•THE population increase in urban areas has brought about opportunities for retail trading and shopping malls
By JUDITH NAMUTOWE -
AS any country’s economy develops, the population of its people also grows and this calls for increased demand in housing.
Given the growth of Zambia’s economy as well as its population, investment in the vibrant real estate sector has become fundamental in addressing the accommodation deficit.
Zambia’s economy continues to register strong growth with real Gross Domestic Product (GDP) growing at six per cent in 2014, above the International Monitory Fund (IMF) projected 5.5 per cent.
The 2015 forecast data is positive with an estimated annual GDP growth of seven per cent continued investment in infrastructure, especially in mining, power generation and roads.
These factors will continue to ensure robust growth.
A survey by Knight Frank, a real estate agency, revealed that at the speed the Zambian economy has been growing, and the current population growth as well as urbanisation, the country needs significant investments in real estate to accommodate the growing urban population.
The construction sector has been enjoying double digit growth rates for the past four years peaking to around 20 per cent before dropping to about 17 per cent last year.
2014 witnessed a significant addition in retail developments with new shopping malls opening, some under construction while others are still being planned to be based outside Lusaka.
This has been marked by demand from South African national retailers to locate in the towns around Zambia.
The Copperbelt benefitted with Kafubu Mall in Ndola, anchored by Shoprite, which opened in the third quarter of last year and Reekays Mall, anchored by SPAR which is expected to open during the second quarter of this year.
Mukuba Mall in Kitwe scheduled to open in the last quarter of 2015, similarly Shoprite and Game Stores are other developments the Copperbelt has benefited from.
In addition, new malls are planned in Chirundu and Choma for 2016 and under construction in Kafue and Solwezi, as well as Pick n Pay and Shoprite respectively.
Shoprite has opened a new stand-alone store in Kapiri Mposhi and Pick n Pay in Chingola.
Despite significant strides in the real estate sector, there is still a serious gap between the demand and actual supply of structured retail and office complexes across the country.
This is because the Zambian real estate sector is still being dominated by self build and the high cost of borrowing with interest rates above 20 per cent.
Another reason is continued sub division of large bush land around Lusaka into smaller plots for sale, with varying levels of services which are resulting in unplanned developments and inconsistence service delivery.
Prior to 1990, before the liberalisation of the economy, the Zambia National Building Society (ZNBS) was the only financial institution in the country that offered mortgages.
The situation has, however, changed as many players have come on board to support the sector.
For instance, National Savings and Credit Bank (Natsave) disbursed about K100 million to finance projects in the real estate sector last year.
First National Bank (FNB) also allocated a total of K260 million to finance commercial properties in the country.
The bank subsequently launched the Zambia International Property (ZIP) expo which is expected to take place in Zambia from April 22 to 23 this year.
This is an initiative of the Smart Homes International, a developer of affordable housing and ‘smart’ communities.
The expo is aimed at showcasing Zambia’s property market by providing a platform for developers, suppliers, transporters, bankers, financiers, government agencies, real estate agents as well as building contractors.
These will demonstrate wares, unveil new products and allow consumers to compare everything under one roof.
The objective of the expo is to generate excitement about the Zambian property market, give consumers an opportunity to see what is on offer from developers, banks, and suppliers and educate consumers about real estate investment among many others.
FNB head of home loans Jane Mwila said the bank’s taking up title sponsorship for the event was in line with its focus to contribute to financial access for property in the real estate sector in Zambia.
“In terms of commercial property development, the bank has financed K260 million for commercial properties in Zambia. The properties include Twin palm mall, Z-Mart on the Copperbelt and Madison Insurance General head office among many others,” she said.
Transport, Works, Supply and Communications Minister Yamfwa Mukanga says property developers must take advantage of increased road development projects and invest in property in an effort to create jobs for local people.
Property owners need to take advantage of this investment to ensure they planned properly and put up infrastructure that will not only create jobs but also lead to poverty reduction.
“If we invest in property, we can transform this country. So we encourage property owners to invest in property and communication infrastructure for the betterment of our economy,” he says.
According to Knight Frank, with over 20,000 square metres of new prime offices, there may be pressure on rentals. The entity expects 60,000 square metre of prime offices in Lusaka.
In the industrial sector the expansion of the warehouses, the multifacility economic zones and other initiatives by the privates will relieve pressure on the shortage of industrial accommodation.
Knight Frank says there is demand for quality property for lease in prime areas because most of the housing units in these are obsolete.
“Slow uptake of new houses for sale in prime development for high cost, above $250,000 pricing,” reads the report.
Economic growth alone is insufficient if it does not translate into development, as reflected through better living standards that includes provision of quality and adequate infrastructure, like proper housing.