A smiling real estate investor in the old heart of Gaborone is as rare as an enthusiastic tenant willing to pay more for office space than last years’ asking price. Landlords who have been making a killing with every square meter of office space being snatched up like fat cakes suddenly find themselves saddled with properties that are sitting on the market longer, especially if the asking price is not slashed.
“The emergence of the new CBD in Gaborone is changing the entire dynamic of the office market. New developments delivering tens of thousands of square meters to the market within a relatively confined period were always likely to cause oversupply and the manifestation of this has been a crash in rental values for ageing secondary grade accommodation”, observed real estate experts, Knight Frank, in their 2013 Botswana real estate market snapshot.
The Gaborone Central Business District which is home some of the city’s new land marks among them the spectacular Exponential building, the new Square Mall, The Tower, the new SADC headquarters, the Industrial Court, the new High Court , Lansmore hotel, an assortment of up-market restaurants and the Three Dikgosi Monument, a landmark featuring the statues of Khama III, Sebele I, and Bathoen I, has not only changed the city skyline but was also a serious game changer in the Gaborone office market.
“Some buildings in the old heart of the capital have seen rental values fall by approximately 50% from their peak in 2010. In contrast, the take-up of new offices in the CBD has been strong with major corporate occupiers, small professional practices, parastatal organisations and public sector bodies all contributing to the mix of tenants and owner-occupiers”, states Knight Frank.
Changes in the office space market are being felt in the industrial market because most industrial activity is in Gaborone, where inflated prime rents have been achieved in the past were due to office occupiers utilizing light industrial locations because of a lack of available offices.
“Zoning is now being more stringently applied, which in conjunction with an increased supply of offices, is changing the nature of the market. A small amount of construction of new space is being seen in locations within 10 km of the city centre and en route to the airport, mostly for owner-occupation”, states Knight Frank.
The retail market on the other hand seems to have stepped into 2013 with a confident stride.
Observes Knight Frank: “The growth of the retail sector has been very visible, especially in Gaborone, with the arrival of new shopping centers. The most notable of these are Airport Junction and Rail Park Mall in Gaborone, which have introduced some new retailers and food outlets to the country. Despite the delivery of new shopping centers, there is still a lack of diversity with little difference in the offering at each mall. However, occupancy in the main shopping centers remains high and demand from retailers for good quality centers across the country continues unabated.”
It is however investors in the residential market who are still having the time of their lives. The residential market in Gaborone remains robust with prices rising both in terms of rentals and capital values.
The expansion of the diamond industry has led to an influx of ex-pats coming into Gaborone and this has resulted in high demand for properties in the prime areas of the city, especially Extensions 9 and 11, The Village and the Phakalane Golf Estate.
The Knight Frank report states that “the high level of demand has opened up development opportunities and interest is also being observed in areas outside Gaborone such as the Lion Park, Mokolodi and Gaborone North, where plots are being sold at more affordable prices.”