As the Namibian property market continues to reel from the adverse effects of a slump in the Angolan economy, a number of property developers have opted to exit the local residential property market and are choosing instead to focus on the commercial market.
“The market is definitely suffering due to the slowdown of the Angolan economy. However, this phenomenon has been experienced mostly in the higher end of the market. One must also keep in mind that Angolans have for many years used the Namibian property market to wash (launder) their money,” explained Gerry Claassen of Property Marketing, a local company that has been extremely successful in the local property market.
He added that a Rent Control Board or any form of artificial price intervention would have a negative effect on the market because it would essentially disregard the basic mechanics of demand and supply. “I am selling all my residential properties now to exit the residential property market,” said Claassen.
Commenting on the major challenges that face property developers, Claassen was adamant that the major challenge still faced is still the availability of land. Once land becomes more available, he said, then the concepts of demand and supply will begin to balance out to offer residents lower prices, both in terms of rental and purchase prices.
“With property goes finance and even though our banking system is strong and respected, the problem is that banks want zero risk when it comes to financing property. With the latest financial guidelines, banks have become much less willing to accept any risk. I am coming from a meeting right now where I made an offer to a guy to purchase property and he simply told me he didn’t want to take the risk. So we, as developers, take all the risk,” said Claassen.
Developers, who are also landlords, seem to be doubly exposed too, as often tenants simply refuse to pay. “People in some properties are not paying me. In fact, I am actually paying water for them and I am giving them a roof over their heads. I am losing money now that I might never get back,” Claassen lamented.
The local market in terms of property purchases and rentals is slowing down, as there is now less disposable income for many Angolans who have for many years propped up the local market with their constant influx of US dollars. But the ever-popular greenback is becoming increasingly scarce in Angola, as less revenue is being collected due to declining oil prices.
Even though Claassen is now exiting the residential property market, he still has great expectations for the future of Namibian housing. “The aspect of demand and supply should prevail and in the long-term the market will remain sound as long as the economy continues to grow and as long as the banking system remains solid and respectable,” said Claassen.
However, he warned that with strict banking guidelines and with tougher control measures from the finance ministry, the reality is that the market is now becoming tougher to enter, particularly for first timers, meaning that the guys with money will continue to dominate the market.
Claassen also confirmed that Windhoek’s property development market is dominated by a few individuals. “Every society has people who work hard and others who do not want to work at all. Certain people just have a higher desire to achieve their goals and I have to commend these people,” said Claassen. He was quick to note the need for more equality in the country and much needs to be done to achieve that. “The sad reality is that because the market is so rewarding, it’s only the rich that have an opportunity to enter the market. Unfortunately, this means the rich will get richer and the poor will continue to get poorer,” said Claassen.