Namibian real estate: investment opportunity or liability?


Once a cornerstone of the economy, the Namibian real estate market had been growing rapidly. It reached its peak in 2014 when Namibia recorded the second highest house price growth in the world, second only to Dubai1.

During this period, the country received substantial foreign investments in real estate, further contributing to the health of the economy. Unfortunately, decline follows every peak. Factors including the plummeting economies of neighboring countries Angola and South Africa, political uncertainties, and corruption scandals at home all contributed to a decline in the real estate market.

At the same time, a nine-year drought affected agricultural and horticultural sectors, which are among the country’s main sources of revenue. Local farmers were left with little choice other than selling their livestock and eventually their farms to avoid foreclosure by the banks. Some 300 farms were on the market with few or no purchasers; foreign nationals are restricted from buying agricultural land in Namibia without the prior consent of the Minister of Land Reform.

In 2017, the Bank of Namibia attempted to restrain the excessive uptake of mortgage credit, which was boosting the already unrealistically high housing prices. It implemented a change in the Loan-to-Value regulations so that purchasers had to pay extremely high deposits on the purchase of investment properties. This change, among others, led to stagnation and an eventual decrease in the purchase of investment properties. This decrease had a negative impact on the success of new developments in the housing market and, as a result, the construction industry collapsed, leading to a standstill in property development.

Falling house prices

In June 2019, the First National Bank of Namibia recorded an all-time low annual house price growth of negative 3.7% year-on-year2. Despite the fall in house price growth, a year-on-year increase of 27.4% was recorded for the volume index3, mainly influenced by the purchase of low-income housing; the demand for real estate is still high in Namibia.

Falling house prices have reached a critical level. In an effort to motivate investment in real estate, the Bank of Namibia reviewed the earlier changes in the Loan-to-Value regulations and smaller deposits are now required to purchase investment properties. The Bank of Namibia also introduced a 25 basis point cut in the Repo rate, aimed at preventing excessive repossessions of real estate. Usually, the impacts of such changes can be seen in the market within 12 months. However, experts remain skeptical that these changes will have an effect on the tumbling real estate market.

Changing market dynamics

One consequence of falling house prices is an increase in the property leasing market. As in any financial depression, people sell their investment and holiday properties first and, after the optimal window to sell has closed, the market is flooded with such properties. Purchasers now have a wide range of properties to choose from and most opt to temporarily rent a property instead of purchasing, with the hope of a further decrease in house prices.

With tourism still one of Namibia’s most successful sectors, plus the availability of services like Airbnb, another window of opportunity has opened to property owners. Rather than entering into long-term leases with tenants, owners offer their properties for short-term accommodation to holidaymakers.

With this option to rent out immovable properties, all be it for short-term holiday lets, investment in real estate can still be lucrative. However, as a result of the shift from a real estate market dominated by artificially high house prices to one where availability is almost equal to demand for real estate, a change in mindset is required by investors. To be successful, they have to be more actively involved in managing the property: operational real estate.

‘Leveraging a building’s products and services’

Alan Tantleff of FTI Consulting Global describes operational real estate in this way: “Today, successful building owners and landlords understand that tenant loyalty requires leveraging a building’s products and services to create a memorable customer experience. This has become known as operational real estate.” 4

“ Tenant loyalty requires leveraging a building’s products and services to create a memorable customer experience.”

The key to success has evolved from selling a product to selling a service. And in a world where social media trumps marketing, client loyalty is not guaranteed. Previously, decisions were based on loyalty towards a person or company, perhaps stemming from a longstanding relationship or previous brand engagement, rather than the quality of a service being delivered. The trend now is personal satisfaction triumphing over loyalty. Through social media, customers can share their opinions and experiences instantly, for better or worse, and their views carry more weight than advertisements from a service provider. So providers cannot just “deliver a service” but have to ensure customer-centric experiences.

Where property owners were, in the past, certain to secure tenants for their properties without additional effort, they must now leverage a building and its services to create customer satisfaction. Moreover, Alan Tantleff believes successful operational real estate must demonstrate three key qualities:

  1. Operational real estate is experiential: it’s more focused on the experience than the transaction.
  2. End user satisfaction is critical to success, and a good relationship between landlord and tenant is therefore paramount.
  3. Stellar service is always the key to success: this can only happen when property owners and managers align themselves to their tenants’ goals, needs and objectives and as such enhance the value of the clients’ investment5

The May 2019 FNB Rental Index Report6 showed a contraction in the deposits charged on rental properties; this is a clear indication that landlords are willing to reduce the deposit charged on rental properties to attract and secure tenants.

While this is more evidence of a gradual shift in Namibia towards operational real estate, a change in mindset is still required so that property owners and managers fully understand that the simple availability of a property is not sufficient to ensure tenant loyalty. High levels of client satisfaction through extraordinary service delivery and memorable experiences, for long-term and short-term tenants alike, are far more valuable than conventional marketing and can lead to successful investments in real estate.

With real estate a highly sought-after resource in Namibia, the demand for property will always exceed its availability. Despite the economic crisis the country is currently experiencing, an investment in Namibian real estate will always be an asset and never a liability, provided that property owners and managers keep evolving their approaches and stay ahead of the game in keeping up with the latest industry trends.

Ellis Shilengudwa Inc is a member of DLA Piper Africa, a Swiss verein whose members are comprised of independent law firms in Africa working with DLA Piper.

“ Despite the economic crisis, an investment in Namibian real estate will always be an asset and never a liability.”


1 FNB Housing Index


2 FNB Housing Price Index


3 Ibid.


4 – A new definition for Operational Real Estate by Tanya Sterling.


5 – A new definition for Operational Real Estate by Tanya Sterling.