A total of 234 building plans were approved by the City of Windhoek in June, which is 73 more than the 161 approvals in May. The value of building plans approved in June was N$138.4 million, an increase of 8.4% from the N$127.7 million worth of approvals in May. A total of 250 buildings with a value of N$95.8 million were completed during the month. On a year-to-date basis, 975 plans have been approved, 45 more than the 930 plans approved over the same period last year. The year-to-date value of approved building plans currently stands at N$792.3 million, which is 45.6% lower than during the first half of 2017. On a twelve-month cumulative basis, 1,968 building plans were approved worth approximately N$1.5 billion, 38.2% lower in value terms than the same measure as at the end of June 2017.
The majority of the number of building plan approvals were made up of additions to properties. Additions to properties made up 179 plans of the total 234 plans approved in June. Year-to-date, 770 additions to properties have been approved, increasing by 2% y/y but decreasing by 14.5% y/y in value terms to N$524.4 million.
New residential units were the second largest contributor to the number of building plans approved with 53 approvals registered in June, 16 more than in May. 186 new residential units were approved year-to-date, which is 28 more than the corresponding period in 2017. In dollar terms, N$225.1 million worth of residential plans have been approved year-to-date, a contraction of 20.4% when compared to the first half of last year.
2 Commercial and industrial building plans were approved in June, worth N$7.0 million. This is one fewer than in the prior month, but an increase of 128.8% m/m and a decrease of 30.0% y/y in value terms. The number of new commercial units approved thus far in 2018 amounted to 19, valued at N$42.9 million. This compares to 17 units valued at N$561.3 million approved over the same period in 2017. On a 12 month-cumulative basis, the number of commercial and industrial approvals has decreased by 13.3% y/y in June to 52 units, worth approximately N$178.9 million, a decrease of 76.1% in value terms over the prior 12-month period.
During the last 12 months 1,968 building plans have been approved, increasing by 6.5% compared to June 2017. These approvals amounted to N$1.5 billion, which is a decrease in value of 38.2% y/y. Much of this is due to a single project worth N$501 million (Wernhill expansion) included in the base period and not in the current 12-month period. The number of building plans approved, on a cumulative 12-month basis, has been steadily increasing since December 2017.
Our expectation is for the BoN to follow the SARB’s MPC decision to keep interest rates unchanged at next month’s MPC meeting. Consumers and businesses are thus unlikely to be provided with slight cost of debt relief in the near-term, meaning that it will not become more attractive for businesses to acquire the debt finance needed to expand and invest in capital projects. That said, interest rates are unlikely to be the major barrier to capital projects as they remain relatively accommodative. A larger obstacle to securing credit is that banks are weary of the construction industry at present as the balance sheets of many players in the industry are stretched. Another factor affecting the construction industry in Windhoek is the scarcity of land on which to build. We do not expect a significant improvement in the approvals and completions numbers in the short term due to the factors mentioned.