Botswana is currently faced with a seeming oversupply of offices and retail space, a situation that will put a strain on current market rentals and property prices, said Outule Bale, of Khumo Property Asset Management, a subsidiary of Botswana Insurance Fund Management (Bifm).
“It is no longer the owners market hence there is need for thorough assessment and selection processes when making decisions to invest in these sectors in the short term,” said Bale. He added that the oversupply is likely to lead to stagnation or reduction in market rents.
At the same time a considerable amount of new space is coming to the market, areas such as the new central business district in Gaborone and Fairgrounds have become a hive of building activity.
“The full impact of these new developments will probably be felt towards end of 2012,” he said.
Bale said property development in Botswana has progressed fairly well over the past decade catching attention of many investors. This has in part been triggered by the prevailing demand/supply conditions in the property market, relaxed Pula/Rand exchange rate and presence of international retail chains, which promote the shopping centre concept in Botswana. Consequently, a rapid change in Botswana’s property landscape has been experienced as evidenced by the rise of modern office parks, housing estates and shopping centers.
As regards the skyrocketing rentals for house market, Bale said the cause of this is multi faceted.
“Primarily, our planning regime has not been responsive to market demands. The planning process of identifying land, zoning, subdiving, servicing and allocating and development ultimately taking place on it, takes a very long time (up to 10-15 years) and creates artificial demand situation in the market,” he said.
“Such scenarios could be overcome if the private sector is given meaningful participation in this entire planning process. Mixed use planning, if implemented, could help bring some balance between supply and demand of properties,” Bale said.
The cost of renting or buying houses in Gaborone has left many city dwellers with no choice but to move to neighbouring villages such as Mochudi, Molepolole, Ramotswa and Thamaga, where rentals are cheaper.
Further, Bale dismissed speculation that estate agencies are making a killing out of the property market.
“For their services, Estate Agents charge fees that are in line with the Regulations of the Real Estate Professionals Act of 2003. As such one cannot say they are making a killing per se. If anything, the biggest beneficiaries would be property owners who hold them on long term basis,” he said.
He said government should concentrate on providing a conducive environment within which property players and other stakeholders can play respective roles in the property market. Additionally, he said professionals should also be creative about ways and means of producing property that is of the required standards yet costing a lot less to construct.