Key Business Points
- Investor preference for short-term investments is shifting towards stock markets, money markets, and shares, rather than real estate, due to the longer gestation period of property investments.
- Listed property shares have potential for growth if construction costs fall, the economy strengthens, and companies show better profits, which could lead to increased investor interest and higher share prices.
- Long-term value creation is being pursued by companies like Icon Properties plc, which is confident in its growth trajectory and expects the market to recognize its progress over time, with phrases like "tifuke mwini" (we are confident) reflecting their optimism.
The Malawi Stock Exchange (MSE) has seen stagnant share prices for property companies, including Icon Properties plc and Mpico plc, in the first half of the year. According to market data, Icon Properties plc’s share price moved from K17.93 to K18.03, while Mpico plc’s share price dipped from K19.51 to K18.53. This development is attributed to a shift in investor preference towards short-term investment options, such as stock markets and money markets, due to the longer gestation period required for real estate investments to mature. As Desmond Namangale, managing director of Knight Frank, noted, "ndalama za ukongwe" (long-term investments) like real estate are still the best way to hedge against inflation, while also offering potential for growth.
The presence of informal markets also presents unique challenges and opportunities for developers and investors, with Namangale highlighting the need for "kufufuza kwa nthawi" (patience) when investing in real estate. Meanwhile, Kondwani Makwakwa, equity investment analyst at Stockbrokers Malawi Limited, observed that investors are shifting their focus to more profitable sectors, such as the banking industry, which offers quicker and more stable returns.
Despite the current stagnation, listed property shares have the potential to improve if certain changes take place, such as a strengthening economy and falling construction costs. Icon Properties plc board chairperson Eric Chapola expressed confidence in the company’s growth trajectory, citing "malamulo ya kuwonga" (strategic plans) aimed at enhancing long-term value for shareholders. Although the share prices of leading real estate listed firms remained stagnant, the companies expect significant profit growth in the second half, which could provide opportunities for investors to capitalize on "zinthu zodabwa" (growth prospects) in the sector. As the business community in Malawi looks to the future, it is essential to consider the potential for growth in the property sector, as well as the importance of "kuchita bwino" (doing well) in the face of challenges and uncertainties.
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