Residential development sustains construction sector

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Residential development sustains construction sector
Residential development sustains construction sector

Africa-Press – Namibia. CONSTRUCTION activity in residential areas continues to gain momentum compared to the corporate sector.

CONSTRUCTION activity in residential areas continues to gain momentum compared to the corporate sector.

According to an analysis of the sector by Simonis Storm Securities, household mortgage grew by an average of 2,4% year to date compared to 4,3% for corporate entities.

At the same time, the municipalities of Windhoek and Swakopmund approved a combined 830 residential building plans with a value of N$820 million YTD compared to only 25 commercial buildings valued at N$65,3 million.

The City of Windhoek approved 314 building plans during July 2022, compared to 249 in the prior month, an increase of 26,1% month on month (m/m) and 223 in July 2021 rising 40,8% year on year (y/y).

Approved plans have a total value of N$496 million compared to N$399,5 million in June 2022 and include 179 plans for new residential additions, new residential properties (112 plans), new walls (16 plans), new commercial buildings (five plans) and new pools (two plans).

Simonis says building completions in Windhoek continued rising for a third consecutive month.

“During July 2022, 88 building completions took place, compared to 74 buildings completed in the prior month, a rise of 18,9% m/m and 36 in July 2021, a massive 144,4% increase y/y,” Simonis said.

The completed projects had a total value of N$51,7 million compared to N$43,9 million for projects completed in June 2022 and included 46 residential additions worth N$6,8 million, 32 residential properties valued at N$41.4 million, one commercial building worth N$3 million and nine walls worth N$0.5 million.

At Swakopmund, the municipality approved 26 building plans during July 2022, compared to 90 in the prior month, registering a 71,1% drop m/m, and 37 in July 2021 – a drop of 29,7% y/y.

Approved plans have a total value of N$43,1 million compared to N$74.1 million in June 2022 and were solely for 26 new residential plans.

“Building completions in Swakopmund rebounded in July 2022, following a significant drop in June 2022. During the month, 49 buildings were completed, compared to 18 in the prior month showing a 172,2% rise m/m and 12 in July 2021 registering a rise of 308,3% y/y.

“We are excluding other crucial municipalities (e.g. Walvis Bay and Oshakati), but data seems to suggest that either we could see an increase in household mortgages to finance these building projects in the near future, or households might be financing residential constructions by other means in response to rising interest rates,” said Simonis.

Simonis noted that holdings in the money market and enhanced cash unit trust funds have increased by 18,9% over the last two years, from N$20,9 billion in the second quarter of 2020 to N$24,8 billion in the second quarter of 2022, according to data from Sanlam Namibia.

“It could be that these funds are used by some households to finance construction or renovation projects, bypassing loans and rising interest rates. On the other hand, slower growth in corporate mortgages could possibly be explained by companies enforcing hybrid working arrangements, as demand for office space wanes,” Simonis added.

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According to an analysis of the sector by Simonis Storm Securities, household mortgage grew by an average of 2,4% year to date compared to 4,3% for corporate entities.

At the same time, the municipalities of Windhoek and Swakopmund approved a combined 830 residential building plans with a value of N$820 million YTD compared to only 25 commercial buildings valued at N$65,3 million.

The City of Windhoek approved 314 building plans during July 2022, compared to 249 in the prior month, an increase of 26,1% month on month (m/m) and 223 in July 2021 rising 40,8% year on year (y/y).

Approved plans have a total value of N$496 million compared to N$399,5 million in June 2022 and include 179 plans for new residential additions, new residential properties (112 plans), new walls (16 plans), new commercial buildings (five plans) and new pools (two plans).

Simonis says building completions in Windhoek continued rising for a third consecutive month.

“During July 2022, 88 building completions took place, compared to 74 buildings completed in the prior month, a rise of 18,9% m/m and 36 in July 2021, a massive 144,4% increase y/y,” Simonis said.

The completed projects had a total value of N$51,7 million compared to N$43,9 million for projects completed in June 2022 and included 46 residential additions worth N$6,8 million, 32 residential properties valued at N$41.4 million, one commercial building worth N$3 million and nine walls worth N$0.5 million.

At Swakopmund, the municipality approved 26 building plans during July 2022, compared to 90 in the prior month, registering a 71,1% drop m/m, and 37 in July 2021 – a drop of 29,7% y/y.

Approved plans have a total value of N$43,1 million compared to N$74.1 million in June 2022 and were solely for 26 new residential plans.

“Building completions in Swakopmund rebounded in July 2022, following a significant drop in June 2022. During the month, 49 buildings were completed, compared to 18 in the prior month showing a 172,2% rise m/m and 12 in July 2021 registering a rise of 308,3% y/y.

“We are excluding other crucial municipalities (e.g. Walvis Bay and Oshakati), but data seems to suggest that either we could see an increase in household mortgages to finance these building projects in the near future, or households might be financing residential constructions by other means in response to rising interest rates,” said Simonis.

Simonis noted that holdings in the money market and enhanced cash unit trust funds have increased by 18,9% over the last two years, from N$20,9 billion in the second quarter of 2020 to N$24,8 billion in the second quarter of 2022, according to data from Sanlam Namibia.

“It could be that these funds are used by some households to finance construction or renovation projects, bypassing loans and rising interest rates. On the other hand, slower growth in corporate mortgages could possibly be explained by companies enforcing hybrid working arrangements, as demand for office space wanes,” Simonis added.

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