Staff reporter - July saw no approvals for any commercial and industrial property plans in Windhoek – the first time since May 2010 the capital has found itself in this predicament.
“The number of approvals for commercial and industrial properties have been languishing in single digit territory since September 2016 and have an average approval rate of four approvals per month over the last 12 months,” IJG Securities says in its analysis of the latest Windhoek municipality building stats.
In the first seven months of 2018, commercial and industrial plans to the tune of N$42.9 million got the thumbs-up from the municipality. This is about N$585 million or 93% down on the figures for the same time in 2017.
“The inactivity in the commercial and industrial space is reflective of the contraction in construction activity and recession in the economy as whole. Business confidence remains subdued, illustrated by the lack of capital investment,” says IJG.
The analysts say the number of commercial and industrial approvals for the year ended July decreased by 25.4% year on year to 44 units, worth approximately N$112.2 million. This is “a huge decrease of 85.8% in value terms over the prior 12-month period,” IJG says.
“Growth in commercial and industrial construction activity remains extremely subdued as the decrease (on a 12-month cumulative basis) in credit extended to corporates also reflects,” the analysts say.
The latest figures released by the Bank of Namibia (BoN) show credit extended to businesses in July was 3.4% higher than the same month last year. In July 2017, business credit extended grew by 5% on an annual basis.
Commercial and industrial plans worth about N$24.2 million were completed in the capital in the first seven months of 2018. Compared to the same time last year, this is a decrease of N$13.6 million or 36%.
Overall, buildings plans worth about N$1.007 billion were approved by the Windhoek municipality from January to July. This includes plans for additions, commercial and industrial buildings, as well as flats and houses. Compared to the same seven months in 2017, this is a decrease of about N$590.9 million or 37%, says IJG.
“The overall decrease in value of cumulative plans approved is highly concerning as, even in nominal terms, this shows a substantial decrease of construction activity in the capital,” the analysts say.
The value of overall plans completed during the period under review is up 108%. A spike in plans for additions completed is responsible for this increase.
In total, N$415.4 million worth of plans for additions were completed in the first seven months of 2018, compared to a value of N$39.6 million in the comparative period last year.
New residential units were the second largest contributor to the number of building plans approved in July, registering 131 approvals compared to the 53 registered in June.
“Year-to-date, 317 new residential units have been approved. This is an increase of 143 approvals when compared to the corresponding period in 2017. In value terms, N$342.9 million worth of residential plans have been approved year-to-date, a 15.3% increase when compared over the same period in 2017,” says IJG.
The growth in the cumulative number of plans approved has been driven mainly by approvals in additions to properties and new residential units which are of lower relative value, IJG says.