BA ISAGO University

FACULTY OF THE BUILT ENVINRONMENT, ARTS AND SCIENCE

DEPARTMENT OF REAL ESTATE

CHALLENGES AND OPPORTUNITIES ASSOCIATED WITH RESIDENTIAL

PROPERTY INVESTMENT IN ENHANCING AFFORDABLE RENTAL HOUSING
SUPPLY, case study of Louie Ville Estate

BY KAONE NDOBANE

01161558612

A research Project Submitted in Partial Fulfillment of the Requirements for the:

bachelors of commerce in real estate
 CHAPTER 1
1.0 INTRODUCTION
The advantages/profits resulting from residential property investment cannot be emphasized
leaving behind the problems encountered in the management of such investments. In order to
achieve investment organizational goals, investors come up with strategic objectives to take
make use of the available opportunities in the market and just like any entrant in a particular
market, investors will have to face some other challenges that do exist in the market.
This study is descriptive in nature as it describes the key components (challenges and
opportunities) of investing in residential properties. The study is motivated by the
involvement of private entities in the provision of affordable housing to the citizens of
Botswana.
This chapter outlines the introduction of the research, highlights the context of the study and
the statement of the problem. It also looks at the purpose of the study, research objectives,
questions and the importance of the study. Some other aspects such as research assumptions,
the delimitations of the study and limitations of the study also zoomed into to insure the
usefulness of the study. Definition of terms and summary are also provided.

1.1 BACKGROUND OF THE STUDY

(Reibclickonline,2018) state that the Botswana real estate industry started as early as the
1970’s with the establishment of foreign owned companies like Real Reach international
property consultants and Goal reach Holding, furthermore between 1970 and 1980, people in
Gaborone Botswana were experiencing shortage of decent accommodation due to rapid
urbanization and population increase. This situation gave and brought about rise to both
opportunities and challenges/problems associated with the property industry including but not
limited to: over-pricing of property either for sale or rental; illegal selling of tribal land and
over-spilling of people into peri-urban areas. All these challenges existed because they were
no formal rules and regulation concerning property services in Botswana.
The provision of affordable urban housing in Botswana is inadequate. The high population
growth rate and rapid urbanization has led to under provision in housing in urban areas as
supply does not match demand. The shortage of well-maintained and serviced land, poor
infrastructures especially in urban areas together with excessive infrastructure costs has
greatly hindered private developer’s efforts in the provision of urban housing in Gaborone.
On the other hand, the rapid urbanization in Botswana provided opportunities in property
investing by enhancing the demand for housing that has resulted in a steady development of
residential areas in most major towns and as a way of dealing with the need for residential
housing in towns (Boshoff, Kachepa and Pienaar, 2013). This led to different land owners
building houses such as one roomed buildings as to provide for housing and other private
organizations coming up with other better housing which are different from the ones offered
by sole landlords such as sectional titles, town houses and single family homes due to
different preferences and income levels of consumers as a way of making use of the
opportunity.
Botswana is faced by a challenge of influx migrants from other many countries in search of
better jobs, security and infrastructure as well as other investment opportunities which
however tend to put pressure on the residential housing. According to (Botswana
Immigration Statistics, 1960-2020) the immigration statistics for the year 2000 were
57,064.00 which was a 42.06% increase from the year 1995. In year 2005 the immigration
statistics increased to 88,829.00 which was 55.67% increase from the year 2000. The year
2010 immigration statistics recorded about 120,912.00 which was a 36.12% increase from the
year 2005 and also in 2015 immigration statistics were 160,644.00 which was a 32.86%
increase from 2010. This statistics provide that after every five years the immigration
statistics keep on increasing which lead to the higher demand in housing.
Even though Botswana’s residential property market is still underdeveloped, it possesses
huge potential for investing of which provides a good investment opportunity for investors to
invest (Delmendo, 2019). Despite the fact that residential property investing provided
opportunities for investors due to its higher demand and need for housing, investors were
faced with other challenges.
Post 1996, some specific policies were introduced and implemented as to deal with the issue
of urbanization and need for residential such as the National Policy on Housing in Botswana
of (2000). The policy was introduced to provide decent and affordable housing for all within
a safe and sanitary environment (Botswana Habitat 3 Report, Ministry of Lands and Housing
Gaborone/ Botswana 2014).
1.2 STATEMENT OF THE PROBLEM

