Namibia’s construction sector is expected to be the fastest-growing industry in 2025, with a projected expansion of 8.5%, despite its relatively small contribution of 1.4% to the gross domestic product in 2024.
This is according to Simonis Storm economist Almandro Jansen, who says a mix of supportive economic policies, increased public investment, and improved private sector sentiment will drive growth.
“Total output is expected to reach approximately N$4.3 billion, with momentum largely concentrated in residential developments, commercial real estate, and government-led capital projects,” Jansen says.
The Bank of Namibia’s decision to cut interest rates by 100 basis points since late 2024 has helped ease financing conditions.
Another rate cut is anticipated in the second half of 2025.
“Developers are finding it more viable to finance commercial and housing projects. Households are accessing more affordable mortgage loans, supporting both homeownership and building upgrades,” says Jansen.
In Windhoek, despite a drop in the value of approved building plans in April, construction activity remains steady.
Most of the investment has been channelled into residential additions and housing developments in growth areas like Katutura, Otjomuise and Kleine Kuppe.
Meanwhile, Swakopmund is seeing signs of a rebound.
“Although monthly approvals have levelled off, year-to-date growth of 69% compared to 2024 signals a potential recovery in building demand,” Jansen notes.
However, he says there is need for a stronger pipeline of commercial and industrial projects to maintain momentum, calling for targeted investor engagement and improved access to development finance.
On the fiscal front, the 2025/26 national budget has allocated N$12.8 billion towards development spending, much of which is expected to benefit the construction industry.
This includes N$3.6 billion earmarked for critical water infrastructure projects such as the expansion of the Outapi Water Treatment Plant, the replacement of the Ondangwa–Omutsegwonime pipeline, and groundwork for a second desalination plant in the Erongo region.
Energy infrastructure is also in focus, with plans for a N$1.4-billion 100 MW solar power plant and the Baynes Hydropower Station, which will add 600 MW of renewable capacity.
Jansen says these projects will drive significant demand for construction services. He also welcomes the government’s commitment to procurement reform.
“The rollout of a dedicated procurement court is aimed at accelerating project execution and reducing costly delays,” he says.
Nonetheless, challenges remain. With debt servicing costs projected at N$13.7 billion, fiscal space is tight.
Jansen also warns of risks from exchange rate fluctuations, which could raise the cost of imported construction materials like steel and cement, factors that may affect profit margins and delay some projects.
“In summary, while 2025 holds promise for Namibia’s construction sector, realising that growth will depend on strong follow-through from streamlined project rollouts and stable pricing conditions to sustained credit availability and investor confidence,” he says.
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