Namibia’s construction sector is expected to deliver N$4.3 billion in output in 2025, with growth led by residential developments, commercial real estate, and state-funded infrastructure projects.
According to Simonis Storm junior economist Almandro Jansen, the sector is poised for an 8.5% expansion, making it the fastest-growing industry despite its modest contribution to GDP.
“We project Namibia’s construction sector to expand by 8.5% in 2025, making it the fastest-growing sector of the year, despite accounting for just 1.4% of GDP in 2024,” Jansen said.
The momentum is supported by looser monetary policy, rising capital expenditure by the government, and improved investor sentiment. Recent interest rate cuts by the Bank of Namibia are already being felt across the sector.
“This robust growth outlook is supported by a favourable combination of monetary easing, accelerated public infrastructure investment, and renewed private sector confidence,” he said.
The central bank has reduced rates by 100 basis points since late 2024, with another cut expected later this year. This easing has improved the financing landscape for both commercial developers and households.
“These lower rates are already making a difference. Developers are finding it more viable to finance commercial and housing projects. Households are accessing more affordable mortgage loans, supporting both homeownership and building upgrades,” said Jansen.
In the capital, activity has been concentrated in residential areas, even as plan approvals declined sharply in April.
“So far this year, investment has been concentrated in residential additions and housing developments, especially in growth areas like Katutura, Otjomuise, and Kleine Kuppe,” Jansen said.
While small projects are dominating, the sector’s longer-term growth depends on larger-scale developments.
“While smaller-scale projects dominate, larger developments will remain essential for boosting overall sector value,” he said.
Coastal towns are also showing early signs of recovery. In Swakopmund, year-to-date growth in building plan approvals stands at 69 percent compared to 2024.
“In Swakopmund, the tone is cautiously optimistic. Although monthly approvals have levelled off, year-to-date growth of 69% compared to 2024 signals a potential recovery in building demand,” said Jansen.
He noted that private capital and industrial projects will be essential to keeping that pace.
“To maintain this momentum, however, a stronger pipeline of commercial and industrial developments is needed, alongside targeted efforts to attract investors and unlock access to development finance,” Jansen said.
Much of the upcoming activity is tied to public infrastructure. The 2025/26 national budget allocates N$12.8 billion to development, with major spending in water and energy.
“Water infrastructure: N$3.6 billion is budgeted for projects such as the Outapi Water Treatment Plant expansion, the Ondangwa–Omutsegwonime pipeline replacement, and preparations for a second desalination plant in the Erongo Region,” Jansen said.
“Energy projects: These include a 100 MW solar power plant worth N$1.4 billion, and the Baynes Hydropower Station, which will add 600 MW of renewable capacity both of which will drive significant construction demand,” he added.
Jansen also pointed to upcoming procurement reforms, including the launch of a dedicated procurement court, as a step toward reducing delays.
“Importantly, the government has committed to procurement reform, including the rollout of a dedicated procurement court, aimed at accelerating project execution and reducing costly delays,” he said.
Still, risks remain as high debt servicing costs and currency fluctuations could impact materials pricing and overall project viability.
“That said, several challenges remain. Debt servicing costs are projected at N$13.7 billion, placing pressure on overall fiscal space. In addition, exchange rate volatility poses a risk to input costs for imported materials like steel and cement potentially squeezing margins and delaying some projects,” Jansen said.
He cautioned that strong execution will be critical to turning forecasts into actual gains.
“In summary, while 2025 holds promise for Namibia’s construction sector, realising that growth will depend on strong follow-through from streamlined project rollouts and stable pricing conditions to sustained credit availability and investor confidence,” Jansen said.
