Announcements Corporate Criteria Research

GCR releases the Namibian Property Sector Risk Score

21 April 2020 – GCR Ratings (“GCR”) has assigned a Namibian Corporate Sector Risk Score for Property of ‘5.0’.

The Namibian Property Sector Risk Score report is available for download at https://gcrratings.com/risk-scores/

The GCR Corporates Sector Risk Assessment

The corporate sector risk score is an aggregation of a) cyclicality b) ease of doing business and c) sector specific dynamics scores, and is intended to provide users with an overview of the major factors that impact GCR’s assessment of the relative risk of each sector.

Corporate Sector Risk Scores are assessed on a scale of between 0-13, and are a key factor in determining the operating environment component score for each Issuer. The core of the GCR Ratings Framework is based on GCR’s opinion that an entity’s operating environment largely frames its creditworthiness. As a result, the operating environment analysis anchors the underlying risk score for the GCR ratings criteria. GCR combines elements of the country risk and sectoral risk analysis, which are blended for countries for Issuers operating across multiple jurisdictions, to anchor a corporate to its current operating conditions. For more details, please read the related criteria and research listed below.

GCR will periodically publish updated “Namibian Sector Risk Scores”, which will supersede previous publications.

Namibian Corporates Sector Risk Scores

Property, Sector Risk Score 5.0

The Namibian Property sector risk score balances below average cyclicality and relatively sound returns against the adverse impact of structural and economic limitations National Government has been grappling with for a number of years. The increasingly fragile operating climate has reduced demand for new developments, while rentals and lease tenors have come under increasing pressure. Subdued business confidence has also seen tenants scale back their space requirements. Vacancies have therefore also picked up, as availability of rental stock in key nodes rises, while viability constraints facing many entities in the SMME sector will impact collections and recoveries.

Counterbalancing this somewhat is the much slower pace of new developments compared to regional counterparts such as South Africa and Kenya, which should help to support more resilience in commercial property values when compared to residential assets. Access to capital and liquidity are viewed to be reasonable, although somewhat restricted by the illiquid capital markets, and banks’ more cautious approach to managing their property exposures going forward. Looking ahead, we expect established players to continue to leverage first mover advantages, especially entrenched relationships with financial institutions and land held in the country’s restricted to development areas to grow and/or diversify their investments. There are likely, however, to be more distressed or heavily discounted disposals in certain segments, especially residential and industrial. Overall, margin progression is expected to be constrained by higher municipal rates, as well as sustained pressure on consumers and business, which will be exacerbated by the COVID-19 related slowdown and/or disruptions.

Analytical Contacts

Patricia Zvarayi Deputy Sector Head: Corporates
Patricia@GCRratings.com +27 11 784 1771
Eyal Shevel Sector Head: Corporates
Shevel@GCRratings.com +27 11 784 1771

Related criteria and research

Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Corporate Entities, May 2019
Criteria for Rating Real Estate Investment Trusts and Other Commercial Property Companies, May 2019
GCR’s Country Risk Score Report, January 2020
GCR Ratings Scales, Symbols & Definitions, May 2019
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