Scene set for action

Not since 1994 and the inauguration of Nelson Mandela has South Africa been so much under the global spotlight and, with the FIFA World Cup now only months away, the eyes of the world are focusing on the "Rainbow Nation". Unlike the developed nations, South Africa escaped the worst of the recession, helped by the government's significant investment in infrastructure and the sound banking sector. The economy is likely to recover in 2010, due both to the resumption of global economic growth and the boost received from preparations for the FIFA World Cup. So how has the DIY and home improvement market been affected by the economic downturn, what is the outlook for 2010? Until 2008, the country experienced a period of economic growth with increasing demand for all types of building and home improvement products. However, during 2008 and 2009, demand declined as factors such as increasing costs, rising inflation, high interest rates and increasing unemployment all took their toll. Although interest rates are lower than a year ago, conditions in the residential property market are not expected to improve significantly during 2010, due to poor demand and weak fundamentals. However, as the country moves out of recession there are two key drivers that will have a positive impact on the market. Firstly, the total number of households has increased from an estimated 9 mio in 1996 to 12.7 mio in 2005, and this is forecast to increase to 15 mio by 2015 (source: Bureau of Market Reasearch UNISA). This is partly due to projects initiated by the government, including the department of housing, which has already built 2.3 mio new homes since 1994. Secondly, there is significant growth in the number of middle-income families and it is especially in what is described as the "previously disadvantaged" groups that the demand for home improvement products is increasing. This new and growing black middle class, which represents 10 % of the black population and 23 % of the total buying power, is referred to locally as the "Black Diamonds". And we cannot ignore the impact of the FIFA World Cup. The direct investment in the stadiums, the airports and the road and rail network will unfortunately not have a direct impact on the market. However, the investment in accommodation and the preparation for the arrival of 450 000 tourists certainly will. Many of the global hotel operators are investing in both the building of new properties and the updating of existing ones and, with…