… as a real estate expert warns of a coming storm
Demand for low-cost accommodation has gone up since the outbreak of COVID-19 last year, the Real Estate Institute of Botswana (REIB) has revealed.
In an interview with The Botswana Gazette, the president of the REIB, Isaac Molefinyana, said the State of Public Emergency, which sprang directly from the pandemic, is another factor in the growing demand for low-cost accommodation.
REIB has observed a trend in which people are relocating from high-income houses to low-income houses owing to economic hardships experienced since the outbreak of the virus.
“The market is still shifting slowly and the storm is coming,” he said. “The immediate impact we saw is only on the high end property where the market was affected instantly. But the shift in middle and low-income is not yet visible because people have now occupied low-income houses.”
This means that competition for middle and low-income houses is intensifying, Molefinyana noted. He pointed out that the real estate space expects a further shift after April when the government’s recent decision to increase and broaden VAT will be implemented.
“We are expecting significant changes within the real estate space because prices of building materials in South Africa have just gone up, for instance,” he said. “On the other hand, estate owners cannot increase rentals.”
He noted that estate owners cannot evict tenants for defaulting on their rentals under the State of Public Emergency while some tenants are losing their jobs, resulting in re-negotiation of rental prices. At the same time, the cost of maintenance is on the rise at a time when tenant retention is low.
Molefinyana said the advent of COVID-19 has made things so difficult for estate owners that people thinking of venturing into high-income real estate are forced to devise innovative ways, such as provision of free Internet services, in order to attract clientele.
Meanwhile, one recent occupant of a low-income house in Gaborone, Kago Mogomotsi, says he has been compelled to vacate a P5 000 per month house and move into a P2 500 per month house. “I am on half pay and cannot afford more P2 500 in rent,” Mogomotsi told The Botswana Gazette. “I moved at the beginning of the year because I also have debts. Everything has gone up.”
A government employee who preferred anonymity said he would be vacating his two-bedroom Botswana Housing Corporation (BHC) house for which rent has shot up to P3 500 per month from P1 500 per month. “I work as a driver and I have a family to cater for,” the man said. “I have had to tender a notice and look for a cheaper house and will probably find one in one of the high-density townships.”
Growth in demand for low-income houses has coincided with a BHC rental hike that will effect on 1st April. The housing parastatal has argued that its rental increases were long overdue because it had last adjusted rentals in 2004.
Meanwhile, Parliament rejected a motion to defer the BHC rental increases for a year in light of widespread economic distress resulting from the COVID-19 pandemic, taking the housing parastatal’s view that the increases were long overdue.