: THE NDPwww.strategicforum.co.za

37

THE VUCA ENVIRONMENT: THE NDPwww.strategicforum.co.za

38

THE VUCA ENVIRONMENT: THE NDP ROADMAPwww.strategicforum.co.za

THIRTY-THREE prominent business figures from several leading South African companies on Sunday boldly called for unity among businesses to arrest a decline in confidence in South Africa’s future, warning the country could "unravel" if challenges in education, corruption and unemployment were left unresolved.

In an open letter published in City Press and the Sunday Times on the eve of the African

National Congress’s (ANC’s) electoral

conference in Mangaung where major policy

decisions on South Africa’s economic trajectory will be made, the chairmen and CEOs offered their assistance to the government but challenged it to implement its policies and the National Development Plan (NDP).(Business Day, 10 Dec 2012)

39

INVESTEC boss Stephen Koseff has

rounded on African National Congress (ANC) deputy president Cyril Ramaphosa, saying

he is “totally on the wrong bus” when it

came to acknowledging the reality of the country’s economic situation.

What really irked Mr Koseff and other bankers at the summit was Mr Ramaphosa’sview that the parts of the NDP on which everyone agreed should be implemented now, and the rest of it left to “dialogue”.


AFRICAN National Congress (ANC) deputy president Cyril Ramaphosa told a banking summit that the National Development Plan (NDP) was like a moving caravan and those who did not jump aboard risked being left behind.

40


“. . . Even with a relatively narrow focus,

finding common ground would require a change in the way they operated. Rather

than trying to resolve all the issues, the

group sensed that they would need to go through many cycles of seeing the problem, clarifying their purpose and “searching for things we could agree on”. Seek agreement and go became our

mantra. We didn’t want to waste time fighting over all the pieces of the big puzzle

that we disagreed on and spending all our

time arguing who was right. “This proved to be a fundamental learning. It oriented us to action, based on what we could agree on and to get going”. (Senge: The necessary revolution:

2010)

Ramaphosa and Manuel

are CORRECT.Koseff is on the wrong bus!

41

PRESIDENT Jacob Zuma has confirmed plans to locate the National Planning Commission (NPC) within the state, while retaining the existing body in an advisory role.

However, Minister in the Presidency Trevor Manuel was quick to emphasise this does not mean the NPC would be "axed".


42

In the past 18 months the South African economy continued to function significantly below full capacity,

although in a number of areas bottlenecks visibly inhibited economic progress. The National Planning Commission released a vision statement and development plan for the country in

November 2011, targeting the elimination of poverty and reduction of inequality by 2030 through

appropriate changes, hard work, leadership and unity. Having identified the key developmental challenges facing the country and its people, the commission developed a plan focusing on

– the creation of jobs;

– improving South Africa’s infrastructure; – appropriate transition to a low-carbon economy; – an inclusive and integrated rural economy; – reversing the spatial effects of apartheid; – improving the quality of education, training and innovation; – providing quality healthcare for all; – social protection; – building safer communities; – reforming the public service to build a capable state; – eliminating corruption; and – transforming society and uniting the country.

Addressing the infrastructure bottlenecks was recognised as of particular importance. In 2011, to ensure timeous and effective implementation in this area, Cabinet created the Presidential Infrastructure Co-ordinating Commission, chaired by the President and including half the members of Cabinet, the nine provincial premiers, and the mayors of the metropolitan areas. The President underlined the need for speeding up the capital programmes of the public sector in his State of the Nation address to Parliament early in 2012, when he unveiled the government’s infrastructure development programme. (SARB, Annual Economic Report: 2012)


43

(Source: WEF: Global Risks 2013: Eighth Edition)

THE VUCA ENVIRONMENT: TOP 5 RISKSwww.strategicforum.co.za

44

THE VUCA ENVIRONMENT: CLIMATE CHANGEwww.strategicforum.co.za

45


46


47


48


49

Societal Needs

Take-make-waste solutions

Regenerative solutions – all life

flourishes

Damage to social and environmental

solutions

DELAY

Short-term fixesEasier, faster

Fundamental solutionsHarder, take time

UnintendedSide effects

(Source: Senge: The necessary Revolution: 2010)


50

Learning Capabilities for Systemic Change



51

When asked why he robbed Banks, the infamous Willy Sutton responded simply”, “Because that’s where the money is.”

If global carbon emissions were currency, most of the ”money” could be found in office buildings, malls, hotels, factories, apartment buildings and private homes.

