Botswana

Investor-friendly policies boosting the industrial sector

Like other African countries, Botswana's government has introduced tax incentives for private international investors in an effort to boost FDI. This includes the introduction of the Development Approval Order – Tax Holiday (zero corporate tax) available to investors for 5-10 years. Investor-friendly policies are already bearing fruit, as De Beers, the world’s largest diamond producer by value, launched a US$ 1bn investment to extend the life of its flagship Jwaneng mine by moving operations underground.

Elsewhere, the limited availability of serviced industrial land in the inner city is helping to boost the occupancy of warehouses in the country. Concurrent with the government's endeavours to steer the economy towards diversification beyond mining, there has been a sustained surge in demand for industrial properties, particularly from budding industries such as manufacturing. Prime industrial yields range from 7.5% to 8.5%, making the industrial sector one of the best-performing asset classes in the country.

Increased demand for Grade A offices

There have been increased inquiries for best-in-class offices, especially within the Gaborone CBD. Occupancy rates have experienced a 10% uptick over the last six months of 2023 ending last year at 95%. This trend extends beyond the CBD, encompassing areas such as the old Gaborone CBD and Fairgrounds.

Among the latest additions to the CBD's office supply is Prime Plaza II, a 5-star green-rated building with a total floor area of 2,780 sqm. This development is regarded as the epitome of the high-end quality within the local office market, and this is reflected in asking rents (US$ 11 psm).

Despite the escalating demand for premium offices, monthly prime headline rents have held steady for the past two quarters (Q4 2023 and Q1 2024), and stand at between US$ 10-12 psm.

Retail market records a sterling performance

The retail sector continues to attract significant interest from new entrants, highlighted by major developments like GLA Mogolori Mall, which spans 28,400 sqm, and The A10, exceeding 17,000 sqm. Phase one of The A10 is projected to be completed by 2025. These new additions will contribute approximately 50,000 sqm of retail space to the market, increasing the total retail inventory to around 350,000 sqm

While the scale of development is below that of neighbouring South Africa it reflects a steady growth in the market.

The sector is underpinned by a number of active local and South African players. Spar, Shoprite, Woolworths, Pick n Pay, and Massmart are all among the South African retailers represented, while local chain, Choppies, is an example of a thriving Botswanan supermarket brand. Choppies has over 100 stores throughout the country and plans to expand further into other African countries, having already opened stores in South Africa, Zimbabwe, Zambia, and Kenya.

Heightened demand for high-end residential units

Against a backdrop of robust economic growth and political stability, Botswana's residential property market continues to thrive. The heightened demand for high-end residential properties has been further fuelled by recent amendments to the Transfer Duty Act, which have substantially reduced duty rates for international buyers. The revised rates, now set at 10% for properties up to US$ 145,000 (approximately BWP 2 million) and 15% for properties exceeding this threshold, have stimulated interest and activity in the luxury residential segment.

While the demand for low to middle-income residential properties in Gaborone is outpacing supply, the investment landscape presents a unique challenge. Yields stand at between 4-5%, the lowest among all asset classes.