*Excluding walls and pools
A total of 108 building plans worth N$155.7m were approved by the city of Windhoek in June. On a year-to-date basis, 843 plans have been approved, significantly fewer than the 1,317 plans approved over the same period last year. In value-terms, approved plans on a cumulative year-to-date basis are worth N$958.2 million, 13.3% less than the value recorded over the same period last year. This year to date decrease in the number of plans approved is due to many factors, including a fall in demand, slower approval of plans from the municipality, and water constraints in Windhoek.
On a monthly basis, 6 more building plans were approved in June than in May. The value for the plans passed in June came in at N$155.7m, 184.2% above the May figure. 19 residential units and 86 additions were approved by the municipality during June. The total value for residential units and additions approved in June stood at N$37.1 million and N$94.9 million respectively. The number of commercial and industrial plans approved in June increased to just 3, with a value of N$23.7 million.
The subdued trend in the 12-month cumulative number of plans approved continued in June, bringing the number down to 1,993 units from 2,129 in May, reflecting a fall of 28.9. As shown in the graph below, the level of the 12-month cumulative number of plans approved has fallen far below the 16-year average for this measure.
Both Windhoek and Namibia as a whole have experienced a massive boom in the construction industry since 2012, with an average annual approval of N$2.265 billion worth of building plans over this period. From a GDP perspective, the Namibian construction industry contributed about 6% to total GDP in 2016.
As the construction at the B2Gold mine and the Tschudi copper mine has been completed in late 2014 and early 2015, and construction of the Husab mine is nearing completion, the growth contribution from the construction sector has now topped out. Water scarcity, coupled with the aforementioned base effects from the mining sector and a large reduction in the development budget are expected to drive a contraction in the mining sector in 2016. As a result, IJG has revised down its 2016 growth forecast for the construction industry to -4.5% (from 8.3% growth) to reflect the current state of the sector.
Water remains a large issue for the central area of Namibia’s construction industry. The NamWater dam level report, dated 11 July 2016, indicates that all three dams (Von Bach, Swakoppoort and Omatako) supplying water to Windhoek are currently extremely low, at 8% of full capacity (the lowest abstraction capacity). NamWater expects these dams to run out of water by December 2016.
As a water-heavy industry, the current water situation is restrictive to large scale construction activity. This further suggests that we could see fewer building plans approved by the City of Windhoek going forward. Consequently, if the water condition in the central region deteriorates further, or we see more water restrictions and new tariffs being introduced, this could have a further adverse impact on construction activity around Windhoek.