The greatest consumers of energy today – and in turn the largest contributors of greenhouse gases – are our commercial, industrial and residential buildings.

Heating, air-conditioning and electricity for what the industry calls the “built environment” accounts for 40 percent of greenhouse gas emissions in the United States (almost 60 percent globally), almost twice the emissions of the automotive sector.

Obviously the built environment represents a high leverage point for anyone looking to create energy systems suited for life beyond the Industrial Age Bubble. (Senge: The necessary Revolution: 2010)


52

Frustrated for several years by industry consensus processes that seemed to keep devolving to “lowest common denominator

agreements,” David Gottfried, a small-town developer, along with environmental litigator Michael Italiano believed there had to be a better way.

They joined Berkebile and his AIA committee to form a small group of like-minded people who were interested in genuinely addressing the total impact of buildings on the environment, human health and well-being and communities.

Ten years later they had succeeded in establishing the US Green Building Council (USGBC) and the Leadership in Energy and Environmental Design (LEED) certification system, which has now spread around the country and the world.

Today the USGBC – and its sister Green Building Councils in Countries such as India, China, Brazil and Mexico – has become a powerful and unifying force within the building industry. (Senge: The necessary Revolution: 2010)


53

• The first USGBC meeting occurred in Washington DC in 1993;• They shared a simple core vision: transforming how buildings get built;• Knowing that competition and fragmentation thwarted real change, the founding group

resolved to get representatives of the entire system involved from the outset;• Finding common ground was a problem and they identified the areas of agreement;• This proved to be a fundamental learning. It oriented them to action, based on what they

could agree on and to get going;• The group discovered one area of agreement early on: market-based forces were much

more powerful than legal or government action in spurring innovation and genuine commitment;

• This idea of market-based transformation became a second key founding idea;• The introduction of the LEED certification system in 2000 led to explosive growth;• By mid-2007 over 7 500 buildings were registered with LEED worldwide, up from just 635

in 2002;• The value of green building construction starts exceeded $12 Billion in 2008;• Today the GBC has more than 90 regional chapters and projects in 41 countries;• The total cost of designing and building LEED certified buildings now averages < than a

1,8% premium over conventional buildings;• A wave of basic innovation is now transforming the building industry;

• A next generation of “living” (regenerative) buildings is coming – buildings that produce more energy and clean water than they use and function more like trees and forests. (Senge: The necessary Revolution: 2010)


54

Alice Lane, Sandton is a 4 Star Green

Star SA rated office, as developer Abland received certification from the

Green Building Council of South Africa

(GBCSA) for the design of their prestigious Sandton project.

No. 2 Silo is a high-end residential development, part of the redevelopment of the Silo area at the

V&A Waterfront. There are two

distinct buildings linked together. No. 1 Silo is office space, and No. 2 Silo

is the residential building.

32 Registered Green Building Projects in South Africa


55

Department of Environmental AffairsCity: PretoriaTool: Green Star SA - Office v1 > Design

Rating: 6 Star

Hyundai Automotive SA (Pty) Ltd Head Office City: Johannesburg Rating: 4 Star

The first office building in the South

African automotive industry to achieve a 4 Star Design Certification

setting the precedent for other industry participants to follow

32 Registered Green Building Projects in South Africa


56


Typical Clamp kiln operation

57

Clamp kiln operation at Langkloof Broken bricks from a fired clamp kiln


58

Zig-zag-kiln at Apollo, Western Cape

Zig-zag-kiln at Apollo, Western C

Side view with flue gas duct

Covering green bricks


59

Top view of the kilnZig-zag-kiln at Apollo, Western Cape


60Side view with chimney and flue ducts

So-called „zig-zag-kiln at Apollo, Western Cape


61

DENIALCompanies - carry on past “tip”Policy makers – stimulus spending (or austerity, or both)

ANGERImplications of change becomes more obviousNeed to BLAME someone for the disaster

BARGAININGCompanies – Asset sales, closuresIndividuals – Stop borrowing, start saving

DEPRESSIONReality begins to be confrontedGrowing awareness of what has been lost

ACCEPTANCEFinally people accept what has happened

New opportunities emerge out of extreme pessimism

THE NEW NORMAL

The paradigm of loss model: Elizabeth Kuler-Ross: Source International eChem

THE TIPPING POINT

THE VUCA ENVIRONMENT

2008 2012 2020

?


