Category Archives: Building Plans

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.

A total of 161 building plans were approved in May by the City of Windhoek, which is three fewer the 164 approvals in April. In value terms, however, approvals increased by N$31.2 million to N$127.7 million, a 32.3% m/m increase from April. A total of 201 completions to the value of N$51.6 million were recorded in May. The year-to-date value of approved building plans reached N$653.9 million, 43.7% lower than the comparative period a year ago. On a twelve-month cumulative basis, 1,916 building plans were approved worth approximately N$1.7 billion, 27.7% lower in value terms than approvals as at the end of May 2017.

Of the total 161 plans approved in May, additions to properties accounted for 121 of these approvals. Year-to-date, 591 additions to properties have been approved, decreasing by 0.8% y/y but rising 24.3% y/y in value terms to N$446.6 million.

New residential units were the second largest contributor to the number of building plans approved with 37 approvals registered in May, only one more than the 36 approvals in April. Year-to-date, 133 new residential units have been approved, three fewer than during the corresponding period in 2017. In monetary terms, N$171.5 million worth of residential plans have been approved year-to-date, a contraction of 31.6% when compared to the corresponding period last year.

Commercial and industrial building plans approved in May amounted to 3 units, worth N$3.1 million. This is two more than in the prior month, but a decline of 61.3% m/m and 99.4% y/y in value terms. Year-to-date, 17 plans for commercial and industrial purposes have been approved, valued at N$35.9 million. This compares to 16 units valued at N$551.3 million approved over the same period in 2017. On a rolling 12-month perspective, the number of commercial and industrial approvals have decreased by 17.7% y/y in May to 51 units.

The 12-month cumulative number of building plans approved increased by 8.0% as at the end of May when compared to the corresponding period in 2017. A total of 1,916 building plans to the value of N$1.7 billion were approved over the last 12 months which represents a decrease in value of 27.7% y/y due to a single project worth N$501 million dropping out of the 12-month cumulative range. The number of building plans approved, on a cumulative 12-month basis, has been increasing steadily since December 2017.

Consumer and business confidence, as measured by the IJG Business Climate Monitor, showed improvement in April 2018, rising to 51.94 points from 50.87 in March. The leading indicator, however, fell to 43.75 points from 47.6 in March, as a result of reduced government spending, a weaker currency and slow private sector credit extension. This is an indication that forecasts for a sustained recovery from the recession observed in 2017 remain fragile. No relief is expected in terms of interest rate cuts or increased fiscal stimulus in the short term.

A total of 164 building plans were approved by the City of Windhoek in April. This is a m/m increase of 27.1% from the 129 plans approved in March and follows from two consecutive months of declines in the number of building plans approved. In value terms approvals increased by N$14.1 million to N$96.5 million, representing a 17.1% m/m increase in April. The number of completions for the month of April stood at 231, valued at N$55.5 million. The year-to-date value of approved building plans reached N$526.2 million, 4.1% higher than the comparative period in 2017. On a twelve-month cumulative basis, 1,937 building plans have been approved as at the end of April, an increase of 14.3% y/y. The 12-month cumulative value of plans approved reached approximately N$2.2 billion, an increase of 27.9%.

Additions to properties made up 127 out of the total 164 approved building plans recorded in April. This is a 19.8% m/m increase in additions from the 106 additions recorded in March. Year-to-date 470 additions to properties have been approved with a value of N$372 million, rising 35.2% y/y in terms of value.

New residential units were the second largest contributor to the number of building plans approved with 36 approvals registered in April, a m/m increase of 90% compared to the 19 residential units approved in March. Year-to-date, 96 new residential units have been approved, 4% less during than the corresponding period in 2017. In value terms, N$41 million worth of residential units were approved in April, 70% more than the N$25 million worth of residential approvals in March. The year-to-date value of residential approvals reached N$122 million, 32.6% lower than during the corresponding period in 2017.

Only 1 new commercial unit valued at N$8 million was approved in April, bringing the year-to-date number of approvals to 14, worth a total N$32.8 million. On a rolling 12-month perspective the number of commercial and industrial approvals have slowed to 51 units as at April, compared to the 61 approved over the corresponding period a year ago. The 12-month cumulative building plans approved within the last 12 months include a single project worth N$501 million and the average approvals in terms of value for this period was N$56.7 million. Excluding this single large project, approvals from a 12-month cumulative basis decline by almost 34% and indicates the generally low level of investment from the business community.

From a 12-month cumulative perspective, 1,937 total building plans have been approved by April, an increase of 14.3% when compared to the corresponding period in 2017. The 12-month cumulative number of approvals has been ticking up since December 2017 and does provide for an optimistic view for approvals to return to above the 2,000-mark, last seen exactly 2 years ago. Consumer and business confidence, as measured by the IJG Business Climate Monitor, fell slightly to 50.8 points in March from 50.9 in February. That it remains above the 50-point mark does signal that an economic turnaround could be on the horizon.

The interest rate environment has changed since the turn of the year. Monetary easing was widely expected to spur economic growth in 2018. This expectation dissipated with the market now not pricing in any more rate cuts in South Africa for 2018. What seems more likely at present is a possible rate hiking cycle, driven by recent rand weakness and an increasing oil price. These two inputs will weigh heavily on the SARB’s inflation expectations with risks being toward the upside, changing the narrative towards higher interest rates should inflation rise outside of the SARB’s target band of 3%-6%. BoN, which has kept its repo rate unchanged and simultaneously adding a 25bps buffer over the SA rate, is likely only to react if the SARB hikes rates beyond BoN’s current 6.75% repo rate. This effectively will offer no reprieve to consumers whom have been the biggest users of credit.