Real Estate Investor Magazine South Africa May/June 2015 | Page 57

BOTSWANA

Get High Returns On Your

Investment

Unexplored opportunities
in many sectors.
BY KILLION MOKWETE

B

otswana’s property market is a small but
growing sector with high returns, albeit faced
with challenges of sustainability and funding.
In 2011, the IPD’s Consultative Survey ranked the
Botswana property market’s ungeared total returns
above that of South Africa, France and even that of
the United Kingdom at 20.9%. The returns fluctuated
in 2012 and 2013, but still showed positive returns at
17.9% and 21.4% respectively. The key drivers have
been attributed to the boom in commercial, office and
industrial units, which were in demand from diamond
polishing sight holders during the relocation of the
Diamond Trade Centre from London to Gaborone.
The market context in terms of geography and
demographics has key elements an investor needs to
take into consideration while assessing investment
opportunities and viability.

“The property market
is potent for investment
in Botswana.”
Firstly, it is important to note that Botswana’s
population is only 2 million. According to a survey done
by think tank, Finscope, 27% of the adult population
did not earn any income by 2011, while 35% of adults
earned less than P1, 000 per month. A further 26.3%
earned less than P10 000 per month. This fact plays a
big part in the demand for space and buying power of
the population.
Secondly, it is worth noting that the property market
is potent for investment in Botswana, where it is
mainly centred on the capital city Gaborone. Other
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major urban centres such as Francistown, Jwaneng
and Maun offer limited opportunities in areas such
as tourism and mining but one has to be prepared to
undertake extensive feasibility and viability to ascertain
the long-term sustainability of investing.
Despite Botswana’s attractive property return in
previous years, there is currently a looming threat to
accessing finance due to the banks’ liquidity crisis.
Recent banks’ liquidity fears have prompted the Bank
of Botswana to cut Bank Reserve Requirements to
5% in order to boost liquidity in banks and jumpstart
lending. The effects of this have been hardest felt in
the mortgage and property finance sectors with most
big banks rolling back their products and some even
downsizing their mortgage departments as a result.
Botswana’s limited property consumer base is
compounded by the fact that the majority of these
income earners are in the public service, which has
seen salary stagnation for the past five years (although
there has been a 6% rise in March 2015). According
to a Finmark report (2011), 70% of income earners
cannot afford a mortgage loan. These factors paint a
gloomy picture for an investor looking for a long-term
sustainable property investment.
However, some areas remain unserviced such as
affordable housing, retirement homes and student
housing. These areas, which had issues of prohibitive
legislation and lack of government support in the
past, have recently seen new favourable planning
laws passed and increased government commitment
in providing resources to facilitate developments.
Demand for affordable housing remains high and
privately developed student housing and retirement
homes remain an unexplored opportunity with great
potential.

RESOURCES

Boidus Media
MAY 2015 SA Real Estat