Category Archives: Building Plans

A total of 162 building plans were approved by the City of Windhoek in January, representing a 78.0% m/m increase from the 91 in December. The value of building plans approved increased by N$207.8 million from N$64.9 million in December to N$272.7 million in January. 87 Buildings with a value of N$54.2 million were completed in January, versus 78 buildings worth N$16.4 million completed in December. January 2019 is off to a slightly better start in terms of both number and value of approvals, compared to January 2018 when 153 building plans worth N$269.3 million got the nod. On a twelve-month cumulative basis, 2,127 building plans worth approximately N$1.84 billion were approved, an increase in number of 11.8% y/y, but a decrease of 16.3% in value terms over the prior 12-month period.

In terms of number of approvals, additions to properties made up the largest portion of approvals. For the month of January, 131 additions to properties were approved with a value of N$34.8 million, N$197.9 million less in value terms than in January 2018, but 2 more than the number of additions observed in the first month of 2018.

New residential units were the second largest contributor to the total number of building plans approved in January. 29 new units worth N$167.9 million were approved in January, representing a 580.2% increase from the N$24.7 million approved in the first month of 2018. It is however worth noting that one of these approvals is a N$125.0 million residential project approved for the city centre.

The number of commercial and industrial units approved in January only amounted to 2, valued at N$70.0 million. This compares to 7 units valued at N$11.9 million approved in January 2018. On average over the last 20 years, 4 commercial units valued at N$19.6 million were approved in the first month of the year.

The 12-month cumulative number of building plans approved ticked up slightly in January with an 11.8% y/y increase. A total of 2,127 building plans to the value of N$1.8 billion were approved over the last 12 months which represents a decrease in value terms of 16.3% y/y. The majority of these approvals are additions to properties which are typically of low relative value. Growth in commercial and industrial construction activity remains extremely subdued as the decrease (on a 12-month cumulative basis) in credit extended to corporates also reflects.

With government still in a fiscal consolidation cycle and spending less on capital and infrastructure projects, we expect the sector to remain under pressure for most part of the year. The mid-term budget released late last year pointed to little additional public funds flowing into the sector. In fact, funds were prioritised to operational expenditure with the African Development Bank loan replacing the funding for larger infrastructure projects in 2019. Infrastructure funding from outside Namibia as well as public private partnerships are now necessary to drive the infrastructure investment that Namibia so desperately needs. We may see more efforts to attract and deploy funds from external sources in 2019 due to it being an election year, which may provide some potential for industry growth.

Building plans statistics for the remaining two months of 2018 were recently released by the City of Windhoek. A total of 91 building plans were approved in December, which is a 9.9% m/m decline from the 101 plans approved in November. In value terms, however, approvals increased by 58.3% m/m to register N$65 million worth of approvals in December compared to N$41 million in November. A total of 78 buildings with a total value of N$16.4 million were completed during December, representing declines of 57% m/m and 56% m/m in the number and value of completions, respectively. A total of 2,118 building plans were approved in 2018, 195 more than in 2017. However, in value terms approvals declined by 16.1% in 2018, falling to N$1.84 billion from N$2.19 billion in 2017.

Additions to properties once again made up the majority of building plans approved in 2018. Of the 2,118 building plans approved in 2018, additions accounted for 1,595 of those approvals, 12 more than in 2017. In value terms however, approvals of additions for the year declined by N$145 million or 14.0% y/y. The value of additions approved has been contracting for the past three years, with the 2018 decline less pronounced than the 41.9% contraction in 2016 and the 36.7% contraction in 2017. 77 additions were approved in December, only 2 more than in November, although 170.4% higher in value terms at N$55.6m.

New residential units were the second largest contributor to the total number of building plans approved with 480 approvals registered in 2018, 190 more than in 2017. In value terms new residential units approved increased from N$422.4 million in 2017 to N$532.2 million in 2018. Residential approvals were the third largest contributor of the total building plans approved in 2017 but returned to second in 2018 due to a slowdown in commercial and industrial approvals. On a month to month basis, the number and value of new residential approvals declined by 15.4% and 44%, respectively.

The subdued level of business confidence is on display in terms of the commercial and industrial building plans approved in 2018. A total of 43 commercial and industrial units were approved in 2018 compared to the 50 approved in 2017. In value terms commercial and industrial approvals fell by N$317 million or 45.5% for the year in 2018 from the N$697.3 million in 2017. This highlights the lack of capital expenditure in the Windhoek area. On a month-on-month basis, a total of three commercial and industrial projects worth N$1.1 million were approved in December, which represents a 59% m/m increase from November.

