Amid all the uncertainty brought on by Covid-19 over the past 18 months, one thing is assured: the pandemic has re-ordered real estate markets across the globe on an unprecedented scale.
In Botswana, property developers are hoping for improved fortunes around property market following a difficult period owing to the outbreak of Covid-19.
Director of Time Projects, Joe Simpson says they have been able to work with their tenants, and in turn their financiers have worked with them to ensure they extend relief to occupiers during lockdowns.
Simpson highlighted that they currently have a vacancy rate of under 1% in PrimeTime’s Botswana portfolio and all tenants are now back to paying their contractual rent.
“Demand in some areas is strong, take for example the new Lobatse Junction mall which was developed through the Covid-19 period and performing excellently since opening last week. We have re-geared some leases which had escalated to above market rates while accepting that has resulted in reduced income on some leases and that essentially secures our income for a longer period,” said Simpson.
Simpson however said they have obviously taken a knock on their income over the Covid-19 period even though they are now well positioned for growth with a strong pipeline of projects ready to go
He also said the company currently has 34 properties, 26 of which are in Botswana.
On the other hand Vantage Property Managing Director who is also the newly elected President of Real Estate Institute of Botswana (REIB) Sethebe Manake said there were many conditions that affected the property market, adding that the market has been experiencing movements due to the outbreak of Covid-19.
“You will understand that the Bank of Botswana lending rate was reduced to 3.75% as a major of stimulating credibility growth and this has started to affect the affordability of individuals. Our government also put halt on the issuance of new construction projects leading to ultimately a decrease in the level of construction and I am sure you know that the government is the key driver of construction in the country,” said Manake.
She also said another factor which has affected property growth is the increase in VAT which increased IN April this year.
Manake said this increase has resulted in increase in rentals and property prices.
She also highlighted that the constant alcohol ban and curfews had an impact on the sector.
She also said repossessed properties achieved about 60% of reserved prices after being put on the market twice.
She stated that last year due to the lockdowns there was decrease in the number of sales transactions and the demand for residential properties on low incomes houses.
“Housing is expected to high with the existing supply overweighed by demand this year and the demand pressures are mainly coming from growth in the population, migration in the urban areas especially Gaborone and the tightening of the economy as most occupiers will want to reduce expenditures due to the decreased household income,” said Manake.
She also said they are expecting an increase in default rates due to job losses which have affected affordability.
Former REIB President Isaac Molefinyana, this year also stated that the State of Public Emergency, which sprang directly from the pandemic, is another factor in the growing demand for low-cost accommodation.
He stated that REIB had observed a trend in which people were relocating from high-income houses to low-income houses owing to economic hardships experienced since the outbreak of the virus.
“The market is still shifting slowly and the storm is coming,” he said. “The immediate impact we saw is only on the high end property where the market was affected instantly. But the shift in middle and low-income is not yet visible because people have now occupied low-income houses.”
This means that competition for middle and low-income houses is intensifying, Molefinyana noted.