By Chimwemwe Mangazi:
Property managers have said elevated costs of borrowing continue to haunt the real estate business.
This is despite claims by the Reserve Bank of Malawi (RBM) that the economy has improved tremendously in the past two years witnessed by stability attained followed reduced interest rates, inflation and a stable exchange rate.
Last week, the Monetary Policy Committee of RBM maintained the policy rate at 16 percent, a development that saw commercial banks maintaining their base lending rates at an average of 23 percent.
Knight Frank Malawi Managing Director, Don Whayo, said demand for property on the market remains subdued as money continues to be highly priced.
Whayo said interest rates have not come down enough to encourage people to start borrowing in order to buy property.
“Whoever has money and bargain his way through gets decent property. The authorities have been bragging about a stable economy but to whose advantage?
“Because if you ask the ordinary man on the street, they don’t see those improvements, they are still suffering, they go to the shops and find that things are still expensive,” Whayo said.
He added that the situation might have improved on paper but on the street liquidity remains tight.
“The future of the industry is still hazy until there is a further decline in interest rates. The only time that we will say the industry is responding to the so called macroeconomic fundamentals is when interest rates are in single digits,” Whayo said.
Operations Manager for Press Corporation Limited Plc, which owns Press Properties Limited, Rose Chitera, while agreeing that demand has been slow in the top segment of the market, was, however, quick to note that growing property demand has been recorded in the medium to lower ends of the market.
Chitera said there has also been a surge in demand for commercial properties in Lilongwe, adding that most properties are being advertised and offered above valuations.
“The reduced interest has really had an impact on the property business as it is a business which requires huge capital and has long margins, hence the reduction in interest rates has really helped.
“The future is bright with the rising population, that will require housing, as well as increase in business especially service segment that will require commercial space,” Chitera said.