The favorable economic environment and stability in the property sector has positive outcome to the local property sector value with the average price for residential properties 11% up to P800K, Market for office space remains weaker due to COVID-19 and Construction developments at Gabs CBD to unlock growth, economic development analysts have said.
The property market has shown some signs of improvement in the first quarter of 2021, the Bank of Botswana (BoB) has noted in its latest Monetary Policy Statement, (2021Q1).
The reports shows that the residential rental market improved in the first quarter of 2021 compared to the fourth quarter of 2020, thanks to a good rental market for the lower-end properties in terms of both a demand and supply
“The average price for residential properties sold in the first quarter of 2021 increased by 11.1 percent to P800 000 compared to the previous quarter, reflecting the higher number of the high valued properties traded in the quarter under review,” BoB noted .
Looking ahead, the demand for the lower-end, medium and prime located residential housing is expected to improve further, given the affordability of properties in these categories compared to those in the upper-end market.
“The market for office space remains weak due to the increasing supply from completed construction developments, such as the Botswana Unified Revenue Service building at the Gaborone Central Business District (CBD),” the report said.
However, demand remains weak and uncertain due to COVID-19 and generally subdued business conditions.
Currently Botswana Real GDP growth is projected to recover to 7.5% in 2021 and 5.5% in 2022, based on a revival in domestic demand as the effects of the pandemic recede and a rebound in commodity prices as economies reopen globally.
Upside risks to the growth outlook hinge on the steadfast implementation of business environment reforms and government interventions against COVID–19, including the Economic Recovery and Transformation Plan (ERTP).
Downside risks include lower diamond demand if the global economic recovery is weakened by renewed waves of infection.
There are also threats from persistent drought and the adverse effects of poor economic conditions in South Africa on Botswana’s exports and SACU receipts.
The fiscal deficit is projected to narrow to 6.3% of GDP in 2021 as domestic revenues pick up. The current account deficit could improve to 7.4% of GDP in 2021, depending on how fast the diamond and tourism industries revive.
Inflation is expected to be within the central bank’s medium term 3%–6% target range, but could be higher if the recovery in global commodity prices is faster than anticipated and the constraints on aggregate supply are sustained by the potential reinstatement of worldwide lockdowns.
Reverting to this form of extreme social distancing could dampen economic activity and aggregate demand and keep inflation lower than projected.
Growth prospects continue to be clouded by Botswana’s relatively high poverty, unemployment, and inequality, particularly among youth and female-led households, both likely to be disproportionately affected by the pandemic.