Ongos housing project costs at N$100m

THE first phase of the Ongos Valley project on the outskirts of Windhoek has so far cost developers N$100 million.

This was mainly incurred on the preparation of land and infrastructure, to enable the construction of 4 500 housing units in the next five years.

According to an update seen by The Namibian, the project is a few weeks behind schedule due to the Covid-19 lockdown and its preventive accompanying restrictions. Contractors are, however, catching up.

The lead project company Ongos Valley Development said, important infrastructure, such as the water treatment plant is almost complete with the bulk of civil, road and water works already at an advanced stage.

The site for a water reservoir, which would ensure self-sustainability, is undergoing final preparations to lay a foundation.

Developers say employment provided by the project is still low due to the nature of the first phase. So far it has created between 50 and 100 employment opportunities.

Once the construction of houses starts, “you’ll see this jump to 200 to 300 workers”, the developers say.

The team says the coronavirus pandemic has had an impact on the project’s progress, as access to certain specialised equipment and materials have been delayed due to the disruption of international supply chains.

The Ongos Valley housing project plans to transform Windhoek’s residential landscape over the next 15 to 20 years by creating 28 000 housing units to meet the city’s housing shortfall.

The project will include apartments, free-standing homes and single residential units.

According to the projetc’s sales hub, the two-bedroomed freestanding houses with the option to extend are the most popular.

These units will cost from N$744 000, depending on the erf size.

The surging Covid-19 cases globally and locally are impacting production levels of local businesses, which leads to scaling down operations, machines being kept dormant and workers being sent home.

However, a sector seeing the contraction of business and an increase in unemployment is the property sector.

According to the latest FNB Rental Index for the second quarter of 2020, landlords are reducing required deposits in the low segment to attract tenants.

This, together with a reduction in rental prices (from on average N$7 404 in June 2019 to N$7 022 at the end of June 2020), had been recorded countrywide.

Overall deposits charged by landlords contracted by 30,6% on a yearly basis at the end of June 2020 compared to a contraction of 25,6% year-on-year recorded during the same period in 2019.

The reduction in required deposits was more pronounced in the two-bedroomed and three-bedroomed segments, which contracted by 44,8% and 35,4% by the end of June in 2019 and 2020, respectively.

The reduction in required rental deposits is quite significant for the two segments.

Researcher Frans Uusiku says the reduction in deposits, “affirms the growing participation of rental activity in these segments as landlords continue to grapple with occupancy issues”.

As a result of appealing to tenants, the deposit-to-rent ratio deteriorated further to a new record low of 5,5% – last seen in December 2009.

Given retrenchments and salary cuts due to the impact of Covid-19, property owners have had to compromise.

Rental returns slowed to 7,9% at the end of June 2020 from 8,2% recorded 12 months ago.

As a generally accepted norm, a rental return of 7% and more is considered good enough for the long-term sustainability of the rental market.

Uusiku says “the rental yield of 7,9% remains attractive despite the challenging business environment induced by the Covid-19 pandemic”.

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