COVID-19 hits F/town property market
Chakalisa Dube | Friday August 28, 2020 12:09
In recent weeks, BusinessWeek has observed many vacant commercial spaces in the city’s popular malls and industrial sites, suggesting that the city’s property market is battling with the pandemic’s effects on business.
Additionally, the Francistown residential and commercial property market has been struggling since the 2008 world recession, which resulted in a decline in commodity prices.
The situation was compounded by the closure of Tati Nickel Mining Company (TNMC) in October 2016, which resulted in job losses and subsequently the contraction of the disposal income in the city.
General rental and capital values across all residential sectors of the residential market have over the years declined especially with the increase in supply due to construction in nearby villages, which include Tati-Siding, Tonota and Borolong. This week, property expert, Elijah Gwamulumba of Willy Kathurima Associates said COVID-19 might even lead to an unprecedented glut in the property market if it does not go away very soon. Willy Kathurima Associates is amongst the major rental and property sales agents in the city.
“Since the lockdown period, the commercial property market has been on a serious decline with rising vacancy and default levels as most tenants struggle to meet their monthly rental obligations,” he said.
“Only 45% of our clients are trying their best to meet their rental obligations. Some have vacated their premises because they closed down due to low business attributed to COVID-19 while others were kicked out of their premises by landlords for failing to pay their rentals.”
The sale of the residential property market has also remained nearly static according to Gwamulumba. “There has been lower demand for high cost houses something which has also caused a glut. There has however been bit of demand for upper middle-income properties.
“I would say that since the lockdown period, our residential property sales have gone down by 50%. This clearly indicates that the property market in the city has been adversely affected by COVID-19,” said Gwamulumba.
He added: “Some of the properties we manage include those housing alcohol-related businesses such as bars. Because the bars and other alcohol trading businesses have not been operating fully, tenants from the sector are amongst those who have been struggling to meet their rental obligations.
“Some of the business owners have proposed payment plans to pay their rental arrears. We are also negotiating with the landlords to waive some of the rentals. We hope that they will accede to our proposals to waive the rentals because some factors are beyond the control of the tenants.”
According to Gwamulumba, negotiating with landlords to waive some rentals is meant to help avoid situations where the landlords will be filing cases against their tenants for failure to meet their rental obligations.
Businesses in the alcohol industry recently pleaded with the government to help them meet their rental obligations as well as extend the wage relief subsidy.
They said that the pandemic had adversely affected their businesses due to the frequent suspension of their licences.Gwamulumba said banks have also tightened their lending criteria especially for residential property loans in a bid to counter the risks brought by COVID-19 to their businesses. This, he said, has also led to few people affording property loans.
“Some banks which used to fund around 90% of the value of the property have now adjusted their funding to 70%,” the property expert said.
“In areas such as Tati Siding some banks can only fund clients with money amounting to P350,000 regardless of the value of the property.
“Clients pay the rest of the money.”
Recently, one of country’s biggest mortgage lenders, Botswana Building Society (BBS), announced reduction of its mortgage loan financing from 90% to 75%.
Sipho Showa, BBS Head of Marketing and Communications, told a local newspaper recently that the move to review the bank’s funding was driven by the negative impact of COVID-19.