In the heart of Africa, Botswana boasts a thriving residential property market fortified by robust economic growth and unwavering political stability. Despite the absence of official and timely house price statistics, local real estate experts affirm a consistent upward trajectory in house prices in recent years.
Analyzing the Market: IPD Botswana Annual Property Consultative Index
The IPD Botswana Annual Property Consultative Index, introduced in 2013, serves as a key metric for gauging the property market’s health. In 2012, the total return for all properties in Botswana reached 17.9%, showcasing a slight dip from 20.9% in the previous year.
Remarkably, residential properties bucked the trend, experiencing a surge in total returns to 24.4% in 2012. This comprised an income return of 8.8% and a capital return of 14.4%.
Strong Demand and Growing Property Loans
The escalating value of outstanding property loans further underlines the robust demand in Botswana’s property market. In January 2014, total outstanding property loans to households skyrocketed by 44% to BWP6.79 billion (US$782 million) compared to the previous year.
Contributing to this surge were falling mortgage interest rates, reaching a record low of 8.99% in January 2014, down from 10.87% a year earlier.
Positive Outlook: Rising Demand and Property Values
Local property experts foresee a continued upward trajectory in demand and property values throughout the year. With the government actively encouraging foreign investment, excluding tribal and state land, the market remains open to international buyers. Particularly in Gaborone, land is readily available for purchase by foreigners.
Economic Growth and Projected Expansion
In the fourth quarter of 2013, Botswana’s economy expanded by 4.7%, following robust growth rates of 6.9%, 7.3%, and 4.8% in the preceding quarters of 2013. Projections from the International Monetary Fund (IMF) paint a positive picture, anticipating a healthy economic growth of 4.1% in 2014 and a further 4.4% in 2015.
Foreign Investment and Land Accessibility
The Botswana Government actively courts foreign investors, facilitating land sales to international buyers. Notably, tribal land and state land are exceptions to this policy. In Gaborone and across Botswana, land accessibility for purchase positions the country as an attractive destination for property investment.
