Property market takes a knock in the absence of foreign retailers

The suspension of issuance of trading licences to foreign retailers has negatively affected the local property market leading to lower prices and revenue loss, complains Turnstar Holdings Managing Director Gulaam Abdoola. He said the issue has contributed to the vast challenges in the property market in Botswana.

“Trading licence issue for foreign retailers caused loss of revenue as the stores allocated could not be occupied,” said Abdoola Last year government took a decision to suspend the granting of exemptions to non-citizen companies to expand or open new retail stores in the reserved business space. Government expected these companies to demonstrate meaningful participation or involvement of citizens in their businesses as a way of citizen economic empowerment before they could be granted the exemption.

In his comment in Turnstar 2016 annual report, Abdoola said the economic slowdown and declining number of foreign nationals in the country has led to a decline in property sales and reduction in domestic rentals. He said the property market in Botswana faced a lot of challenges which forced property owners to negotiate lower rentals and selling prices.

The commercial office space was the most challenged with a number of commercial properties being introduced to the market especially in the Central Business District (CBD). “This in turn caused tenant relocations to the CBD and vacancies and lower rentals in the remainder of the market,” said Abdoola. Abdoola revealed to Business Trends that they are currently expecting four stores to open in Game City mall as the government has now reversed its decision.

“The construction of Game City mall is now complete and the trading licence issue has been resolved. Tenants are taking occupation of the stores for fit out. “The additional revenue from these extensions will be reflected in the coming year’s results,” said Abdoola. He said The Mr Price group and TFG group are still waiting for licences for their stores. “In total they have four stores.

I believe they have just got their licences, so they should be occupying soon,” he said. However the group has seen its retail sector performing well despite the challenges. Game City mall is expecting full expansion before the end of the year. “We foresee a year of high footfall at Game City and increased clientele to all our tenants,” said Abdoola. The group’s operating profit declined by 26 percent from the prior year to P141.1 million. This was due to foreign exchange conversion losses caused by the Botswana Pula appreciating against the US Dollar. Recently Turnstar has acquired five-storey building in Dubai at the cost of P865 million. This property will be bought for cash and will give us a yield of approximately 10 percent per annum,” said Abdoola. The building has been leased on P3.1 million per annum on rent.