62

DENIALCompanies - carry on past “tip”Policy makers – stimulus spending (or austerity, or both)

ANGERImplications of change becomes more obviousNeed to BLAME someone for the disaster

BARGAININGCompanies – Asset sales, closuresIndividuals – Stop borrowing, start saving

DEPRESSIONReality begins to be confrontedGrowing awareness of what has been lost

ACCEPTANCEFinally people accept what has happened

New opportunities emerge out of extreme pessimism

THE NEW NORMAL

The paradigm of loss model: Elizabeth Kuler-Ross: Source International eChem

THE TIPPING POINT

THE VUCA ENVIRONMENT

2008 2012 2020

?


STRATEGIC RESPONSES: COMPETING ON THE EDGE OF CHAOSNew order can emerge from chaos. Complexity theory argues that nothing innovative can emerge from systems with a

high degree of order and stability (eg regulated industries); similarly, completely chaotic systems (eg riots) are incapable of functioning or creating anything.

Somewhere on the boundary between order and disorder,

control and chaos, sits creativity, innovation, self-renewal and growth. Pascale (1999) calls this point “the edge of chaos”. (OUBS, Strategy: Unit 8: 28)

63


Sustainable Value

Drivers• Disruption• Clean Technology

• Carbon Footprint

Drivers• Pollution

• Material

Consumption

• Waste

Drivers• Climate Change

• Resource

depletion

• Poverty

Drivers• Civil Society

• Transparency

• Connectivity

INTERNAL EXTERNAL

TODAY

TOMORROW

StrategyPollution prevention,Minimise waste and emissions from operations

StrategyProduct Stewardship,Integrate Stakeholder views into business process

StrategySustainability Vision,Create a shared roadmap for meeting unmet needs

StrategyClean Technology,Develop the sustainable competencies for the future

PayoffCost andRisk Reduction

PayoffReputation and Legitimacy

PayoffSustainable GrowthTrajectory

PayoffInnovation andRepositioning

Sustainability Value Framework (Senge: The necessary Revolution: 2010)

STRATEGIC RESPONSES: COMPETING ON THE EDGE OF CHAOS

64


There are many forces compelling businesses toward the regenerative economy, but the Sustainable Value framework helps to categorise them into 4 groupings:

1. Increasing industrialisation of the last two centuries and its side effects, inter alia material

consumption, pollution, and waste generation. Firms can create immediate value by reducing the level of material consumption and pollution associated with their activities.

2. The proliferation of “civil society stakeholders”. As the power of national governments has

eroded in the wake of global trade regimes, NGO’s and other civil society groups stepped into

the breach, assuming the role of monitor (and in some cases enforcer) of social and environmental standards. Companies that operate at greater levels of transparency and

responsiveness to the public’s desire for sustainable practices will see the direct impact of

improved brand image on their bottom line.

3. Emerging “disruptive” technologies that challenge the status quo could render many of today’s

energy- and material-intensive industries obsolete.

4. Global problems like resource depletion, deteriorating ecosystems and climate change; poverty and inequity in the developing world; and an equally broad set of sustainability drivers in

the developed world, including global security issues and their close links to climate, resource

consumption and energy supply and security. Responding to this set of drivers is essential for

the health of the planet, and firms can also create value by pursuing sustainability related

opportunities that are rapidly emerging in all industries.

Global sustainability is so complex that it cannot be addressed by any single corporate action. Therefore companies that hope to thrive in the years to come must address each of the four broad sets of drivers. (Senge: The necessary Revolution: 2010)

65

VSBK at Langkloof

For successful transformation to take

place it is important to have something

that people can touch.A lot of talk about climate change and the

whole systems approach are too

theoretical for most people.

While some people can imagine

alternative futures with little help, most

move from the concrete to the abstract – not the other way around.

(Based on Senge: The necessary

Revolution: 2010)


66

VSBK at Langkloof VSBK at Langkloof

adding fuel to the green bricksUnloading site with steel bars, hydraulic equipment and cart


67

VSBK at Langkloof VSBK at Langkloof

Stacking fired bricks Stacking fired bricks; View from top


68

Market-based forces are much more powerful than legal or government action in spurring innovation and genuine commitment.


VSBK Kilns and burnt bricks at Langkloof.

