Johannesburg — SMALL and mid-sized construction companies that turned down work a year ago because they were so busy with residential construction projects are now begging for work.

There are concerns that this could cause job losses.

John Whall, a director of development, construction and marketing company Montagu Property Group, says that a year ago these construction companies "were extremely busy" and did not even want to "price jobs".

"A lot of them were building residential developments. Residential developments have come to a halt because of an oversupply," says Whall.

The sector has had a dramatic reversal of fortunes over the past year because of increasing interest rates and a glut of properties on the market. The power supply crisis is also having a negative effect.

Whall says mid-sized construction companies are now desperate to obtain work on office and industrial property developments.

David Green, MD of commercial and industrial property brokers Pace Property Group, says small construction companies are facing much tougher times.

"It is unfortunately quite concerning as many of the small construction companies currently only have the projects which, have not yet been completed on their books, and are not able to obtain further contracts for the balance of 2008 and beyond.

"This is a result of the residential slowdown, the electricity crisis and the escalated building costs, which have rendered many projects unfeasible," says Green.

He says the larger construction companies are "all fine" because there is still "more work available to them, particularly from the infrastructural development government projects and other major building works. This is not the same for the small to mid-sized construction companies.

"I think it's highly likely that many of the smaller companies will not be able to weather this particular storm.

"The net result will be they will be laying off a lot of staff, and this sector is a major employer within the construction industry as a whole."

First National Bank property strategist John Loos says that if mid-sized construction companies had previously been "busy on residential and retail" developments, they would be "experiencing a significant slump in work, generally speaking".

Loos says there is still a "strong need for space, given the low vacancy rates" in construction activity in the industrial and office property sectors.

He says various supply-side constraints would be more of an issue for construction companies periodically in these two sectors.