Following the Monetary Policy Committee’s (MPC) recent announcement from the Bank of Zambia about the increase in the Monetary Policy Rate by 150 basis points to 12.5%, we, Valuation Surveyors and Real Estate Consultants in Zambia, feel that this will have a direct impact on Real Estate.
And we are poised to share our professional insights into what this pivotal decision means for the Zambia’s real estate sector.
This rate adjustment is set against the backdrop of an inflationary upturn, which saw a climb to an average of 12.9% in the final quarter of 2023, with a further increase to 13.2% in January 2024. A depreciating Kwacha, alongside surging prices for critical commodities such as food and fuel, primarily drives this inflationary trend.
1. Cost of Borrowing: The escalated policy rate will lead to higher loan interest rates, including mortgages, potentially cooling off immediate demand for real estate. Buyers might either delay their purchasing decisions in anticipation of a more favorable market or shift their focus towards more economically feasible housing options.
2. Investment Climate: Despite short-term hurdles, the future perspective remains optimistic. Efforts by the Bank of Zambia to stabilize the economy, coupled with the government’s commitment to fiscal consolidation and debt restructuring, are poised to boost investor confidence. Such a milieu fosters increased investments in pivotal sectors, indirectly favoring the real estate market by invigorating demand for both commercial and residential properties.
3. Rental Market: With the uptick in financing costs for new home purchases, we might see a bolstered demand for rental properties, potentially leading to increased rental yields. This scenario presents an appealing proposition for investors, eyeing the rental market as a source of stable income amidst the economic fluctuations.
4. Development and Construction: The sectors of real estate development and construction might witness escalated costs due to higher borrowing rates. Nevertheless, the broader economic stabilization endeavors and influx of investments are likely to buffer these impacts in the mid to long term.
As Valuation Surveyors and Real Estate Consultants, we are vigilantly observing these unfolding developments and stand ready to guide our clients through the prevailing market dynamics. We advocate for well-informed decision-making and strategic planning as essential tools for capitalizing on the opportunities present in Zambia’s real estate landscape during this economic recalibration phase.
We maintain an optimistic outlook towards the future of Zambia’s real estate market and pledge our unwavering commitment to furnishing our clients with the necessary insights and advice for optimizing their investment ventures.
For further information and updates, please reach out to:
Contact:
Chisebwe Fumbeshi
Valuation Surveyor & Business Consultant
Chief Executive Officer
Fairworld Properties Limited
+260966780192
chisebwe@fairworldproperties.com
