Business
High inflation impacts real estate market
October 29, 2021 / Bester Kayaye
Real estate consultants, Knight Frank Malawi, has singled out high inflation as one of the reasons for the stagnation of transactions in Malawi’s property industry.
A research study conducted in the first half of 2021 shows that as the country’s monetary policy focused on maintaining single digit inflation, overall inflation increased from7.7 percent in January to 9.1 percent in June. At the same time, the Malawi kwacha depreciated by 5.92 percent.
The research notes that during the study period, the market was generally passive with the residential sector showing resilience while the demand for prime residential property for rent in the commercial sector remained stable with limited number of sales transactions.
However, the prime residential market is reported to have registered a rental decline of between 15 – 20 percent in both Blantyre and Lilongwe cities as some houses became vacant for a long period due to low demand resulting from a sudden flight of expatriates during the height of the Covid-19 pandemic.
“Unfavourable interest rates for housing finance reduced borrowing hence self-funded home construction remains strong in both high density locations and affluent suburbs of all the cities.” the report says
Knight Frank also highlights that the office market demand remained passive during the first half of the year as a result of the scaling down of small and medium enterprise occupiers and relocation of others to residential areas.
It says this year, office vacancy rates reduced slightly as compared to the same period last year though it became subdued in the period under review with vacancy rates of between 20 to 25 percent.
According to the consultants, the vacancy rate, lower rental payments by tenants and subdued business influenced by the covid-19 pandemic all pose a great threat to rental collection.
They further note that in an effort to mitigate the impact, some property owners reviewed rentals downwards by-5 to-10 percent as others maintained existing charges with very few increasing their rental fees.
Meanwhile, Knight Frank says there is an anticipation that the property market will continue to adapt to the current trend in second half of 2021 with little light to normalize in the short to medium term due to rising demand for space.
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The establishment of a stable and self-sustaining ecosystem, but not necessarily the one that existed before mining began. In many cases, complete restoration may be impossible, but successful remediation, reclamation, and rehabilitation can result in the timely establishment of a functional ecosystem.
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