Council considers exorbitant construction costs for low-cost houses

The Swakopmund Town Council is considering allocating erven to Power Oyeno to build low-cost houses at a price tag of N$6 264 per square meter. Power Oyeno will construct two show houses, after which Council will consider awarding the tender for the project.
The proposal was discussed at the recent Town Council meeting after Power Oyeno made a presentation to the Management Committee. According to an entry on the agenda there are currently only two areas which have been serviced and are available for affordable houses. These are Extension 6 where 119 single residential erven are available as well as Extension 7 where 155 single residential erven are on hand. The houses Power Oyeno wants to construct are based on two designs. Both designs are aimed at low-income groups. The smaller house measures 31m² and would cost N$194 187 to construct. This translates to N$6 264 per m². The second house design measures 40m², at a construction cost of N$217 450. The construction cost is slightly less at N$5 436 per m². The above-mentioned prices would still make these houses virtually unaffordable to hard-working people earning a minimum wage. Is it realistic? Experts in the construction industry contacted by the newspaper have described the construction cost as exorbitant and overpriced as this could “easily be dropped to at least N$3 500 per square meter – if not more.” The much-reduced construction cost could easily be achieved as the low-cost houses would not be fitted with anything fancy, but instead would only include basic necessities. According to a submission made to the Management Committee the walls would for instance be plastered and painted with contractor’s PVA only on the inside. Also: the developer would only make provision for a geyser – but not install a geyser. According to the Agenda the prices submitted by the developer exclude the cost of the erf, but include various other expenditures, amongst others transfer costs and the water and electrical meters. Curiously though, some of the costs included in the construction costs are shareholder overheads (7%), VAT (15%) and a mark-up of 11.5%. Should Council approve the proposal by Power Oyeno Council will determine which erven and types of houses are applicable and that not more than 150 are to be constructed.

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