The Changing Landscape of the Rental Market

The Lusaka residential property market has never seen such a diversified and concentrated supply of residential real estate across the middle market.  Lusaka has changed into a city dotted with multi-storey dwelling, defined by middle market suburbs and cluster developments. The emergence of modern residential areas such as Foxdale, Meanwood (Ibex Hill, Ndeke) and the growth of Chalala has redefined the property offerings available on the market.  The older and more established residential areas (Kabulonga, Roma, Lilayi, Makeni) have experienced an increased densification of product. Lilayi and Makeni which were traditionally farming areas have now changed into residential suburbs offering cluster developments on land that was previously farmlands.  This has been a response to a number of factors:

  • Increased Demand for Residential Housing (characterised by amenities that support communal living) – with a strong rental market.
  • Maximising Land Use – Extracting further value from the land through a densification of housing to enable the creation of additional revenue from property
  • Emergence of individual real estate developers who looked to take advantage of the increased demand for a better quality of residential housing

The result of the increase in supply has now created what we see as a glut of supply on the market.  The evidence in the glut are the reduction of rental values across this segment of the market. A recent analysis of residential rental price trends carried out by Pam Golding Properties Zambia of properties located in the middle to middle-upper market in established and emerging areas showed a 30% decline (during Q4 of 2018 to Q2 2019),  in rentals from 2016 values.

The increase in supply has now posed a challenge for the landlord of today who has to ensure that his/ her property is “seen” among all the competition that it faces. On the other hand there is a new challenge for tenants as well, this “abundant” supply created the impression that they are  now spoilt for choice; making it an even more daunting experience to select the “right” fit for themselves.

Below are some interesting statistic results that Pam Golding Properties Zambia recently researched in select residential areas:

A recent survey of a square kilometre of Foxdale, showed a 350% increase in the number of housing units over the last ten years.  A survey carried out in 2009, showed a total of 89 residential units this has since grown to 311 units within a square kilometre.

Roma which was characterised up until the mid 2000s by stand-alone houses sitting on a minimum size of 1 acre. A sample survey done showed an increase in the number of housing units in Roma (excludes the Roma Park Development) by 46%.  The increase is as a result of densification of stands that has become the norm for large residential plots.

These two areas are examples that are not unique to them but to almost every residential area in Lusaka.  The pressure on landlords is even higher as no one is no longer competing with about three or four properties but now they are competing with close to 10 properties within the price bracket and area.  A recent survey carried out by Pam Golding Properties Zambia showed that for a tenant to finally select a property of choice they have been exposed to at least 15 properties within their price bracket and at least 10 in their preferred area of choice.  The exposure is from digital platforms, to agencies and personal networks. This makes it harder for the landlord today; as competition tightens it forces innovative marketing techniques, smarter negotiations and even sweeteners for the tenants all in the aim to ensure that the property is let.

Those landlords who have chosen to “bury their heads in the sand”, have felt the impact of their properties being vacant for up to 6 months. From 2008 to 2015, a property took at the longest cycle 3 months to let, with increased stock properties remaining vacant for up to 6 months where they do not quickly adjust to the current pricing which across the board has seen a 15% drop in rentals from 2017 to 2019.

In closing, landlords are now faced with new challenges, particularly regarding how best they can position their property amidst all the competition for it to stand out. A few pointers below may assist landlords to adjust to the new market dynamics in Zambia:

Do your background Homework

Pricing – Understand the current market pricing from an objective standpoint.  Carry out an assessment of properties of similar size, similar amenities and similar fittings within your residential areas.

View other properties – A walk through other properties and see what the competition is offering is key.  Some very valuable lessons can be learnt from this exercise.

Would you like you to be your own landlord? 

Landlord Reputation –Landlords develop a reputation over time and building this is important from the onset.  Timely repairs, responsiveness (within reason) to tenant queries and requests. This is key in retaining tenants which is now more crucial than it was before.

Marketing

In order to attract the right tenant “you / your property” needs to be seen in the right platforms.  “Would you go looking for a brand-new Range Rover at the second-hand car parking lot along the street or would you drive down to the dealership?”  A good quality tenant will be looking only on platforms that they trust. This trust is based on recommendations from other tenants, the credibility of the platform, previous dealings, and the reputation of the platform or agency that it has built over time.