Namibia’s construction industry has been looking bleak as it decreased in recent months.
Despite the building plan data from both Windhoek and Swakopmund showing a slight growth on monthly basis in those plans that were approved during February this year, the analysts at Simonis Storm Securities say there has been a decrease by 24.4 % y/y in Windhoek and down 12.5% y/y in Swakopmund as well.
“Building completions decreased by 70.2% y/y in Windhoek, but rose 83.3% y/y in Swakopmund in February 2023,” the analysts said.
Despite the rising number of housing projects in the country, in towns at the coast as well as in the Southern part of Namibia such as Luderitz and Oranjemund, these major housing expansion projects in those towns will take time to benefit local construction companies.
SSS says the completed projects were mostly focused in the residential segment of the market.
Most of the planned buildings that were approved, mainly concentrated in the residential segment of the market, with new residential developments as well as additions to residential properties accounting for over 95% of all buildings being approved in Windhoek and Swakopmund.
“The mixed use (residential and industrial) plots that these towns want to make available will essentially double the current size of the respective town. This comes as Luderitz is seeing an increase in various activities such as kelp production, salmon fishing, wind farm expansions and of course preparing for green hydrogen operations,” Simonis storm explains.
According to the report, these projects are very low and they are affecting the revenues of those construction companies that are used to larger industrial building projects.
“Indeed, the average building completion value dropped from N$218 million in 2020 to N$81 million in 2021 and 2022,” says Simonis storm.
According to the Bank of Namibia, retailers have been one of the biggest drivers of corporate debt growth throughout 2022. However according to the report by Simonis storm on the building statistics, commercial building plan approvals have been significantly low in the recent month.
“Local property companies indicate that tenants are investing in their shops following the economic recovery from the lockdown induced recession in 2020. Taken together, we therefore see these loans mostly being used to refurbish existing shops and not necessarily building new retail space in the country,” Simonis storm report.