Property and investment experts have urged fund managers to work more closely with the real estate sector to ensure that excess pension and insurance funds are invested into real estate after proper due diligence.
The call comes against the background of fund managers grappling with overexposure to listed equities, which is above the 60 percent investment cap set under the Financial Services (Investment Management of Life Insurers and Pension Funds) Directive of 2025.
In an interview on Wednesday, Knight Frank managing director Desmond Namangale asked institutional investors to collaborate with property professionals to ensure effective due diligence.
He said: “Property, whether residential, commercial or mixed-use remains one of the best investment vehicles of all time.
“It is a tangible asset that hedges against inflation as rental income and capital values appreciate over time.”
Namangale said real estate is capital-intensive and investors have to consult professionals to understand market demand before committing funds.
Finance analyst Brian Kampanje, in an interview on Wednesday, described property as a viable sector as Malawi modernises, but emphasised the importance of joint ventures with established real estate firms.
“The best approach is to partner with reputable international brands to provide concepts and clientele for offices and flats catering for both affluent and middle-class societies,” he said, adding that proper project appraisals substantially reduce business risks.
Kampanje noted that fund managers tend to be risk-averse, favouring the relative stability of equities.
He said beyond property, institutional investors could also tap opportunities in mining to broaden their portfolios and boost returns.
The Reserve Bank of Malawi (RBM) Financial Stability Report for December 2025 indicates that 76.9 percent of pension assets are invested in listed equities on the 16-counter Malawi Stock Exchange, leaving funds vulnerable to market volatility and regulatory compliance risks.
The report noted that equity holdings had become the largest single asset class, far above the prescribed limit, “heightening vulnerability to equity market corrections and signalling increased compliance risk among pension funds”.
Reads the report in part: “The sharp rise in listed equity investments as enunciated above consolidated equity investment’s position as a largest single asset class, highlighting the sector’s elevated investment concentration.”
In the past five months, MSE market capitalisation declined by K5 trillion, from K33 trillion in December 2025 to K28.3 trillion at the end of May this year, a development analysts attributed to institutional investors, including pension funds and insurers reducing their equity positions in line with regulatory requirements.
