From the MD’s Desk
I often meet people whose first question after “how are
you?” is “how’s the property market?” In particular, many
are really referring to the housing market which is then
closely followed by the question: “when is this bubble
going to burst?” Meaning when will the prices of houses
come down, whether it is better to rent or to buy?
Another question is: “is this a good investment?”
There is one exception to this rule, that being if you can
afford it, you can build anything you want anywhere. If you
ever travel to the north of Zambia, visit “Africa House” at
Shiwa Ng’andu, built by the District Commissioner in the
1920’s (because he could) almost worthless now, run as
a guest house by his descendants. Check out this website
for details http://www.shiwangandu.com/
Well, I could write a whole book about the state of the
property market, but in essence, it is not much different
since the last few issues: competition for office space
with a strong movement to the new CBD; the Main
Mall still popular with businesses related to government
departments and central to extensions 9 and 11, where
many senior officers live; retail in the big centres competing
for customers and housing remains firm, despite a limping
economy.
Then, look at what your position is in your investment
life. The investment advisors say there are four stages of
investment:
1. Caring for your basic needs. Here you need the best
roof over your head that you can reasonably afford
whilst managing to care for your other needs: school
fees, etc.
2. Then comes the stage where you start to put some
savings away every month (this should be part of
phase one, even if it’s small). Once you have enough
saved up or your income is sufficient, it may be time
to buy an investment property. This could be a small
rental house for example. Something that you know
will almost always have a tenant, even if the rental
is not top dollar. This stage is preparing for your
retirement, so if one is able to, for example have 4
paid up houses by that time, you’ll be able to retire in
that same level of living.
3. Next is lifestyle investment. This is where one might
buy a holiday home. It is important here to ensure
that you don’t end up with a “white elephant” that just
costs or is in a place that goes out of fashion.
4. The last stage is where it doesn’t matter, and you buy
whatever you want. Roman Abramovich, the Russian
billionaire owner of Chelsea has houses all over the
shore: on the Black Sea, in the Alps, the French Riviera
where he also has a yacht. I don’t think we have to
worry about that one here.
The main reason for the housing market remaining firm
is a continuing influx of people to Gaborone with little
development, particularly in the low and medium cost
market due to lack of land and the fact that more people
are being able to afford to buy houses. At the top end,
new build houses are still on a par or cheaper than
existing houses due to the shortage. This is not the case
in more mature markets such as the UK or South Africa
where new houses are 20-30% more expensive. So, for
the meantime, being at least the next few years; unless the
economy collapses completely and people are forced to
sell to survive whether voluntarily or by bank foreclosure;
prices will remain firm and even increase.
Moving to “is this a good investment?” It depends on what
you are investing in and for. If