South Africa’s premium real estate agency Pam Golding has launched its first franchise in Namibia indicating the emergence of the Namibian residential property market as an attractive market to foreign investors.
In a statement released yesterday Pam Golding said the Namibian real estate market is evolving into a more mature, modern landscape which, combined with a growing economy, political stability and well developed infrastructure. The franchise is based in Windhoek.
Leon Jooste and Paul Kruger, new shareholders of the Pam Golding Properties franchise in Namibia, said the market “is drawing the attention of both regional and international real estate investors.
Pam Golding CE, Andrew Golding, said “The launch of this new franchise office is a strategic move which further strengthens our presence through Africa. Increasingly, we see evidence of growing cross-border trade with investors and purchasers seeking to acquire residential property in South Africa – while South Africa itself remains a gateway into the rest of Africa – a continent which continues to experience burgeoning growth.
Kruger added that “Today’s more sophisticated and discerning clients require innovative new solutions. One of the new trends evident in Namibia is the development of lifestyle estates in the residential market and turnkey products for clients in the retail and commercial sectors. Further evidence to 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.”
Namibia’s median house prices vary considerably, depending on location and level of development. Due to the growing demand for property and the undersupply of land for development, house prices have shown steady growth over the last few years. 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. Prices for properties located in the more upmarket areas in all the larger centres differ considerably from the median house prices.
“As part of a typical bond agreement the applicant will be limited to allocate a maximum of 30 percent of his/her disposable income to service instalments,” said Kruger. He said the interest rate available on a typical loan is currently nine percent over a 20 year period. On sectional title and single residential homes a deposit of 10 percent is the norm while a deposit on vacant land is 30 percent.
Although the property market has shown an annual growth of 20-25 percent over the last few years, the banks have increased their lending criteria. Mother bonds are available to property developers after securing 80 percent 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.
“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,” he says.
As at 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 newly extended boundaries. At present, the capital contains 83 000 houses, and while current population growth requires the mortgaging of around 300 stands per month, on average only five stands are mortgaged monthly.
Kruger said 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.
“The three major centres in Namibia namely Windhoek, Swakopmund and Walvisbay are the hot spots in the residential market, while resurgence in development in some smaller towns with specific character like Tsumeb, Otjiwarongo and Omaruru is also attracting interest. Agricultural land remains to be in high demand, especially game farms, as well as farms suitable for livestock and irrigation.
“From a commercial perspective, Windhoek, Swakopmund,and Walvisbay are also the three largest commercial centres, while development and investment in the north with Oshakati and Ondangwa are growing rapidly. 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 Walvisbay as the main port with planned upgrade and expansion to its container terminal offer various industrial investment and development opportunities,” he adds.
Kruger said ncurrently 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.
“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,” he adds.
The legal framework allows locals, South Africans and foreigners to invest in residential and commercial property in Namibia without undue constraints. The Namibian economy has recovered well after the global economic slowdown and the Namibian Dollar is pegged to the South African Rand.