The real estate residential property investment as a whole as compared to other property
investments has both challenges and opportunities that the investors face when addressing the
need for residential property. The provisions of adequate housing are a way of essential part
of needs of every society and have a great value of individual, families and communities
(Opoku and Adbul-Muhmin, 2009). There is rapid rural-urban migration whereby people
relocate from villages towards Gaborone because most of the developments are concentrated
in the city, for example all the big tertiary institutions are in the city, job opportunities and
better amenities. According to (Plencher,2019) in 2015, 67.16% of the total population of
Botswana was living in urban areas and in 2016 a 67.93% of the total population was living
in urban areas which was a 0.77% increase from the year 2015. The 2017 urbanisation
recorded about 68.7% percentage and 2018 recorded 69.45% of the total population which
was a 0.75% increase from the year 2017. Gaborone is faced by more population which
presents an opportunity for more demand in housing (different types of housing) which
investors can benefit from. On the other hand, since Gaborone is much populated there is
shortage of land and poor, slow provision of land which pose a challenge to investors as this
hinders their investment activities. The city is also surrounded by other villages like
Tlokweng, Mogoditshane, Gabane and Phakalane as well causing the city not to expand and
provide more land and accommodation. Due to the high demand of residential property,
landlords take advantage of tenants by escalating rental prices because they are not adhering
to any regulations or justification which also disadvantages tenants and may drive them away.
A high proportion of the population in Gaborone rents than owning homes because many
cannot afford to own. This has led to development of squatter camps or slums and people
living in places like Old Naledi where there is poor waste management and sanitation. The
only people who are able to afford to rent house in Gaborone are those with well-paying
careers while others with low wages stay in places around Gaborone. The quality of life in
the city is distorted by the type of housing people live in, as it is an indication of their levels
of poverty or wealth. This problems are faced by investors both new entrants in the market
and those already participating in the market. Some efforts have been made by the
government to deal with challenges such as shortage of land in the capital city as the
government expropriated land from some of the residents of Ledumadumane for the
expansion of Gaborone (Sunday Standard, 21 May 2012). Dealing with these challenges will
help attract investors and make housing affordability as investors will provide residential
properties. If the challenges remain unsolved it means that there will be slower developments
and infrastructure that bring about demanded affordable housing hence this study aims to
give understanding of the available challenges as well as opportunities and propose
approaches to solve the recognised challenges.

1.3 PURPOSE OF THE STUDY

The purpose of this research is to investigate the challenges and opportunities that residential
property investors face in their daily business activities. That is what are the difficulties and
favourable circumstances that the owners of Louie Ville Estate face when carrying out their
investment/business activities.

1.4 RESEARCH OBJECTIVES

Main objective
1. To investigate the challenges and opportunities of residential property investment in
the context of Louie Ville estate.
Other objectives
2. To identify factors influencing residential property rentals.
3. To recommend solutions and strategies to the investors of Louie Ville (solutions and
strategies to the identified challenges.

1.5 RESEARCH QUESTIONS

1. What are the challenges and opportunities of residential property investment that the
owners of Louie Ville estate are faced with?
2. What are the factors influencing residential property rentals in Louie Ville estate?
3. What are the solutions and strategies to address the challenges identified?

1.6 SIGNIFICANCE OF THE STUDY

This study seeks to provide information on how challenges facing residential property
investors can be solved and how the investors can go an extra mile to turn the challenges into
opportunities, for example this study will highlight solutions that investors can use to deal
with identified challenges. This study is also important for the researcher as it is crucial for
the completion of the researchers Degree in Real Estate Programme at Baisago and
furthermore useful to other real estate companies as they can get knowledge on what aspects
to look into when determining their rental prices.
1.7 ASSUMPTIONS
In carrying out this research the researcher assume will find more readily available
information from wide range of different sources and more respondents will cooperate when
collecting data.
The researcher assumes there will be more time to carry out this research and finish each of
its aspect on time.
The researcher assumes he will have more capital to be used to travel in order to collect data.
The researcher assumes that more resources needed will be available to carry out this
research.

1.8 LIMITATIONS
Time: The time frame given to complete the project won’t be enough because the researcher
also have other three modules to do in school at the same time with the research which
needed much focus, energy, time and attention.
Finance: Some of the research works will be affected by lack of funds and financial support
which might disturb some research activities like meeting with respondents and collecting
data.
Weather conditions: Some of the weather conditions will bring about delays in the project as
weather conditions such as rains might hinder the process when the researcher need to link up
with some respondents to collect the data.
Information: The researcher will find difficulties in obtaining information as there is still
less in-depth recorded information and however the researcher have to use what is available
and also be innovative when constructing the research.
Confidentiality: This research is focused on a private estate and some of data can contain
confidential of the organisation which might hinder collection of full and valid information.

1.9 DELIMITATIONS
The study will be focused on a single residential estate belonging to Louie Ville that is in
Gaborone Block 6 since they have many residential properties around Gaborone in places
like block 8 and Gaborone North. This is done to conduct the study within the given time
period and to narrow the scope of study.
The study will be only focused on the selected aspects of the problem as the research is all
about the challenges and opportunities that the Louie Ville estate investors are faced with and
their rental price determinants as this contribute to some investment decisions.
1.10 DEFINITION OF TERMS

1. Challenges: The problems that the investors encounter.

2. Opportunity: A time set of circumstances that make it possible to do something.

3. Shortage: Situation where the quantity available or supplied in a market falls short of the
quantity demanded or required at a given time or price.

4. Determinants: A factor which decisively affects the nature or result of something.

5. Residential property: Any property that a municipality has designated for single family
homes, apartments, cooperatives, townhouses and any other place where people live.

1.11 CHAPTER SUMMARY

Chapter one bring together the study measurements by giving the background on the research
problem, purpose of research study, research objectives, research questions and significance
of the study, limitations, delimitations as well as definitions of terms. The information
resulting from the study will guide investors, property owners and managers to deal with the
challenges they might face and to make best use of the favorable events that can arise as a
result of dealing with residential properties for investment purposes.