Category Archives: Building Plans

A total of 193 building plans were approved by the City of Windhoek in August, 12 more than in July. The value of approvals increased to N$135.5 million in August as opposed to N$114.9 million in June. A total of 97 building plans were completed during the month with a value of N$98.1 million. Year-to-date, N$1.14 billion worth of building plans have been approved, 20.6% lower than the corresponding period in 2018. On a twelve-month cumulative basis, 1,937 building plans have been approved worth approximately N$1.54 billion, 19.1% lower in value terms than cumulative approvals in August 2018.

154 additions to properties were approved in August with a value of N$66.5 million, a drop of 8.9% m/m and 20.0% y/y in value terms. Year-to-date 1,061 additions to properties have been approved with a total value of N$501.7 million, a decrease of 5.9% y/y in number and 28.8% y/y in value terms. On a 12-month cumulative basis, the number of additions approved contracted by 10.3% y/y and 29.4% y/y in value terms. Year-to-date 607 additions have been completed with a combined value of N$309.3 million, down 61.8% y/y in number and 37.9% y/y in value terms.

New residential units accounted for 34 of the approvals registered in August, an increase of 9.7% m/m. In value terms, N$42.5 million worth of residential units were approved in August, increasing by 139.9% m/m but contracting by 54% y/y. Year-to-date residential unit approvals have decreased by 31.3% y/y in number and 8.5% y/y in value terms. On a 12-month cumulative basis, residential units recorded a 20.1% y/y decrease in number of approvals and a 7.4% y/y in value.

5 new commercial units, valued at N$26.5 million, were approved in August, bringing the year-to-date number of commercial and industrial approvals to 28, worth a total of N$235.1 million. Year-to-date, this is the same number of commercial approvals compared to the corresponding period in 2018, but represents a contraction of 19.1% y/y in value terms. On a rolling 12-month basis, the number of commercial and industrial approvals fell to 43 units worth N$495.1 million as at the end of August. This is a decrease of 15.7% y/y in number and 6.2% y/y in value. The drop-in figures indicate the declining level of activity in the industry.

In the last 12 months 1,937 building plans have been approved, decreasing by 12.4% compared to August 2018. These approvals amounted to N$1.54 billion, representing a decrease in value of 19.1% y/y. According to the Namibia Statistics Agency, construction industry recorded a negative sectoral growth rate of 27.8% in the first quarter of 2019 and 5.5% in the second quarter. We expect this trend to continue in the medium-term, given the current state of the economy. This continues to be of concern as the construction industry forms part of the key sectors along with mining and agriculture in the Namibian economy.

The BoN took the decision to cut interest rates by 25 bps in August and this has brought some relief to indebted consumers and businesses. However, private sector credit extension for August indicates that although there has been an increase in the uptake of credit on year-to-year basis, it has mainly been short-term and overdraft facilities. Household have taken up most (64.3%) of the credit extended compared to businesses. The outlook remains gloomy as the extension of short-term debt remains on the rise as opposed to financing for more productive loans.

The latest GDP data from the Namibia Statistics Agency indicates that key economic sectors remain under pressure and the economy is contracting by more than initial projections by the central bank.  According to the NSA, the economy has contracted by 2.6% in the second quarter of 2019 with growth in the construction sector contracting by 5.5% in real value-added terms. We expect the economy, and construction activity as a result, to remain under pressure as both consumer and business confidence remains low.

A total of 181 building plans were approved by the City of Windhoek in July, 37 more than in June. The value of approvals increased to N$114.9 million in July as opposed to N$60.5 million in June. A total of 218 building plans were completed during the month with a value of N$108.3 million. Year-to-date N$1.0 billion worth of building plans have been approved, 0.7% lower than over the comparative period a year ago. On a twelve-month cumulative basis 2,013 building plans have been approved worth approximately N$1.83 billion, 14.5% higher in value terms than cumulative approvals by the end of July 2018.

147 additions to properties were approved in July with a value of N$73.0 million, increasing by 159.4% m/m but dropping by 24.6% y/y in value terms. Year-to-date 907 additions to properties have been approved with a total value of N$435.2 million, a decrease of 0.9% y/y in number and 29.9% y/y in value terms. On a 12-month cumulative basis the number of additions approved has decreased by 3.1% y/y and by 27.4% y/y in value terms.  Year-to-date 531 additions have been completed with a combined value of N$258.7 million, down 60.1% y/y in number and 37.7% y/y in value terms.

New residential units accounted for 31 of the approvals registered in July, an increase of 40.9% m/m. In value terms N$18.1 million worth of residential units were approved in July, increasing by 5.8% m/m but contracting by 84.6% y/y. Year-to-date residential unit approvals have decreased by 31.9% y/y in number but are up by 3.9% y/y in value. On a 12-month cumulative basis a 12.5% y/y decrease in number of residential unit approvals was recorded, although increasing by 16.6% y/y in value. Year-to-date 187 residential units have been completed with a combined value of N$257.7, up 289.6% y/y in number and 178.9% in value.

