Category Archives: Building Plans

A total of 131 building plans were approved in December with a value of N$108.2 million. For the 2016 calendar year the City of Windhoek approved 1,872 building plans, well below the 2,467 plans approved in 2015. Cumulatively 2016 witnessed the approval of N$1.95 billion worth of plans, also well below the 2015 figure of N$2.20 billion.

The largest portion of building plan approvals were made up of additions to properties, from both a number and value perspective. Cumulatively 1,452 additions to properties have been approved with a value of N$ 926.8 million, 15.2% less in value terms compared to 2015 and 497 less than the number of additions observed in the previous calendar year.

New residential units were the second largest contributor to building plans approved. 286 residential units were approved in 2016, 96 less than 2015 when 382 units were approved. In dollar terms, N$553.3 million worth of residential plans were approved, 18.6% higher than the previous calendar year.

The number of commercial units approved in 2016 amounted to 84, valued at N$460.0 million. This compares to 136 units valued at N$636.9 million for the calendar year of 2015. On average over the last 10 years, 81 commercial units valued at N$496.6 million were approved annually.

The 12-month cumulative number of building plans approved ticked up slightly at the end of 2016. On a 12-month cumulative basis, 1,872 building plans were approved, 24.1% less than the same measure for December 2015. This figure has nearly halved from the peak in September 2013 to lows last seen in 1997. As a leading indicator for economic activity in the country this reinforces our view that we will see negative economic growth for the 2016 reporting period.

A lack of serviceable land has often been cited as the reason for the slowdown in building plans. The Municipality has indicated that there is a high demand for land, but little land left around Windhoek that can be developed. As a result, additions to existing property have exceeded new construction fourfold. However, the slowdown in additions point to less potential value in additions or possibly saturation of the available space.

At the beginning of 2016, the outlook for construction was relatively positive due to several large government projects expected to commence within the year. We revised this view several times during 2016, 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 a material N$1.5 billion in this financial year alone 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 continue to forecast a contraction in the construction industry for 2017.

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.

A total of 218 building plans were approved in September to the value of N$156.6 million. On a year-to-date basis, the City of Windhoek has approved 1,359 building plans, a significant decrease when compared to the 1,965 plans approved over the same period last year. However, the dollar value of building plans approved on a year-to-date basis stood at N$1.560 billion in September, up 1.1% or N$16.5 million over the comparable period last year.

Majority of building plans approved, were for plans of additions to existing structures. Year to date, a total of 1,103 building plans for additions were approved in September, 437 less plans when compared to the same period last year and almost 500 less when compared to the average ytd figure for September over the last 10 years. From a value perspective however, N$764.3 million worth of additions were approved year to date, which compares to N$720.4 million over the same period last year and N$549.3 million average ytd figure since 2006.

Year to date, 126 less residential units were approved when compared to 317 over the same period last year and 132 less than the ytd average since 2006. In dollar terms, N$372.7 million worth of residential plans were approved year to date, more or less in line with the N$373.5 million over the same period in 2015 and N$365.2 million average ytd figure over the last ten years.

The number of commercial units approved in 2016 so far amounted to 65, valued at N$422.7 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, 59 commercial units, valued at N$320.7 million were approved year to date, well below the ytd value for September 2016.

The 12-month cumulative number of building plans approved picked up slightly in September, as depicted by the graph below.  On a 12-month cumulative basis, 1,861 building plans were approved in September, 27.1% less than the same measure for September last year. In value terms however, 12-month cumulative value of plans approved in September was 10.4% higher than the value of plans approved over the same period last year, at N$2.212 billion. The 12-month cumulative number of building plans approved has fallen to a level last seen in 1997, with most of this drop happening during the last 18 months. 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 as opposed to the popular belief that water restrictions in the Khomas region has been the causal factor. Furthermore, there have been no water restrictions imposed on construction activities around Windhoek. The Municipality has indicated that, there is a high demand for land, but little land left around Windhoek that can be developed.

Anecdotal evidence suggests that the lack of available land has contributed to a large extent to the number of additions applied for over the last 15 years as well as limiting the amount of new plans applied for. As property prices increase due to lack of supply so does the number of people living under one roof which may then lead to additional space added to existing buildings. Children stay with their parents for longer, and families accommodate members who cannot afford to rent, etc. The fact that we have seen a steady decline in additions on a cumulative basis over the last two or so years suggests that value addition to existing properties has become significantly less affordable and that the gains from such additions are now much less pronounced than before.

Half-year revision of our growth expectations

At the beginning of the year, we believed that some growth could be expected in the construction sector, following what we believe will be a large contraction in 2015, mostly due to base effect as a result of three big mines constructed through 2014. However, this view was based on the expectation that we would see the commencement of a number of large government projects during the year, including water and energy projects. We have now revised this view, and believe that these projects will not start until later years. In the meantime, Government has also cut the capital budget aggressively. The slowdown seen in the number of building plans approved also suggest difficult times ahead for the construction industry.   As a result, we have revised down our growth forecast for the construction industry for the year, expecting a contraction of 4.5%.

Going forward, affordability issues are likely to mean that the lack of availability of land will become an even bigger issue than it is at present. In the past the lack of available land has driven increases in property prices, but the limit of affordability is currently being tested, and thus property prices are unlikely to increase at the accelerated rate seen previously.