Sunday, September 24, 2023

Here is the 2017 Gaborone property report card

Office market supply continues to outstrip demand in Gaborone and this imbalance is likely to worsen for secondary space, a report by Knight Frank has shown. 

In its 2017 Africa Report, Knight Frank said with several large CBD office towers due for completion in 2017 and government departments set on moving to new CBD buildings, older and poorly located offices will be left empty with little expectation that they will be taken up by the private sector. 
Knight Frank has real estate consultants in more than 350 offices worldwide.

The report said Fairgrounds Office Park remains the decentralized location of choice, with rents around 20% lower than in the CBD. 

“Despite the perceived oversupply, several occupiers with requirements for 500-1,000 sq m are unable to secure appropriate accommodation in the new CBD buildings, and many high-rise towers with smaller floor plates do not suit corporate occupiers,” the report noted.

With regard to the retail market, the report said the sector continues to see new development, but demand for space has waned, with few new market entrants and existing businesses contracting in response to weak consumer spending. 

“Historically, mall developers have targeted South African chains, who were able to obtain exemptions to legislation that limits the granting of certain trading licenses to local businesses,” the report said.

 However, the report added, a hardening of the government’s stance meant that South African retailers were unable to obtain exemptions throughout 2016. 
“If this situation persists, it will deter the development of new malls and landlords will have to target Botswana based tenants, who generally occupy smaller shops of less than 200 sq m,” the report further stated. 

On industrial market, the report said demand for industrial space is focused on units of less than 500 sq m, as tenants have started to use newly built business space as cheaper quasi-offices or showrooms. 

“The lack of strict planning controls within industrial areas has enabled this trend. For new warehouses under 200 sq m, rents are now as high as 50 pula/sq m/month, close to half the level of fully-fledged offices,” the report said.

Demand for larger space is dominated by quasi-retailers seeking prominent properties with good visitor parking. 

“With Botswana reaching 50 years of independence in 2016, many 50-year Fixed Period State Grant (FPSG) leases are nearing expiration and industrial property owners are anxious to see how the state treats requests to renew FPSG leases.,” the report said. 

Residential market Gaborone has a diminishing supply of low-to-middle income housing, with most people on average incomes finding it difficult to locate affordable housing or finance their own self-build homes. 

It said the drift to smaller and cheaper properties has been reinforced by an increased number of single-family households due to growing student and elderly populations. 

Many residential buy-tolet investors are struggling to find tenants, particularly as expatriate workers have found it difficult to renew work permits.
“Demand for multi-residential housing has increased and developers are increasingly tailoring schemes to the demands of average local buyers and tenants. Sales at the high end of the market are far less frequent and likely to stay muted for some time,” the report said.



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