Real estate business

Impact of Covid-19 on real estate activities in Dar

The economic sector that developers and managers say contributes billions of money to gross domestic product (GDP), the government, meanwhile, says it is growing rapidly but with fewer returns on investment.

The National Bureau of Statistics report, National Economic Status for June 2021, states that between July 2020 and June 2021, the agriculture, forestry and fishing sector provided 61.5% of all jobs, follow-up of the trade and maintenance sector (14.5%). the real estate industry accounted for only 0.04 percent of all jobs with a lower contribution than other sectors.

The Bank of Tanzania (BoT) annual report for 2019/20, on the other hand, indicates that the construction industry and activity, which includes mining and quarrying, manufacturing, construction, electricity and gas, as well as water supply and sewage, increased by 11.8% in 2019 compared to 9.7% in 2018.

The BoT says construction, which contributed 27.5% of GDP, grew by 14.1% in 2019, mostly associated with ongoing infrastructure projects including: Standard Gauge Railway (SGR) ; Ubungo interchange; construction and expansion of ports, airports, roads and bridges; and the construction of ships and ferries in the great lakes.

Far from the relocation of the central government to the capital Dodoma, property managers claim that the outbreak of the Covid-19 pandemic has disrupted real estate activity in Dar es Salaam because some of their tenants, mostly non-governmental institutions , have been working from home for almost a year. now.

Property managers blame the economic crisis and working from home has led to the suspension of some rental contracts while others are calling for relief in rental charges to renew their rental contracts. According to them, working from home is an extension of reducing working hours and laying off staff in order to prevent the spread of the pandemic and reduce operational costs.

However, the International Labor Organization (ILO) in its World Employment and Social Outlook for June 2021, states that the total loss of working hours has resulted in a sharp drop in labor income and an increase in poverty in due to the blockages linked to Covid-19. About half of the lost working hours were due to reduced working hours for those who kept their jobs.

“The economic and labor crisis created by the Covid-19 pandemic could increase global unemployment by nearly 25 million people,” part of the report reads.

The ILO says global labor income, which does not include government transfers and benefits, was US $ 3.7 trillion (8.3%) lower in 2020 than it would have been in l absence of the pandemic. For the first two quarters of 2021, this shortfall is equivalent to a reduction in global labor income of 5.3%, equivalent to US $ 1.3 trillion.

The Covid-19 eruption has been an additional challenge to the relocation of the central government to the capital Dodoma. Property managers told the Guardian that the pandemic has prompted them to further reduce their rental and purchase prices.

Along the new Bagamoyo road, a neighborhood that is becoming privileged with booming real estate projects, current rental prices average U $ 12 per square meter compared to downtown U14 per square meter. Apartments are priced on average U $ 130,000 less than the downtown average of U $ 280,000.

In the upscale neighborhoods of Masaki, Oysterbay and Upanga, rental prices for three- to four-bedroom apartments range from US $ 4,500 to US $ 6,000 per year. The purchase prices, however, are between US $ 500,000 and US $ 1,500,000. Previously, managers claimed that rental prices reached US $ 8,000 per year and purchase prices exceeded US $ 2 million.

Jacqueline Samson, property manager, Skyline Property Limited, said her 20-apartment skyscraper along the New Bagamoyo Road is rented at U $ 10 per square meter excluding VAT but at U $ 12 including VAT. She said the minimum rental space is 50 square meters. The buildings have two wings covering 800 square meters.

“The rental price is negotiated and may even be lower than this depending on the size of the space the client needs. We charge $ 50 per month for parking a car. Water bills are included in the rental charges but each tenant has their own electricity meter. The rental period begins with a minimum of three months, ”Samson said.

Right next door is the ten story ZO Spaces shopping block. The property is rented at U $ 12 per square meter on the second and third floors, but the price may be a bit higher on the upper floors.

Clarah Herman, Sales Supervisor at Victoria Noble Center, said the property that sits along the New Bagamoyo Road, with 15 apartments, is on the market with a rental price of $ 10 per square meter and a price minimum purchase of $ 168,000.

“The USD 10 per square meter includes taxes and service charges. A fully furnished three bedroom apartment has a minimum purchase price of USD 168,000. Why choose Noble Center? It has office space in the front and residential apartments in the back. Its spacious offices start at 53 square meters, ”Herman said.

On the other side, there is a new Treasure Victoria Apartments by Jiangxi International Tanzania Investment, a company based in China. The company has so far committed more than US $ 9 million to the building of 17 apartments.

Rehema Mahmud, the company’s marketing and sales manager, told The Guardian that the three-bedroom apartment costs US $ 150,000 and US $ 120,000 for a two-bedroom apartment.

“You have to pay 20% of the purchase price before you move in and finish the rest of the money in 12 months. The building has 83 apartments. It has a five-star swimming pool, a children’s pool, a children’s playground, a gym, CCTV, a restaurant and a rooftop bar where you can have a view of Dar es Salaam, ”said Mahmud.

According to data from the Center of Affordable Housing Africa, Tanzania had 12.3 million households in 2018, of which 8.2 million (66%) were in rural areas and 4.2 million (34%) were in urban areas. The report predicts that over the next five years, the number of households in rural areas will increase by 255,000 per year and by 130,000 in urban areas.

“This rapid urbanization, coupled with a reduction in the average household size, will require an increasing number of smaller and more affordable housing units to meet the urban housing demand of rural-urban migrants and newly formed families in the city. urban areas “, part of the report reads.

The 2020 Least Developed Countries (LCD) report of the United Nations Conference on Trade and Development (UNCTAD) titled “Productive Capacities for the New Decade” indicates that while the pandemic has at least initially had less impact than catastrophic on health, its economic repercussions were ruinous.

According to the report, the prolonged recession has resulted in job losses, threatened the survival of companies with associated losses in terms of production capacity and could have a long-term effect on potential output.

The list of LDCs is reviewed every three years by the Committee for Development Policy, a group of independent experts who report to the United Nations Economic and Social Council.

In this context, the list of developed countries are: Uganda, United Republic of Tanzania, Zambia, Angola, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Democratic Republic of Congo, Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Guinea -Bissau, Haiti, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Sierra Leone, Somalia, South Sudan, Sudan and Togo.

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