A total of 116 building plans valued at N$128.7 million were approved by the City of Windhoek in January 2016. It looks like a good start for 2016 as 43 more plans were approved in January compared to a seasonally slower December, however it is significantly less than the 220 average number of building plans approved in January over the last 10 years.
The 12 month cumulative number of plans approved continued to lose momentum during January, falling to 2,398 compared to 2,467 in December, with the year-on-year growth rate contracting by 14.4%, posting negative growth for the 21st consecutive month. As shown in the graph below, the level of the 12 month cumulative number of plans approved is now more in line with the 2500 20-year average number of plans approved. The period between September 2012 and September 2013 saw a significant increase in number of plans approved as new regulation stipulates all plans of exiting property must be updated with any additions made before the property can be sold, together with a construction boom in flats and houses during that period.
The 12-month cumulative value of plans approved totalled N$2.230 billion, up 0.8% in January compared to a 4.4% decrease in December.
15 residential units were approved by the municipality during January, down 58.3% year on year. Plans for flats and houses approved were valued at N$23.7 million in contrast to the 36 plans worth N$35.3 million in January 2015, down 32.8%.
The City of Windhoek approved 95 additions in January 2016, a decrease of 31.2% from 138 plans approved in January last year, however, from a value perspective, the value of additions approved increased from N$32.6 million in January 2015 to 63.0 million this year.
6 commercial and industrial plans were approved through January, 5 less than the 11 projects that got the go-ahead in January 2015. The value of commercial and industrial building plans approved, however, is up 55.7% on January last year. The value of commercial and industrial buildings approved in January is N$41.9 million, where as the value in 2014 was N$26.9 million.
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 yesterday, 18 February 2016, that water supply to Windhoek will be cut by 20% as of 1 March 2016 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 in Namibia, it would have a severe impact on the construction industry as they are heavily reliant on water supply.