Saturday, September 19, 2020

Manake’s viewpoint on real estate

Vantage Properties Chief Executive Officer Sethebe Manake says that real estate in Botswana has exemplary legislation and because of that presents opportunities for investors to tap into its market.

The company is a consulting firm that helps investors identify and leverage on opportunities offered by the real estate market.

Manake engaged journalists on Friday last week to discuss mega trends to be seen in 2050 and their significance to the real estate market. She zoomed on six mega trends which include huge expansion in cities expected to produce mixed results; unprecedented shifts in population which will drive change in demand for real estate; growth in emerging markets which will increase competition in assets available in such markets; technological disruption; real estate capital taking center stage and the application of sustainability in transforming design of buildings and development.

What this generally means, she says, is that Africa as an “emerging market” presents a new scramble given that it possesses all the ingredients such as land, population and natural resources to give investors a return on the capital that they will bring.

Manake says that when such money from other corners of the world pours into Africa and leverages on the opportunities that are currently being overlooked by the local market it could shape the direction of legislation.       

The benefit of legislation in Botswana, says Manake, is the security it provides on investments which from the side of investors weighs heavily in their favour.

“If you buy property you assume ownership of it as long as you have a title deed to it,” she said. This contrasts the practice in other African countries such as Uganda and Kenya where ownership can easily be challenged as per the legislation.

The nexus of Manake’s discussion was to demonstrate the difference in the perception of real estate from a value perspective and that from a consumerism stand point. She emphasised that the current view of property in Botswana is largely on its use or consumption as opposed to drawing value from it.

This view, she says, presents a challenge in that it limits full understanding of the value of real estate and as a result opportunities within it are not seen.

She says, contrary to traditional belief, that real estate is not brick and mortar but is rather a set of different investment tools associated with brick and mortar which investors can put their money into in order to get a return.

She says that participation by the local market in real estate is typically restricted to ownership of a house which often people don’t make money out of, therefore putting blinders to other existing opportunities in that market.

The point she makes is that not owning a house doesn’t imply exclusion from real estate participation given that people can also partake in that market through other means that may give the same level of return as the one obtained from a physical building.                  

A burning issue to a majority of people in Botswana is that of the current high prices in real estate. Affordability is from that sense regarded an important factor in whether or not people participate in the real estate market.

Manake argues against the notion that regulation can be used to bring down the perceived high prices.

“Regulation is not regulating prices. Prices are a result of practices in real estate market. Pricing depends on who the investor is,” she said, adding that “the only way rentals can come down is if you stop renting at high prices.”

The reasoning she puts across is that consumption is the driving force behind the existing prices, which in other words means that if buyers/tenants didn’t accept the sellers/landlords’ asking prices then such prices wouldn’t be the norm. “Sales are purely driven by consumption,” she said.

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