Windhoek-In what is certainly a first for Namibia, the Government Institutions Pension Fund has adopted a new model whereby it acquires and services land and then has property developers build and sell such houses at reasonable and affordable prices.
The approach is to buy land directly from town councils or farmers, service it and have the property developers put up houses. Nevertheless, the Fund is emphatic that while its model has a social responsibility aspect to it, the approach is by no means a mere social intervention.
The decision to invest in the housing sector was taken on purely business considerations, albeit with social implications, where long-term investment returns to the Fund are also justifiable, David Nuyoma, the chief executive officer of the Government Institutions Pension Fund (GIPF), said in a wide-ranging interview with New Era yesterday.
“Our wish is that since we acquired [the land] directly, the savings that we have realised in that context should be passed on to those who are going to put up houses,” Nuyoma said.
“It is going to be hard work. We have to break certain behaviours in the market that have become almost like a norm, and truly say ‘let us get the best for our people’, without making a loss,” he said.
The GIPF CEO says what they learned in the short span of time the Fund has been involved in land development is that houses are priced high because the land is bought from third parties or those who sell land on at a prices three times what they initially paid for it.
“That thing of 100 percent mark-up [by property developers and those selling land], for us it won’t work. That is not why we are in that business. We are solely in it to provide a very much needed intervention in our economy,” he said.
“We have to be realistic on what are the costs, [keeping in mind that] it is not cheap to build houses. It is expensive.”
Nuyoma nevertheless notes that through engagement with developers they established the minimum cost of building a three-bedroom house, for instance, and said early engagement between property developers and prospective homeowners also allows for better pricing.
“Yes, we have managed to bring the [price] bracket down,” he says of the model.
The pension fund has thus far acquired land directly from town councils, or farmers, in various towns across the country, with houses in Walvis Bay already sold to civil servants and other interested individuals.
Land has also been acquired and is being developed on the very same basis in Okahandja, Swakopmund, Otavi, Omuthiya and the Osona development between Windhoek and Okahandja, which was recently inaugurated by President Hage Geingob.
According to GIPF’s calculations, only about 30 percent of the total number of civil servants – estimated at about 100,000 – own formal houses. That leaves a significant number of civil servants in need of housing.
He says the Fund’s decision was largely informed by the call in the Harambee Prosperity Plan (HPP) to have 20,000 new houses constructed and 26,000 residential erven serviced nationwide by the end of the HPP period.
“We’re saying we want to take up a significant portion of what the president has put as a challenge to the market and we want to have a positive response to that.
“It is good for our economy, it is good for our people, and it is good for our Fund,” Nuyoma remarked.
He pointed out that in Walvis Bay, for instance, the Fund was able to recoup a good return on its investment, to the extent that it was able to reinvest some of those proceeds at Osona development, while at the same time granting the men and women in uniform a much-needed opportunity to acquire their own homes at more reasonable prices than the market currently offers.
At Osona GIPF is looking at the larger picture, where in the long run the development would eventually morph into a full township or suburb of close to 10,000 houses.
“Obviously we are going to have a challenge. You have developers who have acquired the land, [but] it is our wish they would develop it, passing on that benefit of the cost to the end-users, those who are going to own the property. That is really the thinking and wish,” he explained.
Nuyoma further said GIPF is working on the modalities that could change the rules of the Fund to allow GIPF members to use a portion of their pension savings against the cost of setting up homes in villages or outside proclaimed town areas.
While the legislation to that effect has been passed and gazetted, GIPF needs to ensure that such a scheme would not impact on the benefits of members once they retire.
“The purpose of the Fund is to ensure that the pensioner, the retired member, is able to have a reasonable income after retirement, that comes in on a monthly basis,” he says.
As it stands, using a portion of such funds towards the cost of buying a home could be interpreted as interfering with the funds accumulated by a member and could impact on the eventual pension pay-out when the person retires.
“It has moral implications also. Do you deprive a member of a house, but the income taken home at the end of the day may not be at the desired level? We are looking at various ratios, to see how do you mitigate that impact on the member. It is still a work in progress in that score,” he advised.