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Rental market remains overall negative owing to persistently weak domestic economy – Expert

Rental market remains overall negative owing to persistently weak domestic economy – Expert

FNB Namibia recently released the latest rental index report, which according to Ruusa Nandago, FNB Group Economist, is based on average advertised prices in the residential property market across the country.

In the report it is said that growth in rental prices remains in contractionary territory with the FNB Rent Price Index recording a contraction of 1.9% at the end of September 2019, compared to a contraction of 8.6% over the same period last year.

The smaller contraction was once again supported by price pressures in the more than 3-bedroom segment whose growth stood at 9.0% y/y compared to a contraction of 9.4% at the end of September 2018. In addition, pressures continue to build in the 1, 2 and 3-bedroom segments which have resulted in smaller year-on-year contractions of 4.0%, 3.2% and 3.4% respectively.

The price dynamics in the rental market have brought the national rent price at the end of September to N$7163.94 per month. The rental market remains overall negative owing to the persistent weak domestic economy

Windhoek recorded the highest rental prices at the end of September with the average rent in this town at N$6 674.03 per month. This is, however, a 5% contraction compared to the same period last year. The lowest rental prices were recorded in Rehoboth at N$3000 per month.

The low rental prices in this town are indicative of a smaller population and weaker economic activity and consequently thinner volumes in rental transactions compared to Windhoek. Prices in Walvis Bay recorded the highest growth in rental prices of 66.7% y/y. Other towns where rental growth was in positive territory include Ongwediva at 9.1% y/y, Okahandja at 3.0% y/y and Ondangwa at 1.5% y/y.

The monthly rental price for a 1-bedroom unit is N$3436, while a 2-bedroom unit rents for N$6890. 3-bedroom and more than 3-bedroom units now rent for N$9705 and N$21,029 respectively. Overall, the average rent price per room at the end of September was recorded at N$3515.79, a 2.7% y/y compared to a contraction of 9.6% recorded in July 2018.

“When looking at shares of total rental activity, 39.4% of all activity took place in the 1-bedroom segment, followed by the 2-bedroom segment which accounts for 36.7% of all transactions and the 3-bedroom segment whose share was 20.6%. The more than 3-bedroom segment accounted for 3.3% of all rental activity,” she said.

The growth in deposits charged continues to trend lower with the reading at the end of September recording a contraction of 30.8% y/y compared to 13.8% y/y. This is the lowest reading recorded since 2017 with contractions in deposit growth rates observed across all Rental Index Segments.

Furthermore, the deposit-to-rent ratio has continued to trend lower and now stands at 6.8%, the lowest the ratio has been since April 2010. The deterioration in deposit to rent ratio was observed in all segments with the largest observed in the 3-bedroom segment. The persistently declining ratio continues to highlight the bargaining power potential tenants have in the rental market.

“We maintain our view that Namibia has moved to a renter’s market, allowing potential tenants to negotiate lower rental deposit charges or no deposit charges at all,” she added.
Rental yields, which are an indication of the return a landlord is likely earn on the rental of a property, have shown a moderate increase from 7.6% recorded at the end of September 2018 to 7.8% recorded at the end of September 2019.

The Namibian rental market provides much higher yields when compared to other jurisdictions in sub-Saharan Africa including Kenya, South Africa and Zambia where rental yields are 6.7%, 3.9% and 0.14% respectively.

Nandago stated, that the erosion in rental prices which started in early 2018 because of the recessionary environment seems to be gradually reversing. Prices in the 1-3-bedroom segments are showing smaller contractions, while prices in the more than 3-bedroom segment are in positive territory. The housing market remains under pressure with very low levels of buying and selling activities resulting in houses staying on the property market for 31 weeks before they are eventually sold.

“We thus maintain our earlier view that rental affordability has not necessarily improved, but rather that rental property prices will be buoyed by an increasing number of participants opting to move into the rental market in the face of affordability issues in the housing market. This will likely continue to push up prices and lead to smaller year-on-year contractions in growth. We expect rental price growth to remain in contraction for the remainder of the year and to move into positive territory early next year, likely settling in the range of 1-2%,” she concluded.


 

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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.