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Last Updated: Apr 07, 2014

Botswana's thriving property market



Botswana’s residential property market remains strong, amid healthy economic growth and political stability.

Because of the absence of official and timely house price statistics in Botswana, it is difficult to analyse the market. However, local real estate experts ascertain that house prices in the country have continued to rise in recent years.

According to the IPD Botswana Annual Property Consultative Index, the total return for all properties in Botswana stood at 17.9% in 2012 from 20.9% in 2011. For residential properties, total returns soared to 24.4% in 2012. The income return for residential properties was 8.8%, whilst the capital return was 14.4%.

The IPD Botswana Annual Property Consultative Index was launched in 2013 to measure ungeared total returns to directly held standing property investments from one open market valuation to the next. Accordingly, the index tracks the performance of 103 property investments, with a total capital value of BWP2.8 billion (US$322.4 million) in 2012.

Another indicator that demand remains strong is the increasing value of outstanding property loans. In January 2014, total outstanding property loans to households surged by 44% to BWP6.79 billion (US$782 million) from the same period last year, thanks to falling mortgage interest rates, based on figures from the Bank of Botswana.

In January 2014, the average mortgage interest rate by commercial and merchant banks fell to a record low of 8.99% from 10.87% in the same period last year.

Both demand and property values in Botswana are expected to continue rising this year, according to some local property experts.

The Botswana Government actively seeks out foreign investment and is happy to sell land to foreigners. Only tribal land and state land cannot be sold to foreigners, and in most areas of Gabarone (and indeed Botswana) land can be bought.

Botswana housing loansIn the fourth quarter of 2013, Botswana’s economy expanded by 4.7% from the same period last year, after registering real GDP growth rates of 6.9% in Q3, 7.3% in Q2 and 4.8% in Q1 2013, based on figures from the country’s Central Statistics Office (CSO).

Botswana’s economy is projected to grow by a healthy 4.1% in 2014 and another 4.4% in 2015, according to the International Monetary Fund (IMF).




RENTAL YIELDS
Last Updated: Dec 08, 2005



Residential property prices in Gaborone and Francistown had rental yields ranging from 6.55% to 9.4% in December 2005, according to Global Property Guide research. Yields are now estimated to be between 7% and 10% by Seeff Properties. Knight Frank estimate that upper-end residential yields in Gabarone are around 15%, but this estimate is generally held to be not credible. Francistown yields are generally higher.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Dec 13, 2016



Rental Income: Rental income is taxed at progressive rates, from 5% to 25%.

Capital Gains: Gains from the disposal of immovable property are taxed at progressive rates, from 5% to 25%.

Inheritance: Estate tax is levied at progressive rates, from 5% to 25%. Transfer of property ownership is subject to capital transfer tax.

Residents: Residents are taxed on their worldwide income at progressive rates, from 5% to 25%.

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BUYING GUIDE
Last Updated: Dec 14, 2016



Buying costs are around 6.12% to8.36%of the property value. The buyer pays for the transfer duty at 5%, and conveyance fee at around 1% to 3% of the property value.

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LANDLORD AND TENANT
Last Updated: Nov 30, -0001



Botswana Gabarone propertiesThe law in Botswana is pro-landlord, but the force of the law is weakened by slow enforcement in the courts.

Rent: Landlord and tenant are free to agree the rent; rent control only applies to commercial properties in urban areas. The parties may also freely agree a mechanism for increasing the rent during the tenancy term.

Rent Arrears: Although the landlord’s rights are strong, the law can be slow. For example, if rent due has not been paid, the landlord has a residual “hypothec” over any movable goods the lessee has on the leased premises. But if opposed, an action to seize the goods can take 2 to 3 years to enforce.

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ECONOMIC GROWTH
Last Updated: Apr 07, 2014


Africa's success story

Botswana gdp per capitaBotswana is a small-landlocked state, dominated largely by desert, savannas, wetlands, and salt pans. Nonetheless, it is home to a wide variety of wildlife that has attracted adventure-seekers from around the world. The tightly controlled tourism industry is developing into the country’s second most important industry after mining. Botswana’s population of more than 2 million is concentrated mainly on the eastern corridor where the land is more suitable for agriculture

A former British protectorate, Botswana gained independence in 1966. It has been Africa’s longest running multi-party democracy since then, and stability continues up to present. There are three major political parties: the Botswana Democratic Party (BDP), Botswana National Front (BNF), and Botswana Congress Party (BCP). Although the BDP has dominated the political landscape, competition is tolerated. President Ian Khama succeeded Festus Mogae in 2008.

Botswana is one of Africa’s success stories. A few years after independence, three of the world’s richest diamond mines were discovered within its territory. Botswana experienced the world’s highest average growth rate from 1966 to 1999, transforming itself into a middle-income country with a per capita GDP of US$7,470 in 2013.

The economy is mainly dependent on mining; it is the world’s biggest diamond producer by value. Diamond mining accounts for about a third of GDP and 75% of all exports. The export of diamond and other minerals such as copper, nickel and gold have made Botswana one of the most prosperous African countries.

Real GDP per capita grew by more than 240% from 1980 to 2005, the highest in Africa and one of the highest growth rates in the world. Sound macroeconomic policies enforced by the government have sustained this momentum; the 2014 Index of Economic Freedom labels Botswana as the end freest country in the Sub-Saharan Africa region. It is relatively free of corruption and has a good human rights record.

Botswana gdp inflationDespite a stable political and economic atmosphere, HIV/Aids infection remains a foremost social concern and a major setback. It is estimated that more than one in three adults is infected with the virus. But with government efforts, the epidemic is slowly being controlled. The death rate has dropped dramatically with one of the most-advance treatment programs in Africa. Anti-retroviral drugs are readily available.

In the fourth quarter of 2013, Botswana’s economy expanded by 4.7% from the same period last year, after registering real GDP growth rates of 6.9% in Q3, 7.3% in Q2 and 4.8% in Q1 2013, based on figures from the country’s Central Statistics Office (CSO).

Botswana’s economy is projected to grow by a healthy 4.1% in 2014 and another 4.4% in 2015, according to the International Monetary Fund (IMF).

In February 2014, the overall inflation rate in the country stood at 4.6%, according to the CSO. Consumer prices rose by 4.1% in 2013 from a year earlier.







  • Moderate to high rental yields
  • Stable political system
  • Pro-landlord rental market
  • Low to moderate income taxes
  • Desert covers 85% of country
RESIDENTIAL PROPERTY FACTS
Price (sq.m): n.a. For a 120 sq. m. property, usually an apartment.
Rental Yield: n.a. For a 120 sq. m. property, usually an apartment.
Rent/month: n.a. For a 120 sq. m. property.
Income Tax: 4.20% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 7.24% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 25.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.




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