The Ministry of Finance and Public Enterprises has projected a slight upturn for the construction sector in the fiscal year 2024/25, with an anticipated injection of N$6.2 billion.
According to IJG Securities, the capital boost is poised to propel the sector’s growth by 8.9% year-on-year in 2024 and 5.8% year-on-year in 2025, marking a noteworthy reversal from the consecutive declines observed since 2020.
IJG said the outlook for construction has turned slightly positive after the government has announced the 2024/25 National Budget.
“The development budget for the new financial year has increased by 50.8% y/y from the revised estimate of 2023/24 to N$12.6 billion. Of this, 23% were allocated for the construction of roads of which 25% will be funded by external loans and grants,” said the firm.
Meanwhile, the pipeline for construction activity in Windhoek remains subdued as a total of 165 building plans were approved in February, a 129.2% m/m increase compared to January’s figure, translating to a 1.2% y/y decrease.
“The value of approvals has surged by 251.7% m/m and 158.9% y/y to N$188.2 million, compared to N$53.5 in January and N$72.7 million in February 2023. On average, the applications that were approved had a time-lapse of 103 days,” reports IJG.
Windhoek saw a 42.0% y/y drop in completed buildings, falling from 50 in February 2023 to 29 in February 2024.
The firm noted that the completion of two commercial buildings, valued at N$3.6 million, 11 additions at N$5.0 million, and 16 residential buildings valued at N$13.7 million, equated to the total value of completions of N$22.3 million.
“Indeed, the number of applications submitted to the City of Windhoek increased by 52.5% m/m, translating to a 7.9% y/y decline in submissions, due to the month-on-month increase being from a low base,” IJG said.
The firm said engagements with stakeholders in the banking space have indicated that demand for loans is high, but affordability is low hindering individuals from obtaining loans.
Furthermore, a similar trend exists in Swakopmund, as the Municipality approved 50 building plans in February, which is 20.6% lower than in February 2023.
In the coastal town, 40 residential plans were approved, at a value of N$35.7 million, six institutional plans worth N$288,414, and four commercial and industrial building plans worth a total N$89.3 million.
In February, 123 property additions gained approval, totaling N$140.7 million. While this marks a 3.1% year-on-year decrease in additions, the value surged by 198.3% from last year.
36 residential units were approved, up 89.5% month-on-month but down 2.7% from February 2023. The total value of N$37.1 million represents an 11.3% drop from the previous month but a 57.7% increase from the prior year.
Similarly, February saw approvals for five commercial and industrial buildings, valued at N$10.3 million, a 242.0% month-on-month increase from the preceding months and a 428.7% year-on-year increase from low bases.
