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2016 WHAT LIES AHEAD IN REAL ESTATE INDUSTRY? |

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PIM. Issue no.14, Feb 2016

issue Contents

Upfront In this

Contents

Cover Story

www.propertyinternationalltd.com FEBRUARY, 2016 | ISSUE No. 14 | ISSN - 1821 - 987X

2016 WHAT LIES AHEAD IN REAL ESTATE INDUSTRY?

Will house prices rise or fall? Will the government implement changes to the super system?

18 Renting vs

Buying, Which is best for you? Paying instalments for 10-15 years is deemed too much of a commitment.

News & Review

Floating Homes

The Role of CRDB Bank in Promoting Mortgage Marketing in Tanzania

Renovation Rock stars

Editors Pick

Old but Gold, Properties that are never out of trend.

Modern Roman Architecture

BY DOMINIC MWAKIFULEFULE

here is such a thing as a timeless design. We see this with Castles and other ancient stone buildings, which never lose their charm. Victorian architecture is still well kept, not necessarily because of its age as there are buildings older that have been taken down, but because it’s peculiar to its time. Some architecture has its roots in renaissance times where the rich nobility funded art, poetry and music which in turn inspired architects of the time to come up with something truly special. The appeal of architecture may also have to do with the durability associated to it. Some architects were simply practical, building not necessarily of the aesthetic appeal. From Africa, the thatched room has made an appearance in several western countries though some primitive may consider it. Take note of three ancient designs that have continuously inspired home owners today to incorporate its hallmarks into their modern homes.

This home owner drew inspiration from Roman architecture’s iconic pillars, window panels and Roman roofs to design a unique pool house. A redefinition of ancient designs when met by a creative home owner who knows what they want and a budget to match can come together quite nicely. Notice how the steps descending to the pool and outdoor pot plans add to the ambience of a Roman themed garden pool side. Roman architecture uses mainly concrete materials which are an important feature even in this set up.

Here is another example of how Roman architecture can influence designs with this library. Roman pillars have been re-imagined here, towering the top of the steps leading into what is a glass covered reception area. A closer look to the left side of the building and the semi-circle Roman Colosseum inspired concrete which creates a multiple window pane façade for ease of access into the building a ventilation. What stands out about this building is collaboration of glass and concrete to achieve a rather interesting design. The reception area roof glass caves in achieving a descent like to seats in a Roman Colosseum as if to insinuate that a library is a place to battle to books. Whatever the case, the architects came up with a brave depiction of a Colosseum inspired by ancient Roman architecture.

Modern Victorian Architecture Modern Stone Architecture

This home in Australia puts a bold black Victorian styled balcony and spike iron fence at the forefront which is contrasted by the white in the backdrop. The universal theme of black and white is tampered with. Another interesting aspect about this house is the simple plan garden a spacious front. There is an air of simplicity about the environment of the house because there isnâ&#x20AC;&#x2122;t too much going on, yet the touches of black give is a subtle bold character.

Long windows were known to characterize many Victorian styled homes and this one is no exception. Choosing not to put curtains in this house, the windows are as inviting as walking past a welllit restaurant at dusk. The high roof is equally Victorian styled with simple roofs that a given company by the chimneys.

This modern stone building shows that stone need not be dull. The cross cutting glass adds a soft and somewhat precarious touch. Lights, especially when put alongside steps can make one feel like they are walking into something grand. This effect is referred to by some as the spotlight effect and is very well accomplished with the staircase on the left. Class and durability, the latter character is a well-known attribute of stone materials so whoever this stone building belongs to, it will be there for a long time.

Modern Stone Architecture

Consider these wooden photo-frame sized window panes. Like peeking windows, they create a vantage point that slants the favour to the person inside. They also add a miniature detail to a very tough material and what would have been a pedestrian wall. A fitting example for the notion that you donâ&#x20AC;&#x2122;t have to do much to add flavour to a surface.

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PIM. Issue no.14, Feb 2016 Feature

Real Estate

Q&A Salum Awadhi

Tête-à-tête with a founder and principal consultant of Sustainable Solutions Consultancy (SSC). A young enterprenure with a passion in the Real Estate 1. A BRIEF INTRODUCTION ABOUT YOURSELF

4. WHEN DID SSC PROPERTIES START? AND WHAT DOES IT ENTAIL?

I am a business and financial consultant, being offering the service for six (6) years in the market now. I am also an author and public speaker. I also regard myself as a serial entrepreneur, having started a couple of ventures in the past two (2) years, and now venturing into real estate.

Precisely, we launched the division in July 2015, and started getting busier in September. SSC Properties focuses on six (6) areas namely advisory services, property development, property financing, property dealing (buying and selling), property management, and our unique service known as Corporate Property Services which is dedicated for companies by outsourcing to us all of their real estate needs.

