After the City of Windhoek put auctioning of land on hold it will now advertise plots on tender and people will be expected to buy plots through that process.
The city’s acting chief executive officer Fillemon Hambunda told New Era recently that plots will be advertised with an upset price and individuals would offer how much they want to pay for a plot.
Hambunda mentioned this when responding to questions on how the city now generates its money after it was decided to no longer auction land.
“Say for example the city is selling a plot for N$100 000, then you look at the size and how it is going. You will say, I want to buy this plot for N$130 000 or N$150 000. Now if the tender closes, it will be evaluated according to the set formula that is there. No one will come again and escalate the price,” said Hambunda, adding that an individual will have to source his/her own building costs.
Hambunda explained that there is a difference between tender and auction of land. He said tendering would curb the cost while with auctioning the cost keeps going up – as those who have money keep escalating the price.
At last week’s city council meeting it was announced that the city approved the sale of 399 erven located in Khomasdal Extension 16, which are fully serviced.
New Era had contacted city spokesperson Joshua Amukugo to get further explanation on the issue, but he did not reply to questions sent to him over a week ago.
However, last month Amukugo said that a person would buy a form from the municipality with a map of all available erven and also the prices of the plots.
“And people can then say how much they are willing to pay for the plots. Those who are desperate might add more. After we collect all the offers we will add all the amounts together and divide them by the number of applicants to determine the price per plot.”
Last year, the city said auctioning of land has been put on hold following a directive by former minister of regional and local government, housing and rural development Charles Namoloh in 2011/2012.
Namoloh felt auctioning of land had become a rip-off system with well-to-do residents beating the needy poor to the biding price.
However, investment strategist at Capricorn Asset Management, Suta Kavari, says that the problem with a tender process is that it would create unnecessary backlogs and other potential bottlenecks in the supply chain of land.
“One of the reasons that the city finds itself in this mess. The tender process is also not the most transparent,” Kavari remarked. He doesn’t think the process of selling land is currently problematic and further thinks auctions have the added advantage of selling off several plots of land in one go and in a somewhat transparent manner.
Kavari is of the opinion that nothing will happen to land prices because of tendering. “A tender process will not lead to suppression in prices. If anything the price of land will not alter all that much as demand still far outstrips supply.”
He said if the supply issue is not addressed, residents would continue to have this perennial problem of exorbitant property prices.
“Supply has been an issue because the city has a historic backlog when it comes to the provision of serviced land. The city also has a monopoly on servicing of land, a situation which exacerbates the problem.”
He further stated that if private vendors are allowed to supplement the city in the provision of serviced land, then Windhoek would possibly have a scenario where land is serviced a lot faster, thus injecting much needed supply into the market, which has the potential to lead to a drop in property prices over the medium to long term.