Economic gains yet to filter in property market

While the property market is growing due to the rising demand for residential  and office space, demand for quality properties is decreasing as tenants are moving to  smaller and less expensive units in medium density areas where rentals are fairly affordable.

This is according to a 2017/18 report by Knight Frank Africa, a property management firm.

The report observed that the trend is despite Malawi experiencing a stable economic environment characterised by low inflation and interest rates and a stable exchange rate for the past 12 months.

According to the report, demand for high quality retail space is decreasing due to the low purchasing power.

It said residential sales have slowed down due to the difficult economic environment.

In an interview yesterday, Knight Frank Malawi managing director Don Whayo observed that despite the country registering some economic gains, it would take time for the property market to peak.

“The property market always lags behind. We are yet to see the market responding to what the economy is experiencing.

“Other than this, the country has also been hit hard by blackouts which is costing companies a lot of revenue. As a result, most companies are operating at a loss and cannot afford decent properties,” he said.

A Blantyre-based property owner said the cost of getting loans from banks remains on the higher side despite some changes made to the lending rates over the past months.

“Lending rates, though tamed from above 30 percent to somewhere about 25 percent, are still on the higher side. In this regard, property owners consider all these when coming up with rental rates. We are in business and whatever we do we have to ensure that we operate at a profit and be able to repay the loans,” he said.

Indigenous Businesses Association of Malawi (Ibam) president Mike Mlombwa said the current times have not been pleasant for businesses as well as local Malawians.

He said companies as well as individuals cannot afford decent properties because they come at a high cost.

“In the end, we all are getting just minimal of what we can offer.

“We have heard news over the past months of improvements in the macroeconomic environment and the idea was that this would bring a huge impact in our businesses and way of life.

“However, the situation on the ground is different,  and instead things are just moving from bad to worse,” said Mlombwa.

He said this only shows that the economic gains the country has registered in recent times will take long to trickle down to have a meaningful impact on people’s livelihood.