Zambia property market outlook stabilises

As with most economies and housing markets, Zambia experienced significant pressure as a result of the onset of the Covid-19 pandemic in early 2020.

Lusungu Kayela, licensee for Seeff Zambia, says that while the country did not have a complete lockdown, schools, colleges, pubs and restaurants closed while offices adopted remote working. Shopping malls were mostly open just for essentials. Reduced international flights continued.

Nonetheless, it was impactful on the economy which entered a technical recession by mid-2020 and Zambia became the first African country to default on its debt obligations.

While it has since made incremental strides in terms of economic recovery, Ms Kayela says inflation and slow economic recovery remain a challenge for the property market. Inflation now stands at around 11.5% (from 19.2% in 2020) and the bank lending rate around 22.75% to 24% depending on the bank.

Medium and low-cost housing market has remained active

She says further that while the residential market is still slower compared to the pre-pandemic period, the low to mid-market remains active, driven by young professionals. There is also strong demand for small tracts of land and housing developments.

Although house prices initially came under pressure due to the pandemic, there has been an element of resilience as the market received a welcome boost from returning expatriates once the lockdown measures eased.

After a significant decline during the 2020/1 pandemic period, rentals are now stable although the rates have declined for properties such as three-bedroomed units due to an oversupply.

Retail and commercial property rents are stabilising at lower rates

Retailers have felt the effects of the pandemic and landlords have had to be accommodating to retain and attract tenants. In the medium to longer-term the fast-growing population and ever more affluent middle class is expected to favour the retail sector and drive increased demand.

Office rentals have also stabilised. Average rates now range around USD15 to USD18/sqm for A-grade space and USD10 to USD14/sqm for B-grade. A number of office building projects were completed during the pandemic, which is adding stock, but demand is still sluggish as a fall-out from the pandemic.

Although Zambia’s mainly young nation has contributed to numerous universities opening which has driven higher demand for larger office space, demand remains weaker for smaller office space.

Demand for prime industrial space remains low although rents have remained stable at between USD1.50 and USD4.50/sqm per month.

Farms and agricultural properties are in demand

There is higher demand for agricultural and farming properties due to the world food production’s current dynamics and announced shortages. This, she says, has brought increased interest in small holdings and farms which are more affordable for novice and budding farmers.

The interest in large farms is also growing with notable enquiries from South Africa and Western countries with interest shown in large established farms and large portions of virgin land. The pricing per hectare varies from USD250 to over USD5,000/ha depending on the land and water sources, e.g. the amount of arable land, cleared or cultivated etc.

World Bank expects Zambia economy to stabilise

The World Bank considers Zambia as a stable multi-party democracy with elections held every five years. The Bank expects economic growth to improve although it will likely only average around 3.8 percent in the 2022-2025 period. An improving economy is always good news for the property sector, she concludes.

Visit Seeff Zambia website for more information.

Sources: With thanks to Elvira Brentnall (Seeff) and Tim Ware (Knight Frank).