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Weak economy sparks drop in rental prices

Weak economy sparks drop in rental prices

Group Economist at FirstRand Namibia, Daniel Kavishe, said rental prices seemed to have started their decline as early as the first quarter of 2017 with current prices suggesting that the market is bottoming out.

FNB Rental Price Index, the leading indicator on rental prices in Namibia, shows that growth has been stymied by sluggish economic conditions – specifically weak disposable income that has been a systemic problem of the current recession. For March 2019, the index shows a negative territory at -5.2%.

According to the Index, in Windhoek, a three-bedroom property rents for N$10,695 per month, while a two-bedroom property rents for N$7,023 per month and the average price for a single room unit is currently N$3,620 per month.

Moreover, across the country, the Index shows that stark ranges exist in terms of rental prices. Coastal town prices are but an example of these idiosyncratic differences with prices at Walvis Bay (on average) coming in 9.3% lower than Swakopmund yet 55.6% higher than Henties Bay. The rental market in Otjiwarongo and Tsumeb seems to be one of the lowest advertised within the past year, while the northern towns of Ongwediva, Oshakati and Ondangwa tend to have prices ranging between four to five thousand Namibian dollars.

Kavishe added that the standard practice of requesting deposits from renters as a gauge of affordability and commitment has loosened in the market, noting that an average deposit charged contracted by 11.8% at the end of March 2019.

“A better indication from the market, however, is the deposit-to-rent ratio which serves as a good measure of demand at a given point in time with the assumption that a higher deposit to rent ratio denotes higher demand. The latest indicator shows that the ratio has tapered to 8.5%y/y with the highest growth in the series experienced in 2015 when growth was 27.4%y/y,” Kavishe said.

Kavishe further added that the Rent Bill may be problematic to implement and may not meet the needs of the current market, specifically given the current economic slowdown.

“Based on current data, rental yields are much lower than the proposed ceiling which would mean that the landlord would have room to push prices higher if the bill is instated in its current form,” Kavishe said.


 

About The Author

Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys

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

Promotion

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.