Month: July 2022

The new normal that came with Covid-19 to the business environment has seen drastic changes in two years. But some things will never be changed easily, rather gradually or not at all. The Property and Infrastructure Forum which came in the first quarter of 2022 discussed the future of office in Botswana.

The office space part of real estate remains one of the most important aspects of the property business world, and it is evolving. Offices were left vacant or with limited people during Covid-19 restrictive measures and this did not help the new shift where people are dumping old offices for newer and finer designs.

The Property and Infrastructure Forum which came in the first quarter of 2022 brought a loud theme of “Building Botswana’s New Future” and the media received not much unfamiliar words like proptech and there was also “Environmental, Social and Governance (ESG)” in the mix.

The theme was discussed in the lines of “adoption of new technologies across the local property ecosystem, tech integration for sustainable development and operations, policy, and regulations, and the impact on balance sheets and company budgets.” A panel putting together the best minds in the property sector tried to find out opportunities and challenges and how Botswana will adapt to disruptions and new order of doing things.

Quarter 3 of 2021, the real wake from Covid-19 was seen in the property market as tech words mentioned above were not only enacted in the local property market lexicology, but was now seen in figures and buildings. A champion in technology -meets-real estate, local based Vantage Properties, in July 2021 launched product, gosmartvalue.com, announced a P480,000 financing which was facilitated by Angel Network Botswana.

According to Vantage Properties founder, Sethebe Manake, gosmartvalue.com specializes in real estate data analytics and automated property valuations.  Manake further stated that this product provides people the option of having their property instantly valued or having a qualified and registered valuer perform a full valuation.

It was rated Green because of its of three levels of A-grade office space and supporting facilities, and two basement parking levels, set among more open-air parking and water wise landscaped gardens.  For a building to get a Green Rating there should be aspect of climate friendly; water, materials/waste, indoor environment quality, land use, energy, ecology, transport and emissions.

Back to the topic of ‘The Role of ESG and Proptech within the Botswana Context’, speakers at the Property Forum believe technology is still premature in the local real estate.

One speaker on the above topic, account director at Cushman & Wakefield I Broll Patrick Katabua, said the growth of proptech is too slow. He said this before responding to the lamentation that technology is taking away jobs, saying new technology can only augment and compliment the way of doing something. He believes the workshop should be technologically equipped so that the job market does not vomit them when technology arises.

There was an issue of regulation which seemed to the speaker as the main worry of policy makers. But legislation and over regulation of new technology things only delays progress to move into new dimensions of doing things, according to the speakers of above topics. Bureaucracy is sometimes seen as an impediment as policy makers would be trying hard to regulate what is less known or not understood.

“Technology or proptech is not even a zygote in maturity; it is too small, as it is still coming to its growth. It cannot be regulated yet at this stage. There should not be rush to regulating as that sometimes stifle growth,” said one of the speakers and one renowned pioneer in proptech, Manake.

Manake however acknowledged the need for regulation to protect the public. She said all regulatory bodies and government are needed to protect the public from exposure to bad practices.

A strong political or policy issue arose during discussions at this year’s The Property and Infrastructure Forum, BotsReal held in the first quarter of 2022. Is acquiring enough land for real estate a possibility or a hustle? The heads which was at Avani Resort and Casino converged on the latter, getting land to develop is a serious jostle.
This is despite deal maker at Rand Merchant Bank Therisanyo Masuga telling the audience at the property forum that real estate transactions is what mostly frequent the counter, amidst and post covid-19. He said there still exists big opportunities in the property sector. Real Estate is seen as the way to go for business ventures and a best long term business.
Masuga said during covid-19 credit appetite has been increasing in real estate. He said real estate has been resilent and there have been no issues in general leases in the local market. Masuga said RMB has been very bullish on real estate hence allowing of credit extension to this sector.
On the securities market real estate remains intact and standing tall like a tall building, a tangible symbol of the sector. Botswana Stock Exchange Head of Product Development Kopano Bolokwe said they also put their head on property. In the local stock exchange the sector was the second best last year. Despite a year faced with lockdowns, uncertainties and turbulence, real estate with its seven listed companies, managed to go high bagging a turnover of over P38 million.
The property market was not left badly scathed even during lockdowns whenpeople stayed home without income to pay rent on residential property; buildings were left unused while malls were closed. Kgori Capital Portfolio Manager Kwabena Antwi said in their large investors in the property sector, there was more flexibility and tenants and landlord met halfway hence the survival of this sector. Sethebe Manake, property expert said rental rates for major malls remain “relatively strong.”
According to Bank of Botswana, Real GDP Growth by Sector and Expenditure in the real estate sector dampened like the rest in the domestic economy with -3.7 percent in the first quarter of 2020 before a recovery to 0.7 percent in the second quarter of the same year, shrugging away from a heavy deficit. The sector is still recovering while counting all the losses of covid-19 and recovered to 4.8 in the last recorded period of first quarter of 2021.
But there remain to be a real real estate issue. The shortage, unavailability of land and government policies seem to be standing on this much viable and long term business venture of property’s way. While economists would say diamonds are not forever, farming may be hampered even more around this era of climate change and most businesses depend on others, property remains the most valuable and wealth enhancing business.
But government would offer small space for hospitals, especially privately owned, owing to regulations that aligns with the state. In a panel discussion at the property forum, Debswana Pension Fund Investment Analyst Mbakisi Gopolang talked of how covid-19 came with opportunities to build more hospitals. He touted their investment on Gaborone Private Hospital which bedded a lot of covid-19 patients meaning the pensioners made more money despite the closure of mines coming with ripple effects to their investments.
A big player in the industry RDC Property Group, executive chairman Guido Giachetti stated that his eyes are already set on the South African, to build clinics. He said he will extend the clinics portfolio to Botswana in the near future.
Another player, a partner at Apex Properties Maje Maje explicitly stated that the issue of real estate not investing in things like private health care centres is the land issue and government policies around them. Changing of land rights and other land regulations remains as an impediment to smooth real estate projects, said Maje.
“It is not easy to get land for a private school for example,” said Maje who also stated that acquiring land for hospitals is still an issue hence why Batswana still go to South Africa for hospital beds while that sub sector could have been empowered for national economic benefits.
There has been an issue of government , deliberately or incidentally, developing the southern part of Botswana more than the north despite the latter having ample of land idle waiting for development. There is also a skewed surface of where land which is owned is and for what purpose the land is used for. Observation is that the northern part of Botswana is less urbanized than the southern. The north has more residential areas than the south.
According to property expert Manake Gaborone and Greater Gaborone maintain the highest sales and transactions in most of these localities are higher than most because they are developing areas.
Kim Bekker, managing director of Seff Properties encourages banks to fund projects outise Gaborone. She also called for lobbying with government, like engaging licensing authorities to be easy on land ownership especially for commercial purposes.
She then encouraged one to own a land anywhere. Bekker said there is no funding but more demand for land at the north. “Just own a land anywhere for when you retire,” she said.
A land policy review done by the African Development Bank on Botswana almost a decade ago stated that Botswana has an unbalanced urban network. “Another factor to note is the slow growth of large urban settlements in Botswana. According to the 2011 National Census Report, peri-urban settlements grew the fastest. Mmopane, adjacent to Gaborone, recorded the highest population change of 339.9 per cent between 2001 and 2011 or an annual growth of 16.0 per cent.
Big urban areas recorded slower growth than the national urbanization rate of 42.9 per cent. Urbanization and growth is fastest in peri-urban areas, where land and rent are cheaper, and in district headquarters, where high-order services and goods are available (Gwebu, 2011),” said the report by the Bank.

