- According to most developers and realtors, the condominium popularity and appeal in the country’s real estate sector is currently weak due to a sluggish local demand
Dar es Salaam. Tanzanian developers are in dejection owing to what they say is a less than appealing condominium market in the country. According to most developers and realtors, the condominium popularity and appeal in the country’s real estate sector is currently weak due to a sluggish demand.
Developers are realizing that prices for condos, especially in affluent areas in Dar es Salaam and other major cities, have exceeded affordability to locals, thus leaving foreign buyers as the major buyers.
Realtor at JR Real Estate Dealers Mr Hashim Masiwa says that condominiums have become increasingly popular in cosmopolitan and metropolitan areas and for middle income earners; however, in Tanzania, the number of people who buy condos is still low especially in the local buyers’ category. This is attributed to many factors; dismal purchasing power being top of the list.
“Currently, the market sees an insufficient demand for suburban condos, one major factor being that Tanzanians prefer building their own houses,” he said.
He acknowledged that it is foreign homebuyers who continue to show relatively healthy demand for condominiums in the prime real estate industry.
Echoing similar sentiments, other developers said that foreigners who come to stay in Tanzania either for work or tourism are the largest group of buyers for condominiums, especially those foreigners who reside in the commercial city of Dar es Salaam.
In a market which in the long run will have to depend on locals to push the business forward, real estate agents believe that foreigners’ dominance of the condominium market is still strong.
This was reverberated by another real estate guru Scoba Raymus, Director of Dalali Mwanamke Real Estate Company. He said that Tanzanians prefer having a standalone family home which is often built by them from the ground. This leaves foreigners to dominate the condominium market.
However, some players in the industry state that the dependence on foreigners is a ticking bomb, considering that the number of expats fluctuates year to year. So, in times of departure, the market experiences a dearth of clients.
“It’s actually a challenge, Tanzania should depend on locals as a source of income because there are not many foreigners in the country, making the condos market small and undeveloped,” Raymus said.
A few years back, what city dwellers would often see along different stretches at the seaside attached to erect residential buildings were signs of “apartment for rent” calling for interested renters. However, the trend is now slowly shifting to calling for dwellers to ‘buy’ the residential space. These have become so saturated in different parts of the city that some are being offered on a deferred payment basis where the buyers can opt to pay in installments.
Erica Shumi, a resident of Kinondoni who works as an accountant says that entering into a mortgage agreement where you pay in installments is actually costlier compared to when you decide to save and later buy a condo in a lumpsum.
“I tried to make inquiries with different developers and banks offering mortgage financing, I did the numbers and realized that it is too costly for many of us who do not earn a lot from our jobs,” she said.
Sitting snugly at the foothills of Mount Meru, the small town is surrounded by some of the most famous national parks in Africa.
The region has the buzz of a fast growing city and hosts a stream of international tourists who use it as a base to explore some of Africa’s most beautiful landscapes including the Serengeti, Ngorongoro Crater, Olduvai Gorge and Mount Kilimanjaro.
My Dalali Real Estate agent Mr Robert Makule says since the region is still a growing city, supply and popularity of condominiums is low and most of the residential buildings are rented out as apartments.
“The region’s residential areas are not as full compared to Dar es Salaam, that is why many people are still buying plots and building houses, the concept of condos here is still peculiar,” he said.
The semi-autonomous archipelago off the coast of Tanzania is famous for its mix of exotic beaches, famous spice plantations, history (Stone Town being the capital) and diverse culture.
The isle hosts many foreigners throughout the year, since tourism is the main economic activity.
“Mostly, the real estate market is dominated by apartments which are offered for rent and standalone homes, condos market are still not popular here,” says realtor Ame Khatibu of RE/MAX Tanzania.
According to him, some of the developers who were previously selling their residential building units as condos have shifted into renting as the business seems to be more profitable.
He said, “Local residents prefer buying plots and building the house themselves, for condos we just receive interests from foreigners mostly and a few numbered locals”.
Tanzania Housing Demand
The Bank of Tanzania (BoT) reported that there is currently fast growing demand in housing mainly driven by the strong and sustained economic growth with GDP growth averaging 6-7 percent over the past decade.
The fast growing Tanzanian population which currently sits at close to 60,000,000 people is estimated to more than double by 2050, contributing to the growing demand of affordable housing.
The Tanzanian housing demand is estimated at 200,000 houses annually and the country has a total housing shortage of 3 million houses, BoT mortgage update for 2020 indicates.
According to the central bank, the demand for housing and housing loans remains extremely high but is constrained by inadequate supply of affordable housing and high interest rates.
Most lenders offer loans for home purchase and equity release while a few offer loans for self-construction which for the most part continue to be expensive beyond the reach of the average Tanzanian.
Efforts to develop a number of housing projects by developers continue with a special focus on housing projects in Dodoma as the government continues with the relocation of its administrative functions to the country’s capital city.