3 new commercial units valued at N$23.8 million were approved in July, bringing the year-to-date number of commercial and industrial approvals to 23, worth a total of N$208.6 million. This is 21.1% up in number from July last year and 386.9% up in value terms. On a rolling 12-month basis the number of commercial and industrial approvals rose to 47 units worth N$546.1 million as at July. This is an increase of 6.8% y/y in number and 386.9% y/y in value. Year-to-date 26 commercial units have been completed with a combined value of N$178.6 million, an increase of 333.3% in number and 639.1% in value terms. This is encouraging despite both figures coming off a very low base.

In the last 12 months 2,013 building plans have been approved, decreasing by 4.8% compared to July 2018. These approvals are valued at N$1.83 billion, an increase in value of 14.5% y/y. As can be seen in the figure above the cumulative value of building plans approved in Windhoek has been trending downward in both nominal terms as well as simple inflation adjusted terms. Despite various spikes in the nominal figure the average value of plans approved continues to decline. As building plan approvals is a leading indicator this does not paint a particularly rosy picture for the construction industry in the capital city in the short term. This outlook concurs with the view of the Bank of Namibia that construction activity is likely to record a fourth consecutive annual contraction in 2019.

As we expected Bank of Namibia took the decision at its MPC meeting to cut interest rates by 25 bps. The decision to cut the Repo rate will bring some relief to indebted consumers and businesses. The central bank’s decision to cut interest rates comes as the domestic economy is projected to contract by 1.7% in the current year. This aims to boost economic growth given the current low consumer and business confidence.

According to the Bank of Namibia’s Economic Outlook for July 2019, growth in the construction industry is expected to remain negative with improvements expected to occur in 2020. Activity in the construction industry is set to recover due to the increase in government’s development budget for 2019/20 and 2020/21.

A total of 144 building plans were approved by the City of Windhoek in May, 15 less than in May. N$60.5 million worth of plans were approved in June as opposed to N$81.3 million in May. A total of 220 building plans were completed during the month with a value of N$225.3 million. Year-to-date, N$885.3 million worth of building plans have been approved, 11.7% more than during the corresponding period in 2018. On a twelve-month cumulative basis, 2,108 building plans have been approved worth approximately N$1.93 billion, 26.6% higher in value terms than cumulative approvals in June 2018.

117 additions to properties were approved in June with a value of N$28.1 million, a drop of 17.5% m/m and 63.8% y/y in value. Year-to-date 760 additions to properties have been approved with a total value of N$362.3 million, decreases of 1.3% y/y in number and 30.9% y/y in value terms. On a 12-month cumulative basis the number of additions approved has decreased by 0.8% y/y as well as by 22.2% y/y in value terms. We continue to see more additions to properties being approved but with a lower overall value being added.  Year-to-date 341 additions have been completed with a combined value of N$194.9 million, down 68.3% y/y in number and 42.6% y/y in value terms.

New residential units accounted for 22 of the approvals registered in June, decreases of 47.6% m/m and 58.5% y/y. In value terms N$17.2 million worth of residential units were approved in June, contracting by 62.7% m/m and 68.0% y/y. Year-to-date residential unit approvals have decreased by 0.5% y/y in number and are up 50.2% y/y in value. On a 12-month cumulative basis residential unit approvals recorded a 50.6% y/y increase in number of approvals and a 76.9% y/y increase in value.

5 new commercial units valued at N$15.2 million were approved in June, bringing the year-to-date number of commercial and industrial approvals to 20, worth a total of N$184.9 million. This is 5.3% up in number from June last year and 331.4% up in value terms. On a rolling 12-month basis the number of commercial and industrial approvals have risen to 44 units worth N$522.3 million. This is a decrease of 15.4% y/y in number but an increase of 192.0% y/y in value.

In the last 12 months 2,108 building plans have been approved, increasing by 7.1% compared to June 2018. These approvals are valued at N$1.93 billion, an increase of 26.6% y/y. Overall the cumulative plans approved have increased in number and value terms compared to a year ago which points to positive future construction activity in the city.

Our expectation is for the Bank of Namibia to follow the SARB’s MPC decision to cut interest rates by 25 bps at next month’s MPC meeting. Consumers and businesses are thus likely to be provided with some slight relief. With the rate cut it will become more attractive for businesses to acquire the debt finance needed to expand and invest in capital projects, but only marginally.

Interest rates are unlikely to be the major barrier to capital projects going forward. The construction industry, along with lenders, have been challenged by sluggish growth in the economy and poor business confidence rather than tight monetary policy. We do not expect the decrease in interest rates to bring about a significant improvement in the approvals and completions data in the short term as business confidence is still lacking.