According to the IPD Botswana Annual Property Consultative Index, released today, the total return for all property was 17.9% for the year to December 2012, compared with 20.9% for 2011. This figure represents the un-geared total return to directly held standing property investments from one open market valuation to the next.
The return on Botswana property comprises 11.0% income return coupled with 6.3% capital growth over the year. The underlying rental growth of 8.6% outstripped Botswana’s headline inflation rate of 7.4%, underpinning both the capital growth and income return.
Industrial property outperformed other sectors with a total return of 28.4%, closely followed by residential at 24.4%. Retail property’s performance was more conservative with a return of 16.6%. The office return trailed at 15.2% as recent development activity placed pressure on rental levels.
The property asset class outperformed bonds and equities which returned 6.3% and 7.7% respectively over 2012.
Stan Garrun, Executive Director & Head of South Africa, IPD, said, “Now the Botswana property sector can provide local and global property markets with the comparative, precise and timely data they increasingly require.
Objective performance reporting informs investment decisions and asset management. Over time and with credible data, the IPD process also assists managers to increase efficiencies and reduce costs on property portfolios.”
It is the second year IPD has reported on the Botswana property market. This means IPD is now tracking the sector’s performance with a fully-fledged indicator. The index shines a light on the Botswana property investment sector for new investors and provides an important tool for local players.
A growing sample of 103 individual properties with a total value of nearly BWP3 billion will underpin research based on the IPD Botswana Annual Property Consultative Index. The figures represent the combined holdings of seven leading Botswana property investment portfolios. For 2012, Wharic Construction (Pty) Limited joined Botswana Insurance Fund Management Property Portfolio, Debswana Pension Fund, Letlole La Rona Limited, Motor Vehicle Accident Fund, Primetime Property Holdings Limited, and Turnstar Holdings Limited in the index. The index is the result of collaboration between IPD and its key Botswana partner and the index sponsor, Botswana Insurance Fund Management (BIFM).
Botswana is the second African country in the stable of 30 countries across the globe with an IPD index. South Africa was the first IPD reporting country on the continent, launching its index in the mid-nineties.