Low liquidity may affect property developments

Banks are expected to be more conservative in their lending assessment and pricing in property financing this year. A property expert and Managing Director of Vantage Properties, Sethebe Manake is of the view that access to property financing will be difficult as a result of low liquidity levels compared to last year.

“Those who wish to develop property should be creative and innovative and plan well. It also helps to avoid buying unnecessary, expensive materials,” she says. On the other hand, she encourages people to always engage architects in their plans so that they can build quality properties that can stand the test of time. Manake advises those who build for investment purposes to always maximise their building spaces to cater for future developments. She is however, optimistic that those that can take advantage of the general growth that has been forecast in the local industry and the rest of Africa, can benefit.

Managing Director of Premier Properties, Thabo Letshwiti concurs that low liquidity levels is going to affect the property market. However, he stated that this would hopefully give birth to some innovation in the property-financing sector.

According to Letshwiti, low liquidity is likely to result in the risk of adverseness of banks, which would ultimately frustrate large-scale developments. “Low liquidity brings about credit constraints which in the supply side of property negatively affect construction activity in terms of quantity and timely delivery of commodity,” he said. Letshwiti also noted that on the demand side, it is going to affect buyers from accessing credit. Letshwiti urged people to be careful, and not to fall into believing that with no supply and no demand, the market will therefore equalize.

“The few who would have managed to access some credit will be fighting for few properties available and this will add on to the cry that property prices are insanely high,” he emphasised.
He highlighted that this would therefore lead to the rental levels increasing as a reaction to the low supply of property in the market. Letshwiti also believes that it is high time institutions such as Botswana Public Officers Pension Fund (BPOPF) start taking an active role in helping Batswana realise an ultimate dream of owning a descent house.  “Less than five years ago, BPOPF issued around BWP500 000 0000 in property. What is stopping them from taking an initiative to subsidise their members from securing decent housing?” quizzed Letshwiti. 

He further noted that their members could utilise their current value of pension fund to secure financing from banks. “People should not expect commercial banks to finance them 100 percent, but need to know the importance of saving and postponing unnecessary purchases, for example, cars.”