Urban property market bullish as demand soars
The local property continues to show strong signs of growth mainly driven by growing demand, especially in the residential market, research by First National Bank Botswana (FNBB) indicates.
FNBB is the country’s largest commercial bank by both balance sheet and number of customers, while also being the biggest property financier through various products including mortgages, refinancing tools, and property loans.
The FNBB report indicates that demand for housing in 2023 continued to outstrip supply, especially in major urban hubs, exerting pressure on prices. The disparity between supply and demand is anticipated to persist in the short to medium term, bolstering price appreciation.
Noticeably, the report also revealed strong growth in rental rates helped by changes in market demand for more property as the economy continues to recover from the effects of COVID-19.
“Recent observations indicate a general upswing in rental rates across the country, reflecting a broader trend in the real estate market,” FNBB researchers said. “Various factors contribute to this phenomenon, including increased demand for rental properties, changing economic conditions, and evolving housing preferences.”
Gaborone stood head and shoulders above the rest in terms of higher rental rates, as urbanisation continues to drive many people to towns and cities, creating aggressive demand for property. The capital city is followed in strong rental rates by Jwaneng which is an economy supported by the presence of Jwaneng Diamond Mine. “Gaborone stands out with a significant surge in rental rates, particularly in the three and four-bedroom segments possibly driven by families seeking spacious and accommodating living arrangements during times of transition.
“This specific trend warrants a closer examination to understand the unique factors influencing the rental landscape in the capital city,” the report says.
However, the report showed a visible correlation between the increase in rental rates, especially in larger housing configurations, and the number of properties facing default and subsequent auction.
“It appears that individuals, facing the impending auction of their mortgaged properties, are opting to secure alternative accommodation through rentals,” the researchers noted. “This strategic move aligns with a broader narrative of financial recovery, as these individuals seek stability and flexibility in the face of property-related uncertainties.”
Further, the report projects robust demand for housing to persist this year propelled by population, urbanisation trends and the imperative for affordable housing solutions.
The development of integrated residential communities and mixed-use projects is expected to redefine the landscape of residential real estate.