Although there has been a 10.1% increase in the number of building plans approved in 2018 compared to 2017, the cumulative number of plans is almost 40% down from its peak in 2013. The value of approvals has slowed to only N$1.84 billion worth of approvals in 2018 compared to the N$2.19 billion worth of plans approved a year ago. The biggest driver of approvals remains additions, which are enhancements and refurbishments to existing properties. The number of additions has increased by 0.8% y/y, but in terms of value, additions have declined 13.5% y/y. We’ve been concerned by the lack of commercial and industrial approvals in 2018, noting that these were signs of businesses not making capital investments. The largest commercial project approvals in 2018 were recorded in August and September of N$248 million and N$78 million, respectively. These two approvals alone make up 86% of the total commercial approvals registered in 2018.

Bank of Namibia in its December Economic Outlook Update noted that it expects the domestic economy to rebound in 2019 and register growth of 1.5% following two contractionary years. 3Q2018 GDP data released by the NSA shows that growth in the construction industry is still in negative territory, contracting 6.5% y/y as at 3Q2018. Year-to-date figures do however show a 13.5% improvement in construction when compared to the corresponding three quarters of 2017.   The year-to-date improvement is owed largely to base effects, but the outlook for the sector is certainly focused more to the upside rather than the downside. Risks to the outlook of building plans also hinges on service delivery from the City of Windhoek, and reports that the municipality’s capital budget for the current financial year has been slashed by 88% are worrisome. The budget has been reduced to only N$83 million for 2018/19, which pales in comparison to the N$716 million approved the previous year. The City of Windhoek has stated that current plot servicing projects are undertaken through public-private partnerships and as such are not affected. However, future projects and new developments will be affected by the budget cut, and thus provides some pessimism for the 2019 outlook for building plans.

A total of 101 building plans were approved by the City of Windhoek in November which represents a 60.1% m/m decrease from the 253 building plans approved in October. In value terms, approvals fell by N$114.8 million to N$41.0 million, representing a decline of 73.7% m/m and 76.1% y/y. The number of completions for the month of November stood at 180, valued at N$37.4 million. On a year-to-date basis, 2,027 plans have been approved, 220 more than over the same period last year. The year-to-date value of approved building plans currently stands at N$1.77 billion, which is 15.1% lower than during the corresponding period in 2017. On a twelve-month cumulative basis, 2,143 building plans were approved, an increase of 10.9% y/y, worth approximately N$1.87 billion, a decrease of 14.7% in value terms over the prior 12-month period.

The largest portion of building plan approvals in November were made up of additions to properties, from both a number and value perspective. 75 additions to properties were approved with a value of N$20.6 million, 82.2% less in value terms than in November 2017. Year-to-date 1,518 additions to properties have been approved with a value of N$871.3 million, declining 12.2% y/y in terms of value.

New residential units accounted for 25 of the total 101 approvals registered in November, a m/m decrease of 46.8% compared to the 47 residential units approved in October. In value terms, N$19.7 million worth of residential units were approved in November, 55.2% less than the N$44.1 million worth of residential approvals in October. Year-to-date 469 residential units have been approved, 192 more than in the corresponding period in 2017. In monetary terms, N$524 million worth of new residential plans have been approved year-to-date, an increase of 28.5% when compared to the corresponding period last year.

Only 1 new commercial unit valued at N$700,000 was approved in November, bringing the year-to-date number of approvals to 40, worth a total of N$379.2 million. On a rolling 12-month perspective the number of commercial and industrial approvals have slowed to 44 units worth N$385.2 million as at November, compared to the 49 approved units worth N$698.1 million over the corresponding period a year ago.

Building plan approvals took a sharp downturn in November, in terms of both number of approvals and value. Recent private sector credit extension data shows that growth in short-term credit such as overdrafts has been stronger than growth in long-term credit such as mortgage loans for both consumers and businesses. This is an indication that corporates are borrowing simply to stay afloat and are not borrowing to invest in expansionary projects, as is evident in the commercial building plan approval figures. Building plan approvals are a leading indicator for economic activity, which makes November’s low figures somewhat worrisome as it implies that businesses are not investing freely and that the economy is likely to remain under pressure in the short term.