Namibia is the 15th largest country in Africa with a population of just over two million people; this makes it the second least densely populated country in the world after Mongolia. With a per capita GDP of $7363.00 (7th in Africa) one would think the population isn’t doing too badly, however, given that approximately half the population live below the international poverty line of U.S.$1.25 a day, that picture alters.
The country’s Gini coefficient (list of countries by income equality) is 70.7 the highest in the world followed by South Africa. That means with the disparity of wealth in Namibia comes property markets poles apart from one another. Median house prices vary from N$ 317 000 for a small property in the south, N$ 510 000 for a medium sized property in the north to N$ 1 100 000 for a large property at the coast. (N$ pegged to ZAR)
Paul Kruger of Pam Golding Namibia, says that currently the residential market segment with the most activity is represented in the price range of N$ 450 000 to N$ 1.6 million. As prices increase, activity dissipates and the market segment with the least activity is in the price range above N$3.5 million, although activity in this segment remains vibrant. Sectional title units is a popular local investment with an average price between N$ 750 000 and N$ 1 800 000 for two to three bedroom units which generally offers a rental return between N$ 7 500 and N$ 13 000 per month.
However there is a trend in the development of lifestyle estates in the residential market and turnkey products for clients in the retail and commercial sectors. Further evidence of this is the development of two new mixed use facilities (residential, commercial and industrial), one in Windhoek and another in Swakopmund, with the first two regional shopping centres as the core focus of these projects.”
Many South Africa’s may have out-dated perceptions of Namibia, perhaps going back to the South West Africa days. Things have changed somewhat in the major centres, for example there are sophisticated shopping malls in most of Namibia retail centres.
The Maerua Mall is a shopping complex in Windhoek. Expanded to more than double its original size in 2006, Maerua Mall is now the largest shopping mall in Namibia and contains a number of retail outlets, including Ackermans, @home, FNB, and Total Sports. It is the only mall in Namibia which contains a cinema and a Virgin Active gym. Maerua has the usual fast-food/convenience restaurants including Spur, Wimpy, Mugg & Bean and Dulce Cafe.
The Wernhil Park Mall is also in Windhoek. It is named after the first names of Werner and Hildegard List, the senior stockholders of the Ohlthaver and List Group of Companies who owns the facility. It is the second largest mall in Namibia. Along with Maerua Park Mall, the two malls are the largest formal shopping venues in Namibia.
From an infrastructure point of view, things are on the move with the upgrading of airports for example.
The Namibia Airports Company (NAC) is investing R1, 2-billion on airport upgrades over the next five years, which will allow any-sized aircraft, including super jumbo jets, to land at the country’s two main airports. The State-owned enterprise said that the envisaged improvements would also enable it to offer around-the-clock service at the Hosea Kutako International Airport (HKIA) and the Walvis Bay airport.
NAC is spending R120-million on runway rehabilitation at HKIA, which is located 45 km outside Windhoek. This is its biggest undertaking since its inception, and is financed partly by the Namibian Ministry of Works and Transport. NAC also plans to build a new passenger arrivals terminal, an office block and a head office at HKIA.
At the Walvis Bay airport, NAC is expanding the terminal and refurbishing the old taxiway and apron at a cost of about R37-million. The increased terminal capacity would boost passenger movement from 50 passengers an hour to 250 passengers an hour, paired with increased retail offerings.
“The Walvis Bay fishing export industry will also benefit greatly from this expansion as traffic will return to the area, resulting in lower transport costs of particularly fish exports to international markets,” the company has reported.
Plans to increase safety and security have also been undertaken at Windhoek’s smaller Eros airport and the Lüderitz airport.
Improved infrastructure is showing the political will to improve the investment prospects of Namibia commercial centres. Clearly the intention is of attracting investors, among other reasons. Looking more specifically at property: despite the property market showing an annual growth of 20-25 per cent over the last few years, the banks have increased their lending criteria.
Mother bonds are available to property developers after securing 80 per cent pre-sales on developments. Other financial institutions like Old Mutual invest in and fund commercial and residential property developments in Namibia, while alternative funding is available through various institutions like the Government Institutions Pension Fund (GIPF) to finance targeted property development projects.
In the words of Pam Golding’s Paul Kruger: “The potential for growth in the real estate sector in Namibia seems endless. One area with exceptional growth potential is property developed for the low to medium income bracket in Namibia. At the current rate at which Namibia is addressing structural supply shortages, it will take at least another 720 years for the country to exhaust all available municipal land.”
Since August 2011, municipal areas across the country were found to hold a capacity of 3.6 million houses, 1.6 million of which would fit into Windhoek and its recently extended boundaries. Currently, Windhoek accommodates over eighty thousand houses, whilst the present population growth requires the mortgaging of approximately 300 stands per month. On average only five stands are mortgaged monthly.
Paul Kruger says while these figures accentuate the demand for low to medium cost housing they also indicate the need for housing as well as infrastructure across all sectors. Further demand and growth is expected with the anticipated growth in the mining and resources sectors as the mining of uranium and oil reserves occurs.
Namibia’s three major centres being Windhoek, Swakopmund and Walvis Bay are the hot spots in the residential market according to Kruger. There is also a recovery in development in some smaller towns like Tsumeb, Otjiwarongo and Omaruru
Agricultural land is also in high demand, in particular game farms, as well as farms suitable for livestock and irrigation. On the commercial front Windhoek, Swakopmund, and Walvis Bay are the focus of developments. There is also much investment in Oshakati and Ondangwa.
New retail developments in Keetmanshoop in the south and Otjiwarongo in the north funded by GIPF (Government Institutions Pension Fund) will undoubtedly contribute to growth in these areas. Industrially, both Windhoek as a growing capital city and Walvis Bay as the main port with planned upgrade and expansion to its container terminal offer various industrial investment and development opportunities.
An arresting development on the retail front is the new Grove shopping centre in Windhoek. Upon completion it will be Namibia’s largest. The mall is situated within the Hilltop mixed use estate next to Tradecentre in Kleine Kuppe, Windhoek. Kleine Kuppe and surrounds is currently the fastest growing node in Windhoek and the area enjoys the most convenient access from almost all suburbs. The Grove with a total development cost of N$1.1 billion is the largest commercial property investment ever within the borders of Namibia.
“From a commercial perspective Windhoek is experiencing a boom in the commercial (office) sector, with various investment and development opportunities. With a growing economy, stable and sound political environment, well developed and maintained infrastructure, sound fiscal and legal framework there are good reasons to invest in property in Namibia,” says Paul Kruger.
Doing business in Namibia, according to the World Bank’s International Finance Corp, is at rank 74 (SA is 35) down 4 spots since 2011. Getting credit is ranked 24, (SA has a number 1 rank) registering property is 145 while South Africa is at 76. So although not at the same level as South Africa, the rankings are fair as far as Africa goes.
Price Waterhouse Coopers official line on Namibia is encouraging: “This African jewel is a growing hub of business opportunity, with a wealth of land-based resources shows considerable growth prospects in the Tourism, Mining and Agricultural sectors. With the Namibian business environment firmly supported by the Ministry of Trade and Industry, investors can look out for: An open government attitude towards foreign direct investment. Government policy that supports free enterprise. A sophisticated banking system and a multitude of business opportunities.”
And who can argue with that.