General Election results to benefit Zambia’s real estate market

The general election in Zambia is already sending vibrations through the economy after president Hakinde Hichilema achieved his landslide win in August. We assess the top five areas of change that we are seeing, and expect to see, in the coming weeks and months and how they could impact the real estate market. 

1. Falling Yields

Yields fell for the first time in three years on the ten-year and five-year bonds in August 2021 by up to eight percentage points to 25 points for the five–year bond according to Bloomberg, as investors bet on an economic recovery under new president Hakainde Hichilema.

2. Local currency appreciation

The Zambian Kwacha appreciated by approximately 15% within two weeks of the election against the US dollar making it the best performing currency in the world following on the August election. This marked the first appreciation by the currency in five years indicating renewed optimism into the country.

3. Rising copper prices

As the main foreign exchange earner, rising copper prices have provided renewed optimism around the country’s economic outlook. In addition, copper production is expected to increase by 13.6% in 2021 to one million tonnes.

4. Stable Rents

Prime office rents have remained stable over the past year despite the weakening of the economy. We anticipate the office market will see an increase in activity from both investors and developers moving forward. Already, anecdotal evidence points to increased enquiries from occupiers off the back of the election.

5. Covid-19

Data from Google’s Mobility Index, which monitors changes in visitation and time spent at various locations compared to a pre-pandemic baseline, shows that travel to and from offices rebounded to the baseline following the elections. However, the number of confirmed Covid-19 cases continues to rise and is currently at 209,172 from just 20,462 at the end of 2020. The ability of the new government to reign in the pandemic and administer vaccines is set to be its ultimate test.

A change of pace

“The mood change is evident, and it is amazing how quickly confidence returned to Zambia after the August 12 elections and the formation of a new government under President Hakainde Hichilema, who won by a landslide,” Tim Ware, managing director of Knight Frank Zambia, tells me from Lusaka, Zambia's capital city. 

“After a long period of poor economic performance, the expectation is high for positive change and this had an immediate impact on our currency, the Kwacha, which appreciated by approximately 15% within two weeks of the election.

“This is good news for the property market, after a sustained period of uncertainty and depressed values. The budget in October will provide a clearer picture for the future but with new enquiries from investors and developers, there will be increased activity and opportunities in all property sectors, especially in health, education, residential and agriculture,” explains Tim.