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SADC property markets troubled by Covid and expat departures

SADC map

While South Africa’s housing market continues its post-Covid lockdown bounce-back, it has been a mixed bag for neighbouring SADC countries.

Samuel Seeff, chairman of the Seeff Property Group, says these real estate markets are diverse, often with high interest rates and large rental components affected by factors such as a decline in income, business closures and expat departures.

While Botswana experienced two lockdown periods (six weeks in March to May 2020 and a further two weeks in June 2020), the Transfer Duty Act Amendment of 2019 (effective from the 1st of March 2020) has exasperated the situation says Julie Denyer, a director for Seeff Botswana.

Botswana introduced 30% transfer duty (the highest in the world) on sales to foreign buyers (compared to 5% for citizens) which effectively halted sales to foreign buyers. The banks are also concerned about the ongoing effects and potential house prices dropping drastically.

While there has been some recovery in the local market, mostly the P1.25 million to P2..5 million price range, and while the interest rate has dropped to 6.5%, the banks are working on +2% and buyers are facing tough criteria.

Although rental rates remain under pressure, affordable rental stock in the P6 000 to P12 000 range is in high demand and short supply. High-end rental demand remains muted until the borders reopen and expat demand returns.

The blacklisting of Botswana by the EU and new regulations of the Financial Intelligence Act have also made tenant vetting more onerous.

In Zambia, businesses closing in malls are resulting in high vacancies and many empty buildings.

Lusungu Kayela, Seeff’s principal in Zambia says this market is feeling the effect of the pandemic in many ways.

Residential rentals have seen similar trends to South Africa with tenant payments strained and landlords needing to accommodate where possible. Many middle to high-end properties remain vacant due to expatriates having returned to their home countries.

Opportunistic buyers are looking for under-market prices on the one hand while prices are often not yet adjusted to market realities on the other hand. “At least we are now able to do physical viewings while observing strict Covid safety rules which” he says, “will assist in boosting transactions”.

A high interest rate and low liquidity troubles Zimbabwe.

Patience Patongamwoyo, licensee for Seeff Zimbabwe says the economic challenges which existed prior to the pandemic such as high unemployment, a high interest rate (35%) and low liquidity persist.

Hence, the market remains dominated by cash, generally driven by diaspora Zimbabweans investing mainly in entry level properties along with a few buyers from the mortgages market and the business class.

High and medium density properties (land size up to 400m2) are most in demand up to USD80,000. Sellers generally want US Dollars (not the local currency), and many take their funds offshore due to policy inconsistencies and concern about leaving money in the banks.

The informal markets, which form the bulk of tenants, were adversely affected by the pandemic with rental payments affected by both reduced capacity and legislation giving tenants the option to defer payment. Commercial space has also been heavily affected with many companies failing to recover and vacancy rates now up to 50%.

Literally every sales transaction was halted or cancelled in eSwatini when the pandemic struck, and while we have salvaged some, many sizeable transactions are lost, comments Anthony Mcguire, licensee for Seeff eSwatini.

eSwatini is now a super buyer’s market for various reasons and sellers need to be cognisant of price as even the “traditional” buyers in the R2 million to R3 million range remain cautious. There is good activity at the lower (under R1.6 million) and upper end and in the commercial and industrial space, he says further. Business has remained resilient with many industry leaders whose cash flows were relatively unaffected by the pandemic taking advantage of the opportunities in the market.

The rental market seems to be recovering with a slowdown of the high default rates, but with foreign nationals having left the country or had contracts put on hold, premium rentals have declined. For landlords, it is now important to hold onto good tenants and where necessary, halt escalations, or consider rental reductions, especially since rates have remained relatively high contrary to expectation.

Severine Dalais-Pietersen, marketing executive of Seeff Mauritius says property hit a halt in Mauritius during the lockdown but there has been improvement since the lifting on the 1st of June 2020.

Requests from South Africans willing to move or invest in Mauritius are increasing, but they are waiting until they can fly or visit before committing. Other investors are waiting for prices to come down, potentially should listings increase, she says.

With the interest rate at 3.35% and expected to go down further, it is a good time to buy and local Mauritians are investing in a lot of plots of land in the MUR 4 000 000 to MUR 10 000 000 range.

Rentals have been a “boom” with many properties coming back onto the market, but demand has slowed as 95% of tenants are expats. With borders not fully opened, the inflow of new potential tenants remains slow.

Maria Esterhuysen, MD for Seeff Namibia says they have seen some buyer caution but with the interest rate better than in prior years, it is a great incentive to buy and there is plenty of stock and sellers willing to negotiate.

In the Walvis Bay area, we are seeing a high demand in the N$800 000 to N$1 800 000 price range. Here too, tenants are exiting the rental market and buying their own homes, not just young people but we are also seeing families looking to expand but still keeping under the N$1 800 000 price mark to keep instalments similar to monthly rentals. There are also some who are investing in two apartments; one to live in and one to rent out”.

The rental market experienced a similar impact to SADC neighbours with tenants not able to pay full rent and landlords either accommodating or needing to write off losses, but the market remains active. Landlords are keen to hold on to paying tenants due to risk of finding another tenant.