Property market bullish in 2017
Isaac Pinielo | Friday March 10, 2017 15:30
Following the release of the annual Botswana Property Report, real estate investment and development company, Vantage Properties expressed its positivity about the future.
Lloyd Sungirirai, chief investment officer at Vantage Properties, said there are still indications of optimism in selected property markets.
He said in the previous year, lack of jobs and unemloyment affected property purchases, noting that demand for low income housing remained positive.
“Listed real estate covered P4 billion in capital values.
Lack of jobs and unemployment affected property purchases. Demand for low income housing remained positive,” Sungirirai said.
He noted that real estate credit growth continues to fall against increased banking lending capability, adding that Gaborone land income is too high compared to urban villages and satellite villages.
According to Sungirirai, in the office property market, 2017 is not expected to be a good year for offices but improvements after years of poor performance are expected to filter through.
He said vacancies are rising in upper market business nodes such as Kgale Mews and the Gaborone International Commerce Park (GICP).
He noted that the retail sector continues to display strength leading in the testing times, adding that there are concerns that an oversupply of retail space is looming.
“Industrial property remains underrated. The sector has enjoyed steady-to-strong rental growth in recent years, which has encouraged investment and development activity,” Sungirirai said.
He further indicated that residential is an exciting space for property investors, noting that demand for residential properties especially on the low to mid-income levels is expected to be very high with the existing supply overweighed by demand. Sungirirai said many factors can be attributed to the decreased uptake of mortgages including increased sophistication of the debt market offering to real estate investors.
“Such as the nontraditional lenders, hedge funds, credit funds, business development funds, crowdfunding and sovereign wealth funds have become very active,” he said.
In addition to the factors attributed to the decreased uptake of mortgages, Sungirirai mentioned the tightening of the lending criteria against the uncertainty of the economy by mortgage lenders.
Other factors include failure to pass on interest rate decrease to the consumer, as well as poor performance of the property market.
“So as long as this continues we will continue to see the decrease real estate credit,” he said. He stated that as long as commercial banks tighten their lending criteria as they are being conscious of the uncertainty in the market, they should rather invest their excess liquidity in government bonds and short term instruments.