Construction slips into decline

Namibia’s construction sector slipped into contraction in the third quarter of 2025, with output declining by 5%, marking its first quarterly downturn since the first quarter of 2024, according to analysis by Simonis Storm. The contraction followed a robust 11.3% expansion in the second quarter and reflects a sharp reversal in sectoral momentum.Simonis Storm said the outlook for construction remains subdued, with growth likely to remain constrained until final investment decisions are taken on large-scale green hydrogen and oil and gas projects. The research firm noted that additional headwinds include a limited supply of serviced municipal land and strained public finances, which continue to restrict government’s ability to initiate and fund major infrastructure and building projects.In the absence of a strong pipeline of large, capital-intensive developments, local construction firms have increasingly been forced to diversify their activities to remain viable. However, profitability has come under pressure as smaller-scale projects dominate, while competition has intensified, particularly in public sector tenders. Simonis Storm said local firms are facing growing competition from foreign contractors, placing small and medium-sized enterprises in the sector under notable strain.Simonis Storm warned that, without meaningful policy intervention, including the establishment of a dedicated regulatory body for the construction sector as requested by the private sector, these structural challenges are unlikely to be resolved. As a result, the near-term growth outlook remains weak. That said, lower interest rates and a modest easing in building material prices could provide some support for projects that have already received approval and remain in the pipeline.Municipal building plan data reflects mixed regional dynamics. In Windhoek, approved building plans rose by 13% year-on-year in December 2025, increasing from 149 to 169 approvals. On a month-on-month basis, however, approvals declined by 4% from 176 in November to 169 in December. Swakopmund recorded an 11.9% year-on-year increase, with approvals rising from 67 to 75, although month-on-month approvals fell sharply by 29.2%.Quarterly figures highlight a growing divergence. Windhoek recorded 543 approved building plans in the fourth quarter of 2025, down 5% from 574 in the same period of 2024. By contrast, Swakopmund saw approvals surge to 334, up from 205 a year earlier, representing a 63% increase.Over 2025, Windhoek averaged 178 approvals per month, reinforcing its role as Namibia’s primary urban growth centre. However, Simonis Storm noted that Swakopmund’s momentum is strengthening, with approvals averaging 111 per month in the final quarter, supported by lifestyle-driven residential demand, increased logistics and hospitality activity, and anticipated spill-over effects from energy and port-related investments.

Construction slips into decline

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Republikein 2026-01-21

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Construction slips into decline

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