69


Next Investment phase at Langkloof – 18 Kilns

70


Next Investment phase at Langkloof – 18 Kilns

71

Langkloof Bricks has been accoladedwith two "Eastern Cape Top Green Organisation" awards by the Institute of Waste Management Southern Africa (IWMSA), in association with the Department of Economic Development, Environmental Affairs and Tourism (DEDEAT)

These awards were issued in recognition of the innovative practices undertaken by Langkloof Bricks to minimise its impact on the environment by means of reducing and transforming waste into a resource, in addition to contributing toward energy efficiency, air quality and climate change through the successful implementation of the SA-VSBK (Vertical Shaft Brick Kiln) technology.


72

Learning Capabilities for Systemic Change


THE VUCA ENVIRONMENT: FINANCING AND INFRASTRUCTURE

73

And yet few sectors present more difficult challenges for change.

The building industry is highly fragmented and the competitiveness – and even suspicion – between different competing interests is, for most veterans in the industry, just part of the way the business works.

“There was often an adversarial relationship among the three main parties in

any major project: the owner/developer, the architect and the contractors”.

Developers, for example, “. . . tend to set their budget for total building costs a

low as possible to maximise their profit on the project. Architects, engineers

and construction firms then compete to maximise their share of the fixed budget”.

So what you end up with is buildings that have the cheapest heating and air-conditioning systems, as opposed to the most efficient – despite the fact that a higher priced, more efficient system would save the owner money in the long haul (and be better for the environment)

The net result is often a suboptimal conventional design that wastes resources and has double or triple the operating costs of green buildings – costs that are passed on to occupants indefinitely. (Senge: The necessary Revolution: 2010)


74


YTD Actual YTD FC

-2.43% 4.13%

-3.82% 1.72%

-52.61% -20.70%

-3.50% 3.73%

1.51% 2.70%

0.66% 2.99%

YTD Actual YTD FC

6.08% 5.78%

6.46% 5.98%

6.31% 5.90%

6.45% -0.64%

6.31% 2.98%

YTD Actual YTD FC

10.46% 6.33%

19.96% 11.12%

27.76% 11.95%

41.70% 16.81%

15.72% 8.09%

26.80% 13.00%

15.80% 8.12%

26.96% 13.03%

YTD Actual YTD FC

11.63% 9.17%

18.31% 12.52%

14.88% 11.32%

20.86% 14.35%

12.66% 9.83%

19.19% 13.13%

12.67% 9.84%

19.13% 13.14%

-0.70% -2.28%

3.31% 4.36%

7.77% 5.01%

13.27% 8.03%

Buildings Completed Weighted Average (R)

OVERALL AVERAGE (R)

Jul-13

Total BC (m2)

Total BC (R)


DOMESTIC CEMENT SALES (Tonnes)

LOCAL BUILDING LUMBER SALES (m3)

2013 vs 2012

OVERALL AVERAGE (m2)


Total BPP (m2)

Total BPP (R)


BUILDINGS COMPLETED (BC) (m2 and value)

Residential BC (m2)

Residential BC (R)



GFCF Residential


GFCF Total Building

GFCF Construction


BUILDING PLANS PASSED (BPP) (m2 and value)




Mortgage Advances on Existing Buildings




Total Mortgage Loans Outstanding

Mortgage Advances Weighted Average


PROGNOSIS: YTD ACTUAL VS FORECAST BY INDICATOR

Jul-13 2013 vs 2012

Source: BMI-BRSCU

Jul-13 2013 vs 2012







PROGNOSIS: YTD ACTUAL VS FORECAST: MORTGAGE ADVANCES

Jul-13 2013 vs 2012

Jul-13 2013 vs 2012

Jul-13 2013 vs 2012

Jul-13 2013 vs 2012


Residential BPP (R)

75

THE VUCA ENVIRONMENT: THE LEVERAGE POINTSFINANCING AND INFRASTRUCTURE

-60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%


Mortgage Advances on Existing Bui ldings




Total Mortgage Loans OutstandingMortgage Advances Weighted Average


Jul-13


GFCF Residential


GFCF Total Building

GFCF Construction



Jul-13BUILDING PLANS PASSED (BPP) (m2 and value)


Residential BPP (R)



Total BPP (m2)

Total BPP (R)




Jul-13BUILDINGS COMPLETED (BC) (m2 and value)

Residential BC (m2)

Residential BC (R)



Total BC (m2)

Total BC (R)


Buildings Completed Weighted Average (R)


Jul-13DOMESTIC CEMENT SALES (Tonnes)


Jul-13

LOCAL BUILDING LUMBER SALES (m3)


Jul-13

OVERALL AVERAGE (m2)

OVERALL AVERAGE (R)

