Building Plans – October 2016
A total of 191 building plans were approved in October with a value of N$138.6 million. On a year-to-date basis, the City of Windhoek has approved 1,550 building plans, way below the 2,176 plans approved over the same period in 2015. The year to date value of building plans approved is currently N$1.70 billion, below the year to date figure of N$1.79 seen in October 2015.
The largest portion of building plans passes were made up of additions to properties, from both a number and value perspective. Cumulatively 1,228 additions to properties have been approved with a value of N$ 815.3 million, a 4.1% increase in value from the corresponding period in 2015.however, the number of additions decreases by 479 approved plans.
Year to date 227 residential units were approved, this is 125 less than the 2015 figure of 352 and 136 less than the ten-year average of 363. In dollar terms, N$442.7 million worth of residential plans were approved year to date, in line with the N$422.2 million over the same period in 2015 and the N$405 million average figure over the last ten years.
The number of commercial units approved in 2016 so far amounted to 73, valued at N$438.0 million. This compares to 108 units, valued at N$449.2 million over the same period last year. On average over the last 10 years, 64 commercial units, valued at N$392.8 million were approved year to date.
The 12-month cumulative value of building plans approved declined slightly in October. The cumulative value of plans approved in October was N$2.10 billion, 2.9% lower than the value approved over the same period last year.
The 12-month cumulative number of building plans approved continued its trend of decline. On a 12-month cumulative basis, 1,841 building plans were approved in October, 27.6% less than the same measure for October last year. This figure has nearly halved from the peak in September 2013 to a low last seen in 1997. As a leading indicator for economic activity in the country this reinforces our view that we will see economic growth slow in 2016 and possibly beyond.
The slowdown in the number of building plans approved has been largely driven by a lack of serviceable land in Windhoek. The Municipality has indicated that, there is a high demand for land, but little land left around Windhoek that can be developed. It follows that this bottleneck in the availability of serviceable land has been a factor in the high number of additions relative to new developments. People have little choice but to make better use of the available space they already have. However, the fact that the number of additions is slowing points to less potential value in additions or possibly saturation of the available space.
At the beginning of the year, we believed that some growth could be expected in the construction sector. This was largely owing to several large government projects expected to commence within the year. We have revised this view earlier this year, and our suspicions were confirmed at the most recent midterm budget. Government has cut both the development and operational budgets quite aggressively. Spending on construction was cut by an immense N$1.5 billion for the remainander of this financial year and a moratorium has been placed on all government construction projects going forward. This should have a negative effect on economic activity in general, but the construction sector in particular. Thus, we forecast a contraction in the construction industry of 4.5% over the next year.