The real estate sector registered a remarkable recovery from Covid -19 in 2024 as rental growth averaged 20 percent, which has resulted in leading property giants forecasting a significant jump in profits.
This has happened three years after the sector was heavily hit by the Covid-19 pandemic in 2021, when the business slowdown reduced demand for office space, leaving most commercial properties empty and affecting their revenue base.
While the revenues of the two leading property companies, Icon plc and Mpico plc, stagnated at K21 billion and K6.9 billion, respectively in 2022 and 2023, they both expect significant improvements in 2024 according to trading statements.
For instance, Mpico is projecting net profit to range from K11.4 billion to K12.5 billion from K7 billion in 2023 while Icon, which posted K19 billion profit last year could raise it to K25 billion.
“Icon Properties plc accordingly advices that the profit-after-tax for the year-ending December 31 2024 is expected to be between K22 billion and K25 billion, representing an increase of between 15 percent and 50 percent above the previous year-ended December 31 2023 profit-after-tax of K19 billion,” reads the trading statement.
In an interview, real estate expert Desmond Namangale said the projections are justified by market indicators which show that rental growth for the year averaged 20 percent with commercial property going as far as 25 percent.
He said: “The real estate market has experienced a substantial recovery from the shocks it suffered during and after the Covid-19 period. For example, the market indicates that commercial properties rental growth for the year under review is between 20 percent and 25 percent within major cities.”
Namangale, who is also managing director of real estate management firm Knight Frank, said few international organisations and government offices are accepting rental growth of between 30 percent and 40 percent.
“For residential properties, rental growth is ranging between 15 percent and 20 percent, with 20 percent achievable in our major cities. Otherwise, 15 percent is the most easily acceptable rental growth for residential properties countrywide.
“What this means is that the real estate sector is recuperating and as we all know that real estate hedges against inflation and this is a gain to the investors,” he said.
Equity investment analyst at Stockbrokers Malawi Limited Kondwani Makwakwa noted that the property sector demonstrated robust performance in 2024 as trading statements revealed a marked improvement in financial outcomes compared to 2023.
“These strong results have reinforced investor confidence, highlighting the sector’s adaptability, resilience, and significant growth potential within an evolving economic landscape.
“Furthermore, positive trading statements present the potential for increased dividends, signaling financial stability and enhancing the sector’s appeal to investors,” Makwakwa said.
Looking ahead, Makwakwa said in 2025 the sector is well-positioned to capitalise on emerging opportunities, driving continued success and reinforcing its strong potential for value creation.
