Navigating Malawi’s Economic Shift: Mitigating Risks in the Property Market
Key Business Points
- Aid withdrawal by development partners is expected to lead to a downturn in Malawi’s property market, with potential project closures and reduced demand for office space.
- High inflation and tight monetary policy are forecasted to impact the property sector, despite Mpico’s strong performance in 2024 with a 17 percent rise in rental income and profits increasing to K12.18 billion.
- Diversification into new sectors such as tourism and mining is being explored by companies like Mpico to align with broader investment strategies and mitigate risks in the property market.
The Malawian property market is facing a potential downturn due to the aid withdrawal by development partners, including the United States government. This has led to project closures and a weakened demand for office space, according to industry stakeholders. Edmund Hami, Mpico Board Chairperson, revealed that the aid freeze is already reducing disposable incomes, which could lead to widespread retail closures. Despite Mpico maintaining a 92 percent occupancy rate, the company forecasts a challenging outlook marked by high inflation and tight monetary policy.
The property sector is already facing several headwinds, including a severe housing shortage. However, Mpico has reported strong performance in 2024, with rental income rising by 17 percent and profits increasing to K12.18 billion from K7 billion in 2023. This growth is attributed to the company’s high occupancy rate and strategic investments in retail, office, and residential spaces. As Hami noted, "Our properties include retail, office and residential spaces. In all these areas, it is about people’s disposable income, so if traffic to our retail facilities falls, that could affect us because retailers may be forced to close."
Purity Chitalo, Central Region Chairperson of the Minority Shareholders of Listed Companies, praised Mpico’s "strategic direction", saying the growth plans "excite shareholders" despite market uncertainties. Originally established by the government to develop Lilongwe’s property sector, Mpico has since been privatized and shifted its focus away from residential development. However, the company is exploring diversification into tourism and mining to align with broader investment strategies.
As the property market continues to evolve, business owners and entrepreneurs in Malawi must be aware of the potential risks and opportunities. The kugawa kwa njinga (sharing of risks) principle can be applied to diversify investments and mitigate risks. By exploring new sectors and strategies, companies like Mpico can navigate the challenges and capitalize on emerging opportunities. The uzamu (growth) of the economy depends on the ability of businesses to adapt and innovate in response to changing market conditions. As the business community in Malawi looks to the future, it is essential to consider the potential impacts of aid withdrawal, inflation, and monetary policy on the property market and the economy as a whole.
What are your thoughts on this business development? Share your insights and remember to follow us on Facebook and Twitter for the latest Malawi business news and opportunities. Visit us daily for comprehensive coverage of Malawi’s business landscape.
