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Tight liquidity dampens run-away property market

Tight liquidity dampens run-away property market

Despite demand still outstripping supply, bank’s balance sheets that are significantly overweight on mortgages, and tight liquidity, have had a major dampening effect on price growth in the property market.

Whereas property prices has more or less doubled from 2010 to 2015, price growth slowed considerably during the first half of 2016. It was only during the third quarter that prices rebound. Available stock, however, remained limited. This, coupled with bank’s reluctance to extend credit, lead to much reduced transaction volumes.

For the third quarter of 2016, the property market bucked the slowing trend, jumping back up by just over 25% compared to the third quarter of 2015.

“Property prices rebound in the third quarter of 2016 as the FNB Housing Index recorded a 27% increase compared to the same quarter in 2015” the bank stated this week when it released the first index chapter for this year.

The growth was fuelled by central and coastal properties as is seasonally expected during the third quarter. “The movements were largely driven by higher prices in the upper segment – approximately 34% higher across the two regions- and faster than expected price inflation in the lower-end, approximately 23% higher across the two regions”, said Daniel Kavishe, Market Research Manager at FNB Namibia, and compiler of the index.

Transaction volumes have continued to decline for 10 straigth quarters. For the third quarter, it declined by 17% compared to the third quarter in 2015. This is a clear sign of constrained liquidity in the current financial crisis that originated from the government’s inability to continue financing its expenditures from the capital market.

But despite the declining transaction volumes, prices kept going up. At the end of the third quarter the median price printed at N$900,000 or 13% higher than in the thrid quarter of 2015.

Swakopmund and Hentiesbaai recorded the highest median prices at N$1.2 million per unit while Windhoek came in slightly higher at N$1.4 million.

Kavishe added, “We remain cautiously bearish on the property market, despite the price recovery during the third quarter. The limited supply around stand-alone units has kept the prices elevated across most regions despite demand waning. We anticipate further weakness in demand in central Namibia, but improvements across the northern and coastal towns”.

Looking forward, Kavishe expects price growth to have tapered down to between 10% and 13% at the end of 2016. The 12-month cumulative growth in volumes remains negative at -20% which will only turn positive again when liquidity improves. For the time being, the property market is held hostage by the government’s financial woes.

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Following reverse listing, public can now acquire shareholding in Paratus Namibia


20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.