This text was Extracted from by Knight Frank’s “Africa Report 2015: Real Estate Markets in a Continent of Growth and Opportunity.
Office Market
The office rental market has seen some improvement over the last twelve months, and rent escalation rates of upwards of 20% per annum are typical. Demand for space continues to be relatively strong in Lilongwe, which has encouraged some new office development. However, there is very little office construction in Blantyre, and the development that is taking place is mainly for owner-occupation. Office investment activity is currently extremely limited, due to very low liquidity and high lending rates which are making investment almost impossible for most investors. The exception is the pension funds, which are currently highly liquid and thus the dominant players in the market, but they are only interested in buying existing office buildings, rather than development projects.
Retail Market
The retail rental market has performed well across all of the major commercial centres in Malawi, and the shopping mall concept has taken root in the main cities. However, the diminishing purchasing power of Malawians is a threat to the market, which may lead to falling demand for retail space in the medium term. The Gateway Mall, developed by MPICO Limited in Lilongwe, opened in December 2014. This property brings to the market approximately 17,000 sq m of prime retail space and has attracted some of the well known South African chains.
Industrial Market
Industrial production in Malawi has been adversely affected by both the country’s general economic woes and regular electricity blackouts. As a result, demand for manufacturing space has been subdued. However, significant plans have been put in place to boost the electricity sector, which appear to be given priority now. The industrial market is largely dominated by demand for logistics and storage space, and there has been a strengthening of warehousing rents.
Residential Market
Residential rents and values are significantly higher in Lilongwe than in Blantyre. In Lilongwe, the continuing demand for representational accommodation for both the commercial sector and the international community has encouraged many landlords to extend or renovate their properties, rather than constructing new ones. In Blantyre, most residential properties in prime locations date back to the 1960s. The development of new property in prime locations has stagnated in both cities, and most current residential development is in peripheral areas away from more established residential locations. This is partly due to a scarcity of available land in low density residential areas within city boundaries. The increased demand and short supply have resulted in buoyant rental levels.
Source: Knight Frank
