Structural challenges Namibia is facing such water shortages coupled with a high prime rate will put pressure on the number of buildings completed and, to a certain extent, the number of buildings approved, a local research firm has indicated. In its “Windhoek Building Plans – Is the water crisis starting to affect construction activity?” 2016 report, Simonis Storm reacted to the recently released City of Windhoek monthly Building Plans Statistics for July 2016.
The statistics (Windhoek building plans only) show that the number of building plans approved grew by 9.2 percent to 130 projects approved in July 2016 compared to 119 buildings approved in the prior month. On an annual basis, the number of building plans approved contracted by 50.2 percent in July 2016. The highest annual contraction recorded in three years was at 58.0 percent in June 2016.
The report indicated that during July 2016, additions accounted for 75.4 percent of the number of approved building projects. This category grew by 14.0 percent to 98 compared to 86 additions recorded in June 2016. Building approvals for houses contracted by 26.3 percent to 14 houses approved. Furthermore, approval for houses also contracted by 61.1 percent on an annual basis. “Houses in the central area of Namibia remain of major concern, as the City of Windhoek’s slow delivery of serviced land continues to cause a backlog,” the Simonis Storm report highlighted.
As for completed buildings, the number of building plans completed contracted by 67.1 percent to 26 projects in July 2016 of which 57.7 percent are additions while 30.8 percent are houses. Some 15 addition projects were completed during July 2016 compared to 51 projects completed in the prior month while only 7 projects were completed in the prior year. The number of house projects completed stood at 8 units, a 63.6 percent decrease from 22 units recorded in June 2016. Furthermore, 2 units of commercial projects were added in July while walls declined by 66.6 percent to a unit.
With the water crisis continuing to pose a risk to the economy with construction highly dependent on a stable water supply, Simonis Storm believes that the situation is also exerting pressure on the number of building plans approved and completed. “City of Windhoek increased the water saving target from 25 percent to 40 percent due to the serious water shortage faced in the central area. Furthermore, the recently implemented municipal tariff hikes will put further pressure as it becomes expensive and inflationary to consume a certain amount of cubic meters going forward. This in turn will affect the number of buildings completed going forward,” noted the report.
The construction industry, together with the mining industry, continues to be the biggest water consumers in the country. Earlier this year, The Economist quoted the Construction Industries Federation of Namibia’s General Manager, Bärbel Kirchner, saying the federation consistently reminds its members of the importance of saving water; and to implement measures and processes that reduce the consumption of water.
“It would also be important that the planning of government projects and the related time line is considered. Naturally, the drive for infrastructure development by the government for job creation, stimulating the economy and to create further opportunities is important,” the report further quoted. Slow growth rate has also been recorded in the construction sector, a situation which is expected to continue.
“We believe that construction will continue to grow at a moderate pace during 2016 mainly on the back of the water crisis and the higher prime rate of 10.75 percent compared to 10.25 percent in June 2015,” the report indicated. It added that: “Although the construction number is for the whole country, only 31.3 percent of building projects were approved out of 415 plans received for July 2016 in Windhoek. The decline in the number of building plans completed could suggest a slowdown in construction in the central area.”