- Demand for middle and upper end properties down
- Market for office space remains weak due to boom of completed construction projects
The residential rental market showed signs of deterioration in the third quarter of 2021 as compared to the previous quarter due to reduced demand in the middle and upper end properties.
However, the rental market still enjoyed good demand and supply in low-end houses, with the average price for residential properties sold in the third quarter of 2021 increasing by 8 percent to P788 000 compared to the previous quarter.
According to the Bank of Botswana’s (BoB) latest Monetary Policy Report (MPR), this reflected an increase in the number of high valued properties traded in the quarter under review. “Looking ahead, the demand for lower-end, medium and prime located residential housing is expected to improve further, given the affordability of properties in these categories compared to those in the upper-end market, which continue to experience a weak demand,” says the report.
It notes that the market for office space remains weak due to increasing supply from completed construction developments, such as the Innovation Hub and the Botswana Unified Revenue Service building at the Gaborone CBD. Demand remains weak also because of uncertainty due to COVID-19 and generally subdued business conditions. Despite the negative effects of the continued negative impact of the pandemic and generalised weaker demand in the third quarter for office space, there has been continued good office enquiries and/or uptake in the CBD and Showgrounds.
Going forward, the report says there is a likelihood of a slowdown in uptake at the CBD, especially if government institutions remain in their current premises and locations. In addition, the supply of office space is likely to increase further, given the ongoing construction projects and planned office buildings at the Gaborone CBD, such those of the Botswana Housing Corporation and Water Utilities Corporation.
“These will further exert downward pressure on rentals, especially in the decentralised office locations,” the report notes. “Similar to the previous quarter, the demand for retail space remains fair across all market segments while the supply is expected to increase on completion of the ongoing construction of a major shopping center in the CBD (and) another one is proposed for Mogoditshane.”
In addition, other centers with good demand for retail space are said to be Jwaneng, Lobatse, Ramotswa, Selibe-Phikwe, Maun, Francistown, Mahalapye and Letlhakane. The report says this is because most of these locations have a few retail schemes at planning and/or construction stage which are to be anchored by reputable supermarkets. With regard to industrial property, BoB says the supply of unoccupied big warehouse space has decreased while demand has improved. The report says availability of prime location industrial space is expected to decrease going forward, given that most of the centrally located industrial land is almost fully developed and occupied.