PROGNOSIS: YTD ACTUAL AND FORECAST: 2013 VS 2012 BY INDICATOR(Source: SARB; StatsSA; BMI-BRSCU Workings)

YTD Actual

YTD FC

The LEVERAGE POINTS

76

� As can be seen from the analysis of Mortgage Advances (Total Mortgage Advances

expected to increase by + 1,72% compared to 2012, but – 44% compared to 2007)

the real-estate market remained in the doldrums during the past 18 months, consistent

with the stagnation in banks’ mortgage advances;

� In contrast the tremendous growth in unsecured lending is partly a result of a shift in lending from home loans into personal loans by the big four banks;

� Their latest results all make this shift in "business mix" abundantly clear.

� The reason is easy to see: unsecured lending is vastly more profitable than home loans;

� This lack of appetite for home loans is clear across the industry. According to June

data, there is just over R1 Trillion worth of home loans in SA, just 1.5% more than a

year ago. Over the same period, total assets in the banking system have grown 7.8%,

with unsecured loans the largest growth area.� What does this shift mean for the country? Anecdotally, the trend need not mean fewer

homes are being financed. Some of the unsecured lending is being used to finance

deposits on homes, with banks only willing to fund at lower loan-to-value ratios. So

the flat growth in mortgage finance does not mean that total property finance is flat, as

some unsecured loans are being used for this;

� The shift has damaged the ability of the average South African to own a home. This entrenches an economic advantage for those who already own their homes,

making it more difficult to transform the patterns of ownership in the economy.

� While there has been a boom in the size of the black middle class, the simultaneous

shift in banking behaviour means this has not translated into a proportional greater

ability for black consumers to buy property. (Business Day, 16 September 2013)

THE VUCA ENVIRONMENT: FINANCINGwww.strategicforum.co.za

77

THE VUCA ENVIRONMENT: FINANCINGwww.strategicforum.co.za

Mortgage Lending

Unsecured credit

Alternative Financing;

Crowdfunding

Consumption; Home Loan

Deposits

DELAY





Real-estate companies that have jumped into the crowdfunding pool are working

within the SEC's guidelines. For example, Fundrise Fund LLC has registered some of

its offerings with the SEC to solicit unaccredited investors for $100 minimum

investments in small, locally based projects. Realty Mogul Co. requires a $5,000 minimum investment, but like

Prodigy, it only allows accredited investors to participate.

78

THE VUCA ENVIRONMENT: FINANCINGMORTGAGES AND UNSECURED LENDING

79


80


81

THE VUCA ENVIRONMENT: INFRASTRUCTUREwww.strategicforum.co.za

Infrastructure spend

Collusion bid rigging

Fair competition Clients benefit

DELAY





Fines;Tarnished

Reputation;Price Increases;

Capacity.

82 © BMI-BRSCU82

2013-2020 Average

R*Million R*Million % %

23 623 2 953 1.61% 0.85%

117 565 14 696 8.04% 4.25%

61 128 7 641 4.18% 2.21%

4 523 565 0.31% 0.16%

56 100 7 012 3.83% 2.03%

199 273 24 909 13.62% 7.21%

43 004 5 376 2.94% 1.55%

444 56 0.03% 0.02%

106 505 13 313 7.28% 3.85%612 165 76 521 41.84% 22.13%

25 115 3 139 1.72% 0.91%

35 950 4 494 2.46% 1.30%

32 673 4 084 2.23% 1.18%

9 042 1 130 0.62% 0.33%

46 733 5 842 3.19% 1.69%

120 842 15 105 8.26% 4.37%

28 368 3 546 1.94% 1.03%

286 916 35 865

585 638 73 205 40.03% 21.17%

223 928 27 991 15.31% 8.10%

41 358 5 170 2.83% 1.50%

1 463 088 182 886 100.00% 52.90%

568 176 71 022 43.62% 20.54%

504 415 63 05238.72% 18.24%

230 057 28 757 17.66% 8.32%

1 302 649 162 831 100.00% 47.10%

2 765 737 345 717 100.00%

1 037 151

1 728 586

3 457 171

©BMI-BRSCU

Affordable Housing

General Government

PUBLIC RESIDENTIAL

INVESTMENT IN BUILDING & CONSTRUCTION: 2013-2020: LMR SOYUZ SCENARIO

SECTOR AND SEGMENT

PRIVATE RESIDENTIAL

Dwelling-houses < 80 m2

Dwelling-houses > 80 m2

Townhouses & Flats

Other (Incl. hotels & casinos)

General government

Public corporations

Private business enterprises

TOTAL CONSTRUCTION

TOTAL BLDNG AND CONSTR

3 years (2013-2015)

5 years (2013-2017)

8 years (2013-2020)

Unrecorded Res Add's and Alt's

Unrecorded Non Res Add's and Alt's

GRAND TOTAL

CONSTRUCTION

General Government

Public Corporations

Private Business Enterprises

TOTAL NON RESIDENTIAL

Shops

Industrial & warehouse

Other

Additions & Alterations

PUBLIC NON-RESIDENTIAL

Public authorities.

