A total of 182 building plans were approved by the City of Windhoek in February 2016. This is an uptick in the number of plans approved on a monthly basis when compared to the 166 plans that were approved in January. The value of building plans totaled N$211.9 million, largely driven by commercial properties being approved.
29 residential units and 140 additions were approved by the municipality during February, The value of the plans approved for additions and houses were valued at N$52.6 million and N$22.8 million respectively, while 13 commercial and industrial plans got the go-ahead in February. The value of commercial and industrial buildings approved in February totaled N$136.5 million, accounting for 64% of the value of total plans approved.
The 12-month cumulative number of plans approved continued to lose momentum during February, falling to 2,367 compared to 2,398 in January, with the year-on-year growth rate contracting by almost 14%, posting negative growth for the 22nd consecutive month. As shown in the graph below, the level of the 12 month cumulative number of plans approved has fallen well below the 20-year average number of plans approved of 2,500.
Namibia experienced a massive boom in the construction industry since 2010, especially over the last 4 years, with an average of N$2.265 billion worth of building plans that were approved over this period. From a GDP perspective, the Namibian construction industry contributes about 4% to GDP, or N$5.776 billion recorded 2014.
In our view, the Namibian construction sector will remain vibrant during 2016, with both private sector and government having aggressive development plans. However, as the construction at the B2Gold mine and the Tschudi copper mine being completed during 2015 and construction of the Husab mine nearly completed, the growth contribution from the construction sector is expected to decline.
A major concern is the possibility of water restrictions in Namibia, especially in the central region. NamWater announced 18 February 2016, that water supply to Windhoek will be cut by 20% in an attempt to postpone dams running dry in August this year to April 2017. Water shortages and restrictions in Windhoek will directly affect economic activity in Namibia, impacting water dependent industries, such as construction. If water restrictions are implemented, it would have a severe impact on the construction industry as they are heavily reliant on water supply and given the magnitude of construction activity in Windhoek, a standstill of construction activity in the capital would have a significant impact on the total GDP.