With South Africa’s World Cup well under way, concerns that infrastructure would not be up to scratch have fallen by the wayside. The investment required to prepare South Africa was substantial, running in the billions of dollars, and far exceeding that of previous host nations. The impact of all this has been a tremendous – if artificial – boost to the local construction industry.

Data shows that the construction industry has considerably outperformed the economy in general over the past five years, with average real growth in industry value of 10.8% per year between 2005 and 2009, compared to 3.7% GDP growth over the same period. Indeed, when the economy entered recession in 2009, construction industry growth peaked at 7.9%, and was an important force in pulling the country out of recession.

Investment plans reached ZAR28bn (US$3.6bn), and included allocations for airports and other transport infrastructure, stadia, telecoms and broadcasting, and other logistical elements of hosting the World Cup. However, this did not include investment carried out by Eskom to ensure that there is power to light up the games (a very real concern less than two years ago), the Gautrain (South Africa’s much lauded ‘high speed rail line’), or countless other investments into road and rail projects. The true value of preparing for the World Cup may never be known.

What is clear is that some may feel the investment was not worthwhile. The gleaming new stadia stand in stark contrast to South Africa’s large slums, and the recurring labour strikes illustrate discontent by the wider population. Many question whether the money would have been better spent on easing the considerable poverty that is rife in South Africa. This question will only grow once the tournament is over, and the stadia lie empty. Beijing’s Olympic Bird’s Nest Stadium has done the same for China, and a similar fate could be in store for the next World Cup host, Brazil – a country also battling with abject poverty.

Attention Turning To Brazil 2014 And 2016

With the 2010 World Cup under way, attention will soon turn to Brazil. The country is in equal need of infrastructure upgrades and FIFA has already raised concerns over the timely construction of stadia and airports, the areas which require the most attention. Moreover, with Brazil hosting both the World Cup (2014) and the Olympics (2016 in Rio) in quick succession, the country has a rare opportunity to showcase its potential and maximise long-term economic benefits.

Brazil has already allocated US$11bn for the World Cup and US$14bn for the Olympics. This is substantially more than South Africa, but with a construction industry more than seven times the latter’s size, the impact is likely to be more moderate. For the 2010-2014 period, when the majority of the investment will take place, BMI’s infrastructure team is forecasting average real growth of 7% per year for construction industry value.

But before Rio hosts the Olympics, London will host the games in 2012. BMI expects only a limited boost to the construction industry from the UK’s preparations, with much of the crucial infrastructure for catering to an influx of people already in place. The main investments will be on the Olympic venues and village. A further reason for a cautious outlook is the UK’s financial position, which allows for limited frivolous spending, especially with a new, fiscally conservative government in place.