Botswana transfer duty amendments to benefit foreign buyers

Botswana transfer duty amendments to benefit foreign buyers

Category International

Botswana has made notable amendments to their transfer duty including reducing the rate for foreign/international buyers from 30% down to 10% for property purchases up to BWP2 million and 15% above that. The amendments came into effect in early May 2023.

Kim Bekker, director of Seeff Properties Botswana says this is welcome news for the real estate industry and should reignite this sector of the market.

Transfer duty for Botswana citizens remains at 5%. Botswana citizen first time homebuyers are exempt from paying transfer duty. If the purchase is not a first home, the buyer is exempt on the first BWP1,5 million with 5% payable thereafter.

Kim says there is a lot of potential in the property market and the transfer duty amendments should encourage buyers and investors.

Botswana is a popular tourist country with excellent all-year weather, stunning wildlife and a diverse economy driven by its world-renowned diamond industry, fast-growing service industry, tourism and manufacturing, and growing financial services and ICT.

Amenities are good including financial and medical facilities, and there are lovely shopping malls and South African chain stores abound in the country, says Kim.

According to World Bank data, Botswana is seen as a stable economy with significant mineral (diamond) wealth, robust institutions, prudent economic management, and a relatively small population. It is considered an upper-middle-income country with an aspiration of becoming a high-income country.

Stable Political and Economic Environment boosts Property Market
One of the key drivers of the property market has been the country’s political and financial stability. Investor confidence and an increase in foreign investment has been a great benefit including development of many high-end residential properties and commercial buildings.

The government has also responded to this growing demand for housing by implementing policies aimed at providing affordable housing to citizens, which has helped to spur the growth of the property market.

Seeff Properties Botswana operates in the middle to high income property range and our sales prices on residential property is on average BWP2 million to BWP3 million and for higher end properties between BWP4 million to BWP7 million.

As for Seeff’s residential rental averages, these range from BWP8,000 to BWP12,000 per month for the most in-demand range, and between BWP15,000 and BWP25,000 for higher end properties. Rental yields were around 7% to 10% in the pre-pandemic period. Landlords and tenants are free to agree on rent and escalations.

Property Regulations for Foreign/International Buyers
74% of land in Botswana is Tribal Land and regulated by the Tribal Land Act of 2022. Sale of this land to non-citizens is subject to regulation under this Act. Kim recommends any non-citizen wishing to invest in Botswana retain the services of a reputable legal practitioner.

Foreign buyers tend to purchase high end apartments or larger homes with gardens, in the BWP4 million to BWP8 million range, says Kim.

Botswana has a bustling Business and Commercial Property Sector
Botswana is a growing economy and offers a diverse range of business and commercial property as well as investment opportunities. However, the Botswana Government has reserved certain industries for citizens only to stimulate citizen empowerment within the economy. Such industries include bread and confectionery, guest houses, bottle stores and filling stations.

Botswana government has set up facilities to advise and assist foreign investors wanting to do business in Botswana. This is only applicable to certain businesses. Visit www.gobotswana.com for more information.

The retail sector is highly developed and supported by various active players from both the local and South African markets. Major South African retailers such as Spar, Shoprite, Woolworths, Pick n Pay, and Massmart have a strong presence in the region. Choppies, a local chain, is a great example of a successful local retailer in Botswana which has also expanded to South Africa and Zambia while Sefalana and Furnmart are found in Namibia.

Most South African retail brands are also present including Mr Price, Mr Price Home, Sheet Street, Miladys, Pep Home, Mr Price Sport, Incredible Connection, Markham, Sportscene, Exact and so on.

From a commercial property perspective, Seeff Property stock for rental offices ranges from BWP80 to BWP120 per square metre, industrial rentals from BWP30 to BWP45 and retail from BWP200 to BWP280 per square metre.

Author: Gina Meintjes