Financing hinders Malawi’s property development
Unfavourable interest rates for housing finance and reduced borrowing in the face of the Covid-19 pandemic have affected property market development in Malawi, a property management firm has said.
In its first-half Malawi Market Property Report, Knight Frank notes that the unfavourable macroeconomic environment coupled with the Covid-19 pandemic has impacted negatively on real estate financing.
In an interview at the launch of the report in Blantyre on Tuesday, the firm’s managing director Don Whayo said a lot of property financing in Malawi has mainly been on individual basis as people have tried as much as possible to avoid borrowing from banks to invest in property.
He said: “On top of the Covid-19 pandemic which has affected the economy, businesses and individuals have been struggling with interest rates which have prevented people from borrowing money to invest in property.
“Not much is being done in terms of property development as should be the ideal situation. For an individual to get enough money to invest in property, it is an uphill battle.”
In recent times, individuals and businesses operating in the country have voiced out concerns on the country’s lending rates, citing this as a stumbling block to borrowing from banks.
Consumers Association of Malawi executive director John Kapito said though the rates have been tamed, the lending rates are still high such that businesses think twice before they borrow from banks.
Currently, Reserve Bank of Malawi (RBM) has kept the policy rate—the rate at which banks borrow from the central bank—at 12 percent whereas the reference rate stands at 12.2 percent.
The report by Knight Frank says between January and June this year, the residential market has been resilient compared to the commercial market.
According to the report, demand for prime residential property for rent remained stable with a limited number of sale transactions while the office market demand was subdued as small and medium enterprises occupiers scaling down and others relocating to residential areas.
Going forward, Knight Frank projects that the property market will adapt to the environment as the real estate sector begins to experience rising demand for space but with limit transactions