Private Business EnterprisesTOTAL RESIDENTIAL

PRIVATE NON-RESIDENTIAL

Offices

Additions & alterations

THE VUCA ENVIRONMENT: INFRASTRUCTUREwww.strategicforum.co.za

83

THE VUCA ENVIRONMENT: STRATEGIC RESPONSEwww.strategicforum.co.za

The VUCA world is essentially about the transition to a new set of values, which tells us that:

• Consumers no longer define themselves by the size of their car, house or new kitchen.

• Instead, their focus is in five key areas:

� Value for money – they are highly price sensitive

� Simplicity – they are looking for less complex lifestyles� People, not things – family and friends are increasingly important� Values – they value trust, and they are concerned about their carbon foot

print

� Convenience – they want products to last, and to be available locally

84

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259162

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208488

0

100 000

200 000

300 000

400 000

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

R M

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Total Mortgage Advances: 2002 - 2012 (Current Values)The Strategic Forum Scenarios: 2013-2020 (Constant 2012 Value)

(Source: SARB, BMI-BRSCU Workings)

High Road New York Scenario: 2012-2020

Higher Middle Road London Scenario: 2012-2020

Lower Middle Road Sao Paolo Scenario: 2012-2020

Low Road Harari Scenario: 2012-2020

Sao Paolo Scenario:2012-2020

Sao Paolo Scenariois Current

Most likely future

R233 Billion decline in

only 2 years!

Under the Upper Middle Road it could take a

decade to get back to the 2007 level

www.strategicforum.co.za

85

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TOTAL INVESTMENT IN BUILDING: 2000-2012 (CURRENT VALUES) THE STRATEGIC FORUM SCENARIOS: 2013-2020 (CONSTANT 2012 VALUE)

(Source: SARB, StatsSA, MFA, BMI-BRSCU Workings)

TOTAL BUILDINGS : 2000-2007: LOWER MIDDLE ROAD SOYUZ SCENARIO: 2008-2015

TOTAL BUILDINGS HIGH ROAD COLUMBUS SCENARIO

TOTAL BUILDINGS LOW ROAD CHALLENGER SCENARIO

TOTAL BUILDINGS HIGHER MIDDLE ROAD APOLLO SCENARIO

CURRENT MOST LIKELY SCENARIOBETWEEN LOWER MIDDLE AND LOW

ROAD SCENARIOSHigh Road 10%

Upper Middle Road 20%

Lower Middle Road 40%

Low Road 30%

www.strategicforum.co.za

86

SCENARIOS FOR CONSTRUCTION: 2013-2020www.strategicforum.co.za

19 0

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INVESTMENT IN CONSTRUCTION: 2001-2012THE STRATEGIC FORUM SCENARIOS: 2013-2020

(Source: SARB, StatsSA, MFA, BMI-BRSCU Workings)

MOTORWAY SCENARIO: 2007-2015 HIGHWAY SCENARIO: 2007-2015

FREEWAY SCENARIO: 2001-2015 BYWAY SCENARIO: 2001-2015

2 per. Mov. Avg. (FREEWAY SCENARIO: 2001-2015)

The currentMOST LIKELY FUTURE

is theFREEWAY SCENARIO


TowardsBuilding, the Engine for growth and wealth creation

Dr. Llewellyn B. LewisSeptember 2013

THE STRATEGIC FORUMA place of assembly

for strategic conversations

THE STRATEGIC FORUMwww.strategicforum.co.za

BMI




Reg. No. 2002/105109/23

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BUILDING RESEARCH

STRATEGY CONSULTING

UNIT cc

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BMI•

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BMI•

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Reg. No. 2002/105109/23

•

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BUILDING RESEARCH

STRATEGY CONSULTING

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•

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making sense of the building, construction and property market in the vuca environment: sept 2013...

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