A total of 146 building plans to the value of N$188.8 million were approved by the City of Windhoek in March 2016. On a year‑to‑date basis, 444 plans were approved compared to 672 plans over the same period last year, down 33.9%. However, in value terms, plans approved year-to-date are worth N$529.4 million compared to N$462.3 million for the same period in 2015, up 14.5%. This year to date increase in value of plans approved is mostly due base effects as large commercial projects were approved by the municipality so far in 2016.
On a monthly basis, 36 less plans were approved in March than in February, and the total value of plans approved was down 3.2% month on month. 14 residential units and 126 additions were approved by the municipality during March. The value of the plans approved for houses and additions were valued at N$60.4 million and N$85.9 million respectively, while 6 commercial and industrial plans valued at N$42.4 million got the go-ahead in March.
The 12-month cumulative number of plans approved continued to lose momentum during March, falling to 2,239 compared to 2,367 in February, with the year-on-year growth rate contracting by 22.1%, posting negative growth for the 23nd 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.
We have 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. Cabinet has also approved a water tariff increase of 10% during the current financial year. NamWater has given no indication as to when the implementation date for the hike will be. Although the decision to increase the tariff was made in March, the minister of communication and technology, Mr Tjekero Tweya, only made announcement Monday, 11 April. NamWater is only required to give a months’ notice before any hike is implemented. Water restrictions and tariff hikes will directly affect economic activity in Namibia, impacting water dependent industries, such as construction. If water restrictions and new tariffs 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.