• Market Watch

Unlocking real estate opportunities

• 3 Months Ago - 2024-05-21 00:00:00

As Namibia's economy continues to show resilience amidst global uncertainties, investors are increasingly eyeing opportunities in the country's commercial real estate market. With a recent GDP growth of 4.2% in 2023, largely fuelled by the mining sector, particularly diamonds, the nation's economic landscape offers promising prospects for savvy investors. However, a slight moderation from the 4.6% growth in 2022 and future projections indicating a slower growth pace of 3-3.8% annually suggest a cautious but optimistic approach.
Investing in commercial real estate in Namibia requires an understanding of the current economic landscape. Therefore, it is important to note that despite global economic challenges, the country's GDP growth remains positive, though slightly tempered compared to previous years. Inflation has been a concern, rising to an average of 6.1% in 2022 due to global commodity price hikes spurred by the pandemic and global conflict.

Take the necessary steps
There are several steps one has to consider when investing in commercial real estate locally, which include market research, financial planning, legal considerations, property selection, property valuation, property management and maintenance, as well as risk management and regulatory compliance.
When doing market research, one should focus on economic indicators, key sectors driving growth and specific locations with high potential, such as Windhoek, Walvis Bay and Swakopmund. Once that is done, establish a clear budget, factoring in purchase costs, renovation expenses and reserves for maintenance. It is important to familiarise yourself with the local property laws.
Foreign investors can own property but should be aware of any specific restrictions. It is advisable to hire a local real estate attorney to navigate the legalities, draft contracts and secure the transaction. Purchasing property in Namibia is relatively uncomplicated for non-residents. Unless the property falls under the agricultural land category, most ownership is freehold. Your initial step as a prospective buyer is to engage a proficient conveyancer. They will represent you and liaise with the real estate agent handling the listing.
Subsequently, your conveyancer will facilitate the execution of a deed of transfer for the purchase, marking the beginning of an exciting journey into property ownership.

Next steps
The exciting part of selecting the property then begins, and one should then decide on the type of commercial property one wants to invest in, whether it be retail, office, industrial or mixed-use. Personally visit properties to assess their condition and potential for development or renovation. If there happens to be any structural damage or defects to the property, the seller is obligated to declare them beforehand. Common law states that the seller will be liable for these faults even at the completion of the sale, with or without prior knowledge.
Once you have set your mind on a property, get a professional valuation to determine the market value and calculate expected rental income to assess the investment's profitability. This is typically done by dividing the annual rental income by the property's purchase price.
Once the property has been acquired, decide whether to manage the property yourself or hire a professional management company, ensure reliable tenants are chosen and then ensure regular maintenance is done on the property to preserve its value and keep it to tenant satisfaction. It is imperative to obtain comprehensive insurance to cover risks such as natural disasters and liability claims and to diversify your investment portfolio to mitigate risk, considering different types of properties in various locations.
Defining your investment goals clearly is crucial. Whether seeking steady rental income, property appreciation or a mix of both – plan your exit strategy, whether to hold the property long-term, sell after appreciation, or reinvest in other opportunities. Utilise resources such as the Namibian Chamber of Commerce and Industry (NCCI) and the Bank of Namibia for market insights.