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Property market in slow recovery, says official

The Covid-19 pandemic and the elevated inflation rate will continue to hit the property market, slowing its recovery, an industry insider has said.

In a written response yesterday, Knight Frank managing director designate Martin Chimangeni said the market, which has accumulated a lot of arrears due to rental payment defaults and struggling business, faces a rising inflation rate, currently at 11.5 percent, as a new threat.

Malawi is going through turbulent economic times

He said the rising inflation came as another critical economic fundamental that has had a negative impact on the performance of users of the properties as landlords pushed for rental increments to remain above inflation, thereby affecting the general performance of the market.

Said Chimangeni: “From our interaction with some of the tenants on the market, it is evident that for the past two years most of them may have only been fighting for the life of their businesses to ensure rentals are paid and arrears cleared for fear of losing prominent business trading spaces in the central business districts.

“We hope that as things move the property market will follow suit to recover from the losses. Though the recovery should be in sight, inflation is a major threat and we have noted that some places are still vacant though this is now skewed to normal vacancy rates of say between 20 and 25 percent.”

He said said there have been fewer bids on properties traded on the market save for established institutions such as investment funds.

Investment advisory firm Cedar Capital Limited has also indicated that the property market is among the sectors in the economy reeling from the harsh economic realities and environment.

In its analysis, the firm noted that Covid-19 has accelerated the work from home practice where many office tenants now realise that they do not need as much space.

Reads the analysis in part: “When current leases expire, businesses may reassess their needs thus landlords may have to accept downward reviews of rentals.”

In an earlier interview, Indigenous Businesses Association of Malawi president Mike Mlombwa admitted that businesses have struggled and continued to struggle with rentals, as such, the decline in office occupancy levels.

“Businesses have had no choice but to vacate office space as things got tough in view of the Covid-19 pandemic,” he said. In its 2021 first half property market report, Knight Frank indicated that there had been a decline in office space as a result of small and medium enterprise occupiers scaling down and others relocating.

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