Category Archives: Building Plans

A total of 121 building plans were approved in July to the value of N$175.4 million. On a year-to-date basis, the City of Windhoek has approved 964 building plans, a significant decrease when compared to the 1,552 plans approved over the same period last year. The dollar value of building plans approved on a year-to-date basis stood at N$1,133.6 in July, down 9.3% or some N$116.2 million over the comparable period last year. The slowdown in the number of building plans has been mainly driven by lack of land available in Windhoek.

A total of 13 more building plans were approved in July than in June. The dollar value of the plans approved in July came in at N$175.4 million, up 12.6% when compared to last month’s figure.  14 more residential units and 98 additions were approved during July. The residential units and additions approved in July were worth N$32.61 million and N$115.72 million respectively. The number of commercial units approved in July amounted to 9, valued at N$27.04 million.

The 12-month cumulative number of building plans approved continued trending down in July, as depicted by the graph below.  On a 12-month cumulative basis, 1,879 building plans were approved in July, 30.9% less than the same measure for July last year. In value terms however, 12-month cumulative value of plans approved in July was 1.9% higher than the value of plans approved over the same period last year, at N$2.08 billion. The 12-month cumulative number of building plans approved has fallen to a level last seen in November 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.

The number of building plans approved is determined by the number of additions approved, and of new commercial and residential plans approved by the Municipality every month. Historically, the number of new additions approved has usually surpassed the cumulative number of new commercial and new residential plans approved. As can be seen below, the 12-month cumulative number of new building plans approved for flats and houses has been trending down for the most part since the turn of the millennium. This can be attributed to the undersupply of serviced land as well as the type of properties being built on the available land (multiple units on one erf may show up in the data as a single approved plan in many cases). 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.

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 should sufficient steps not be taken to rectify the shortage. 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.

*Excluding walls and pools

A total of 108 building plans worth N$155.7m were approved by the city of Windhoek in June. On a year-to-date basis, 843 plans have been approved, significantly fewer than the 1,317 plans approved over the same period last year. In value-terms, approved plans on a cumulative year-to-date basis are worth N$958.2 million, 13.3% less than the value recorded over the same period last year. This year to date decrease in the number of plans approved is due to many factors, including a fall in demand, slower approval of plans from the municipality, and water constraints in Windhoek.

On a monthly basis, 6 more building plans were approved in June than in May. The value for the plans passed in June came in at N$155.7m, 184.2% above the May figure. 19 residential units and 86 additions were approved by the municipality during June. The total value for residential units and additions approved in June stood at N$37.1 million and N$94.9 million respectively. The number of commercial and industrial plans approved in June increased to just 3, with a value of N$23.7 million.

The subdued trend in the 12-month cumulative number of plans approved continued in June, bringing the number down to 1,993 units from 2,129 in May, reflecting a fall of 28.9. As shown in the graph below, the level of the 12-month cumulative number of plans approved has fallen far below the 16-year average for this measure.

Both Windhoek and Namibia as a whole have experienced a massive boom in the construction industry since 2012, with an average annual approval of N$2.265 billion worth of building plans over this period. From a GDP perspective, the Namibian construction industry contributed about 6% to total GDP in 2016.

As the construction at the B2Gold mine and the Tschudi copper mine has been completed in late 2014 and early 2015, and construction of the Husab mine is nearing completion, the growth contribution from the construction sector has now topped out. Water scarcity, coupled with the aforementioned base effects from the mining sector and a large reduction in the development budget are expected to drive a contraction in the mining sector in 2016. As a result, IJG has revised down its 2016 growth forecast for the construction industry to -4.5% (from 8.3% growth) to reflect the current state of the sector.

Water remains a large issue for the central area of Namibia’s construction industry. The NamWater dam level report, dated 11 July 2016, indicates that all three dams (Von Bach, Swakoppoort and Omatako) supplying water to Windhoek are currently extremely low, at 8% of full capacity (the lowest abstraction capacity). NamWater expects these dams to run out of water by December 2016.

As a water-heavy industry, the current water situation is restrictive to large scale construction activity. This further suggests that we could see fewer building plans approved by the City of Windhoek going forward. Consequently, if the water condition in the central region deteriorates further, or we see more water restrictions and new tariffs being introduced, this could have a further adverse impact on construction activity around Windhoek.

A total of 103 building plans worth N$47.7m were approved by the city of Windhoek in May. On a year-to-date basis, 745 plans were approved, significantly less when compared to the 1,073 plans approved over the same period last year. In value-terms, approved plans on a year-to-date basis are worth N$796.9 million, again15% less than the value recorded over the same period last year. This year to date decrease in the number of plans approved is mostly due to the water constraints ongoing in Windhoek.

On a monthly basis, 95 less building plans were approved in May than in April. The equivalent value for the plans approved in May came in at N$47.7m, 78.3% below the April figure. 10 residential units and 90 additions were approved by the municipality during May. The total value for residential units and additions approved in May stood at N$12.33 million and N$34.45 million respectively. The number of commercial and industrial plans approved in May declined to just 2, worth as high as about N$8 million.

The subdued trend in the 12-month cumulative number of plans approved continued in May, bringing the number down to 2,139 units from 2,231 in April. This is reflected in the 12-month cumulative growth rate which was down 24% in May, posting negative growth for the 25^th consecutive month. As shown in the graph below, the level of the 12-month cumulative number of plans approved has fallen far below the 20-year average for this measure.

We have experienced a massive boom in the construction industry since 2010, especially over the last 4 years, with an average of N$2.265 billion worth of building plans approved over this period. From a GDP perspective, the Namibian construction industry contributes about 4% to total GDP.

As the construction at the B2Gold mine and the Tschudi copper mine has been completed during 2015 and construction of the Husab mine is nearing completion, the growth contribution from the construction sector is expected to have topped out somewhat.

Of major concern are the current water restrictions in the central part of Namibia. NamWater announced on 18 February 2016 that water supply to Windhoek will be cut by 20% in an attempt to postpone dams running dry from August this year to April 2017. Cabinet has also approved a water tariff increase of 10% during the current financial year. NamWater has given no indication as to when the implementation date for the hike will be. Although the decision to increase the tariff was made in March, the minister of communication and technology, Mr Tjekero Tweya, only made the announcement on 11 April. NamWater is only required to give a months’ notice before any hike is implemented.

Water restrictions and tariff hikes will directly affect economic activity in Namibia, impacting water dependent industries, such as construction. If further water restrictions and new tariffs are implemented, it would have a severe impact on the construction industry as they are heavily reliant on water supply and given the magnitude of construction activity in Windhoek, a standstill of construction activity in the capital would have a significant impact on the economy.