High-end residential rentals stagnate

Isaac Pinielo | Friday November 7, 2014 13:43

 

Maria De Angelis, an estate agent at Seeff Properties Botswana explained that for the past year, the company has not experienced a growth in rental demand across all property types.

However there is still high demand for low cost rental while the top-end market has seen declining prospects.

“ The highest demand is for rental properties that cost between P4, 500 to P8, 000 monthly. There is medium demand for rental of between P8, 000 to P11, 000 as well as very low demand for higher rentals.

“This demonstrates that there is a shortage of incoming expatriates to Gaborone,” she says.

According to De Angelis, central apartments and townhouses especially the lower rental for university student type of accommodation are showing a big demand.

For families, she says, demand is good in the city’s central areas near schools, as well as at Phakalane, Kgale, Village and at the ‘Blocks’.

“Usually the demand for accommodation grows in August-September followed by march-April and falls between November and January,” she adds.

De Angelis says the average rental income for a three bedroom house and a four bedroom property, depending on the locations, for low cost is P5,000 to P7,000, medium cost is P7,000 to P9,000, and higher cost is P9,000 to P30, 000.

De Angelis however adds that commercial rentals have given better yields over the past years, stating that with the anticipated boom in the market from both the CBD and Fairgrounds, they expect this return to stabilise or slow for the next few years.

She explains that industrial rental returns have been good especially for mini warehouses.  “New licensing regulations have also affected the outlook for these returns, but with time the rental market will stabilise, although we do not anticipate it to be as lucrative as it has been in the past as more properties are available,” she says.

With returns in office and retail market constrained, property developers are now eyeing the industrial and residential properties for investment opportunities. 

According to the 2014 International Property Databank (IPD) Report, the top-performing sector for 2013 was industrial property, followed by residential and retail.

The industrial sector outperformed others as a result of superior income return and a solid capital growth of 13.5%. The residential market had an outstanding year, mainly in terms of capital growth and delivered a total return of 24.4%, although the income return of 4.1 percent was relatively low.

The office sector underperformed relative to the other sectors, largely as a result of vacancy rates increasing from 1.9 percent to 5.9 percent. Rental growth was low at 4.3 percent and capital growth also underperformed at 5.6 percent.