The Investment Property Databank (IPD) Botswana Annual Property Consultative Index results released on July 31 show the total return for all property was P2.85 billion (US$335.3 million) for the financial year (FY) ended December 2012. The IPD results of 17.9 percent growth rate compared with 20.9 percent for 2011FY demonstrate continued resilience of the Botswana property market.
IPD Executive Director and Head of South Africa branch, Stan Garrun, said the figure represents the un-geared total return to directly held standing property investments from one open market valuation to the next.
Announcing IPD’s second year performance on the Botswana property market last week in Gaborone, the SA-based Garrun told Sunday Standard that the return on Botswana property comprises 11.0 percent income return coupled with 6.3 percent capital growth over the year. The underlying rental growth of 8.6 percent outstripped Botswana’s headline inflation rate of 7.4 percent, underpinning both the capital growth and income return.
Industrial property outperformed other sectors with a total return of 28.4 percent, closely followed by residential at 24.4 percent. Retail property’s performance was more conservative with a return of 16.6 percent. The office return trailed at 15.2 percent as recent development activity placed pressure on rental levels. The property asset class outperformed bonds and equities which returned 6.3 percent and 7.7 percent respectively over 2012, he said.
“Now the Botswana property sector can provide local and global property markets with the comparative, precise and timely data they increasingly require,” Garrun said. “Objective performance reporting informs investment decisions and asset management. Over time and with credible data, the IPD process also assists managers to increase efficiencies and reduce costs on property portfolios.”
The outstanding results for two consecutive years, means IPD is now tracking the sector’s performance with a fully-fledged indicator. The index shines a light on the Botswana property investment sector for new investors and provides an important tool for local players.
A growing sample of 103 individual properties with a total value of nearly P3 billion will underpin research based on the IPD Botswana Annual Property Consultative Index.
IPD is a subsidiary of MSCI Inc., a leading provider of investment decision support tools to investors globally, and clients include real estate investors, managers, consultants, lenders and occupiers.
South Africa was the first IPD reporting country on the continent, launching its index in the mid-nineties. Botswana is the second African country in the stable of 30 countries across the globe with an IPD index incorporating more than 1,500 funds containing nearly 77,000 assets, with a total capital value of over USD 1.9 trillion (P16.15 trillion). Each year, IPD produces more than 120 indices helping real estate market transparency and performance comparisons, as well as nearly 600 benchmarks for client portfolios.
The figures represent the combined holdings of seven leading Botswana property investment portfolios for the FY 2012. These include Wharic Construction (Pty) Limited joined Botswana Insurance Fund Management Property Portfolio, Debswana Pension Fund, Letlole La Rona Limited, Motor Vehicle Accident Fund, Primetime Property Holdings Limited, and Turnstar Holdings Limited in the index. The index is the result of collaboration between IPD and its key Botswana partner and the index sponsor, Botswana Insurance Fund Management.