Chamwe Kaira
Namibia’s construction sector remains on a cautious but uneven path, shaped by improving financial conditions and ongoing structural constraints, according to Simonis Storm’s Namibia Building Statistics for December.
Lower inflation and a gradually easing interest-rate environment are providing some relief.
However, weak investment pipelines, policy uncertainty and capacity constraints continue to limit a broad-based recovery.
Municipal building plan data shows a mixed regional picture. In Windhoek, approved building plans rose by 13% year-on-year in December 2025 to 169 approvals.
Month-on-month approvals fell by 4%. On a quarterly basis, Windhoek recorded 543 approved plans in the fourth quarter of 2025, down 5% year-on-year.
Over the full year, approvals averaged 178 per month, reinforcing Windhoek’s role as the country’s main urban growth centre, although activity remains concentrated in small-scale additions and alterations.
Swakopmund continues to show stronger momentum. Approved building plans increased by nearly 12% year-on-year in December, while quarterly approvals rose by 63% in the fourth quarter of 2025 compared to the same period last year.
Although monthly approvals declined sharply in December, the broader trend points to rising activity along the coast.
Swakopmund recorded its strongest performance of the year in December, driven mainly by residential construction. Quarterly data shows a sharp increase in both the number and value of completed projects in the fourth quarter, pointing to growing momentum in higher-value residential, commercial and mixed-use developments.
Private sector credit extension is expected to remain firm at around 5% year-on-year, supported mainly by corporate borrowing.
Business credit demand continues to be driven by mining, logistics, energy-related services and trade-linked sectors.
Household credit growth remains subdued, recovering slowly amid modest income growth and high living costs. Credit growth is strongest in instalment and lease finance, while mortgage lending shows only early signs of improvement.
Inflation remains contained from a monetary policy perspective. Headline inflation is forecast to average between 3.6% and 3.8% in 2026, within the Bank of Namibia’s target range.
This creates room for further easing. While the repo rate is expected to remain stable in the near term, two additional 25 basis-point cuts are anticipated in 2026, likely in the first and fourth quarters, bringing the repo rate to about 6% by year-end.
“A stable-to-easing interest-rate environment should gradually improve credit affordability for both developers and households. Lower financing costs and improved cash-flow dynamics are expected to support housing upgrades, renovations and selected mid-income residential developments. However, a sharp acceleration in large-scale construction activity remains unlikely in the absence of stronger investor confidence and clearer progress on major infrastructure and energy investments,” Simonis said.
Recent output data highlights the sector’s fragile recovery. Construction recorded its first quarterly contraction since the first quarter of 2024, declining by 5.0% in the third quarter of 2025.
This followed an expansion of 11.3% in the second quarter, reflecting sensitivity to the timing of large investment decisions.
The near-term outlook remains constrained and is likely to stay subdued until final investment decisions are taken on large-scale green hydrogen and oil and gas projects, which are expected to anchor the next phase of major construction activity.
Simonis said structural bottlenecks continue to weigh on momentum. Limited availability of serviced land at the municipal level, combined with tight public finances, has constrained the government’s ability to initiate and fund large infrastructure programmes. Without a strong public-sector pipeline, private construction activity has struggled to reach scale. As a result, local construction firms have diversified their activities, while profitability has come under pressure as smaller, lower-margin projects replace capital-intensive developments.
Caption
Limited availability of serviced land at the municipal level has constrained the government’s ability to initiate and fund large infrastructure programmes.
- Photo: Contributed