The new normal that came with Covid-19 to the business environment has seen drastic changes in two years. But some things will never be changed easily, rather gradually or not at all. The Property and Infrastructure Forum which came in the first quarter of 2022 discussed the future of office in Botswana.

The office space part of real estate remains one of the most important aspects of the property business world, and it is evolving. Offices were left vacant or with limited people during Covid-19 restrictive measures and this did not help the new shift where people are dumping old offices for newer and finer designs.

Quantum Leap Consulting managing director Rorisang Makhema when offering his expert view on the office space said changing work patterns – stimulated by the Covid-19 pandemic – have damped the office real estate sub-sector however it is unclear whether this is a long-term change or a transient one.

During Covid-19 pandemic, a lot uncertainties and distractions happened as people took their offices home. Seeff Properties managing director Kim Bekker said she has observed a shift in the market where people would dump offices their rented, take out a tenant from a residential house they own then adjust their lives to one of their properties while the other becomes a school or an office. She said people then changed perception of how they view life and what is more valuable to them hence the shifts in the market. Bekker observed that in these shifts, the rental houses market dwarfed.

But a big shift happened with people who have been migrating from old offices upgrade to newer ones. In Botswana context, Government of Botswana is a big player in the office sub sector and a lot of millions are used from the national purse to rent office spaces. The Government of Botswana has been leading the migration from old offices to new ones.

“The market for office space remains weak due to increasing supply from completed construction developments, such as the Botswana Unified Revenue Service building at the Gaborone Central Business District (CBD). Furthermore, demand remains weak and uncertain due to COVID-19 and generally subdued business conditions. Despite the negative impact of the pandemic and generalized weaker demand in the second quarter for office space, there has been continued good office enquiries and/or uptake in the CBD and  Showgrounds,” said a recent Monetary Policy Report by Bank of Botswana.

The central bank further observed that in the future there is a likelihood of a slowdown in uptake at the CBD, especially if Government institutions remain in their current premises and location. This makes the state a major determinant in the office market.

“In addition, the supply of office space is likely to increase further, given the ongoing construction projects and planned office buildings at the CBD, such as by the Botswana  Housing and Water Utilities Corporations. These will further exert downward pressure on rentals, especially in the decentralized office locations,” the central bank further observed.

But then the shift is mostly up to preferences and dealing with technology. In the office grading criteria, there is a Grade A office which has all the touches of recent modernity; technology, all the needed infrastructure and reasonably enough spaces. Grade B offices would be the ones used 10 years ago and lacking the sense of modernity. Grade C are almost white elephants or a turned into something else because they are nearly irrelevant to what this generation demand.

A partner at Apex Properties Maje Maje believes one of the things people are overlooking at older offices is due to their lack of parking area. Few people are commuting to offices these days and many can afford cars hence old offices are irrelevant with today’s population.

While there is a strong suggestion that people have changed the culture of officing and now adapted to work from home, Patrick Katabua, account director, Africa Desk at Cushman & Wakefield | BROLL, is still optimistic that offices are still relevantly used. He said there are small shifts inside offices that impacted working cultures and other aspects.

Katabua who is from the Democratic Republic of Congo is based in Johannesburg, South Africa and mostly specializes on; Commercial Real Estate, Real Estate Appraisal, Outsourcing, and Management Consulting. Among his other roles is to ensure that client’s business strategy is met / enhanced through optimization of real estate.

“Now cooperate occupiers are doing a lot of stuff post Covid-19 like doing savings on consumable which impacted on the culture of the workforce. With these savings came loss of cooperate identity as there is less interaction. The company losses on marketing with diminishing cooperate identity while HR would also fail in mentorship as there is less interaction.

The office days are not yet gone as people are still coming to work, but with a lot of adjustments. There is a need to balance keeping of office environment a bit normal and saving of costs,” said Katabua.