Property Futures

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Growth and Stability in the real-estate market of Botswana

Article: The relocation of DTC from London to Botswana has influenced the local property markets.

The climactic conditions and the political stability of Botswana make it a good place to look at real-estate investment.  The world economic forum regards the country as one of the best for governance on the continent.  It also has a high credit rating and offers favorable exchange rates.  Its wildlife sanctuaries and national parks help to attract many tourists, with other activities encouraging economic growth, such as coal and diamond mining and cattle rearing.

Source: Wikipedia

Source: Wikipedia

The commercial real estate market in Botswana

The shifting of the Diamond Trading Company (DTC) offices from London to Gaborone has resulted in an increase in the speculative developments in the new Central Business District as well as other business parks.

Commercial properties coming on the market include the expected completions of:

  • Offices of Fairscape
  • At least 4 new office buildings in the CBD

Experts believe that the office real-estate sector will be in a state of oversupply for the next 2 or 3 years and rental growth will restrict to adjust for this oversupply.

  • There would be increased competition for retail properties and the recent entrants such as Sebele Mall, Rail Park Mall and Airport Junction, completed in the last 2 or 3 years, are expected to take away market share from the established properties.
  • Because of customers moving to the new entrants, there will be pressure on the anchor tenants in the older properties to move as well.
  • Strong demand for properties in the industrial sector will continue to assist because of a shortage of good quality properties.

Residential and hotel investment in Botswana

  • Demand for up-market residential accommodation is expected to continue to be strong because 80 families from DTC have relocated to Botswana from London.
  • Market values are expected to grow in response to the demand.
  • Botswana Housing Corporation has the mandate of providing housing to the government and local authorities as well as low-income families, but struggles to cope with the demand for low-cost housing. Unless it can provide an adequate supply of housing, there would be large rental gains in this sector.

The hotel and tourism industry is trying to cope with the increasing demand because of the DTC shift.  DTC has 75 sight holders who will each visit Botswana 10 times a year and expect 5-star hospitality as well as other entertainment of the highest quality

The outlook for Botswana

The IPD Botswana Property Performance Report for the year to December 2011 showed a total return of 20.9% on directly held investments in property based on open market valuations.

  • This return is made up of 10.8% by weight of income and 9.2% by way of capital appreciation.
  • Inflation for the same period was around 9% and emphasizes the importance of income in this market.
  • Retail and residential real-estate investments outperformed office property because of the impact of development activity in the office sector and the pressure on rental levels in the short to medium term until the oversupply is rectified.

The bottom line for investment in Botswana

According to Knight Frank’s newly released Africa Report 2013, demand for high-quality commercial and residential property is continuing to grow across Africa on the back of strong economic growth and rising income.

Botswana is particularly suitable for investment in residential and retail property because of its economic fundamentals and its political stability.


3 comments on “Growth and Stability in the real-estate market of Botswana

  1. Pingback: Growth and Stability in the real-estate market of Botswana | Property … | Summer Vacation Travel

  2. Pingback: Growth and Stability in the real-estate market of Botswana | Property … | Jonathan Brandis

  3. Pingback: Growth and Stability in the real-estate market of Botswana | Property … | Technology Timeline 21st Century

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