Malawi property influences and overview

Malawi has a land area of 118,000 square kilometers and a population of over 18 million people. The urban built environment consists of 27 percent residential units, 18 percent commercial units, 10 percent industrial units, 15 percent vacant land, 20 percent roads and bridges and eight percent churches and mosques and two percent parks and commons.

The country has three major regions - Southern, Central and Northern - with three major cities in each, being Blantyre, Lilongwe and Mzuzu respectively. Most of the properties on the market are located within the three cities.

Overview of the major cities
Blantyre – is the commercial capital of Malawi and is home to various headquarters for major banks and corporations. The city has three major commercial hubs, namely the Blantyre CBD, Ginnery Corner and Limbe.

The city is developing at a slow pace due to the current economic climate and restrictive interest rates which has left very few capable developers on the market.

Lilongwe – is Malawi’s capital city. It went through a rapid development phase during the latter part of the 2000s spurred on primarily by foreign investment, particularly from the development of diplomatic relations with China. The city is home to most diplomatic missions and international NGOs whose presence has influenced market prices, particularly for low density housing.

Recent substantial developments include the 17,500sqm Gateway Mall, the Bingu International Stadium and the Guoji Dream House Project which is due to deliver 605 houses during its first phase.

Mzuzu - has experienced steady growth over the years. Its proximity to the Tanzanian border and formation of Mzuzu University twenty years ago has seen it transformed into a hub of business activity.

The development of the new Reserve Bank and shopping mall along the main road into town have led to a flurry of development. Very few property managers currently operate in the city with the majority of commercial properties in particular being self-managed. However, the pace of development offers opportunities for more outside players to enter the market.

Business overview and interest and exchange rates
The property market in Malawi has decelerated as evidenced by long marketing periods before realizing a sale. This is due to several factors which include high interest rates resulting in fewer property transactions, high construction costs due to volatile exchange rates, and the overall poor performance of the macro economy which has negatively affected the real estate industry.

Following the recent 25% devaluation of the local currency, a dollar is now K1,026.09. The benchmark policy rate has been raised by 400bps to 18 percent since October 2022, from 12 percent in 2021. The maximum lending rate is 25.18%, and it is likely to adjust downwards considering various economic recovery efforts by the government.

Property demand and supply
Residential units of all classes are in high demand. This is due to increasing urbanization and a lack of affordable housing finance which has led to a huge shortage of residential units in urban areas. Comparatively, Lilongwe registers higher rentals followed by Blantyre and then Mzuzu. Prices of properties arising from genuine sale transactions generally follow the same pattern.

We observe there is quite a lot of overlapping between medium density and low-density areas in Malawi. In formal high and medium density areas, monthly rentals for houses range roughly from $1/sqm to $3/sqm. In low density areas, rentals range within $3/sqm to $5/sqm and above range. Flats/apartments and townhouses in particular fetch from around $15/sqm to above $30/sqm.

The demand for office space has decreased in most urban areas and, as a result, rentals for offices have stagnated with upward revisions resisted by some tenants. On average, monthly rental for prime offices are $12/sqm, $10/sqm and $8/sqm in Lilongwe, Blantyre and Mzuzu respectively. Shops, on the other hand, rent out within the $11/sqm to $18/sqm per month range in the heart of the cities. There is continuous demand for shops in the country as most local centers do not have adequate shopping space.

Most industrial properties including warehouses are owner-occupied and rental ranges from $3/sqm to $5/sqm.

Property buyers and sellers in Malawi
The most active players in the buying and selling of properties are the Asian community. They have heavily invested in commercial property and are also taking up a strong position in the residential property market. Most Malawians opt to buy plots and build houses for owner occupation, as opposed to buying already built properties, with very few going into the property market as an investment.

Conclusion
The economic situation is expected to improve due to various economic recovery frameworks that the government is implementing. Meanwhile, the real estate industry remains the best investment option in Malawi.

The country is experiencing rapid urbanization and the industry is expected to grow tremendously in the coming years. It is worth noting also that the property market has many illegal players. Thus, property buyers and sellers are encouraged to engage the service of certified estate agents/firms for professional real estate services.

Seeff Malawi is part of one of the biggest real estate brands with offices across Southern Africa. The brand offers over five decades of expertise and credibility, backed by strong ethics, and the latest technology and systems.

Presented by Lusungu Kayela, License for Seeff Malawi and Johans Ngwira, Manager Seeff Malawi.
Visit https://malawi.seeff.com/ for more information and contact details.