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Pipeline construction activity looks less promising – Experts

Pipeline construction activity looks less promising – Experts

Pipeline construction activity looks less promising going forward into 2022, according to investment research firm Simonis Storm Securities (SSS) Economist, Theo Klein in an analysis this week.

The analysis follows the recent building plans which show that the City of Windhoek (CoW) approved 153 building plans during May 2022, compared to 188 in the prior month and 193 in May 2021.

The approved plans have a combined value of N$118.3 million and include 114 plans for additions, commercial (2 plans), residential (30 plans), pools (2 plans) and walls (5 plans). Both the number of submitted plans and plans being approved are on a declining trend since March 2022, whereas building completions are trending down since February 2022, he noted in his analysis.

In May 2022, building completions stood at 45 in May 2022, compared to 86 building completions in the prior month and 216 in May 2021. The completed projects had a total value of N$56.2 million (compared to N$70.6 million for projects completed in May 2021) and were mainly for commercial (N$25.0 million), and residential (N$24.8 million) and residential additions (N$5.9 million).

Meanwhile, FNB’s rental index growth anticipated rent growth continued to rally in the first quarter of 2022.

According to the SSS team, rising interest rates and the probability of another 100bps repo rate hike before the end of the year will weigh heavily on household budgets, which are already stretched due to high food and fuel prices.

“This could negatively impact buyer demand, especially in the low to the middle-income residential market. We do also expect demand for office/commercial property to be subdued owing to hybrid working arrangements with staff which requires less office space,” they concluded.


 

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