2. WHEN DID YOU GET INTO REAL ESTATE BUSINESS? AND HOW DID YOU START? I have been offering advisory services in the real estate industry in all my years of consultancy, but only a few months ago that we decided to start a dedicated division focusing on real estate much deeper. We decided to expand to this range after realizing a huge potential in the market that requires us to be more than just consultants 3. TELL US ABOUT THE BUSINESS. So far we have a few projects working on, we are also raising some funds to acquire properties from 2016. So our focus of the business is to extend the division into a fully-fledged subsidiary by 2016. We are also building new relationships, and developing a more stronger team

5. SHARE WITH US ABOUT FEW PROJECTS THAT YOU HAVE DEALT WITH. In consulting, we have done a couple of projects worth more than TZS 100 billion. These include residential apartments, commercial properties, and a few projects in hospitality industry. And currently we are working on a few projects for development and acquisition, we are now busy raising funds to purchase some of them as part of building our portfolio. I reserve specific names for now until deals are completed. 6. WHERE DO YOU SEE TANZANIA IN THE NEXT 5 YEARS CONSIDERING THE PROPERTY DEVELOPMENT IN GENERAL? I still see demand outstripping supply. With the deficit of 3.5m housing units in the country, and the pace we see of new stocks being supplied in the market, there will still be more demand in the market, but this will be skewed to affordable housing, which I believe should be the primary focus of developers now. As total

PIM. Issue no.14, Feb 2016 mortgage portfolio being around TZS 248 billion, with the average mortgage size now being around TZS 69m, which some would argue is not a low income threshold. Developers and financiers still need to hit this market. 7. INCASE I HAVE MASSIVE LAND IN MTWARA OR MOROGORO AND I APPROACH YOUR ORGANIZATION. WHAT WOULD YOU ADVICE ME? So the advice will depend on a variety of factors including location, population dynamics, potential market, future outlook and so forth, so lets take Mtwara for example, as we expect to see commercialization of gas by 2020, there will be demand for offices in the area to cater for new businesses to support the industry, residential apartments to accommodate new residents in town, industrial properties to cater for potential off-shoot industries, as well hotels to cater for business travellers. So the advice would be around such types of assets.

BY EMELDA MWAMANGA

How to Resolve Tenant Problems

Every relationship can have difficult moments and this is also true in the owner and tenant relationship.

8. IS THE REAL ESTATE INDUSTRY SATURATED NOW? Not really. With the demand-supply figures we know, the industry is still far from saturation. However, we see much concentration of certain type of properties in some areas which do not match with the majority of buyers/tenants. Which I believe will find its price recovery once we hit the market balance. 9. WHAT ARE THE COMMON CHALLENGES THAT YOU FACE IN REGARD TO REAL ESTATE BUSINESS AND HOW DO YOU OVERCOME? There is couple of challenges, with financing being the critical among others. As you may be aware that Tanzania financial ecosystem is dominated by commercial banks, who have limitations in terms of cost of finance and repayment structures. As you may also know that only 10% of Tanzania’s total land is surveyed, and some properties are over-priced for unknown reasons, you wonder a small piece of land, out of CDB, priced at USD 5m. How we overcome them? As entrepreneurs we love challenges, because they create opportunities, so we’re turning all these challenges into possible opportunities by packaging and repackaging them into more attractive invest-able assets. With what we see is happening in the government now, we hope prices of properties will return to where they deserve to be. We are also exploring finance outside the border, where is more lucrative and tailored for the industry. We are also working on an option of setting up a Real Estate Investment Trust (REIT) as a way to tap alternative finance, as you know real estate can be a capital intensive industry.

How can a landlord go about resolving tenant problems, whether it be the responsibility of a repair, a rent increase or the use of the damage deposit (the most common friction point)? Both tenants and landlords can avoid a disagreement escalating to legal action by taking the following steps. •

Make sure potential points of conflict are addressed in your contract. Prevention is the best way to avoid problems.

•

When discussing potentially explosive topics, use the personal touch. In our age of digital communication it is very easy to fire off an email to deal with a situation.

•

Know your rights and obligations under the law, It is good to know where a person stands according to the law.

•

Use a third party to mediate. n some cases when it is not possible to resolve the issue directly with the tenant it is good to involve a third party to mediate through whom the communication would go.

Royal Palm Estate is a Property International Ltd project consisting of 99 plots most of which are residential, a few commercial and two housing estates. It is situated by the main road to Mwasonga some 21 kilometers from Kigamboni Ferry and stands opposite the Dar-es-salaam Zoo. Other attractions include the conspicuous six-lane bridge linking Dar-es-salaam Central Business District with the proposed Kigamboni city.

FOR ENQUIRIES PLEASE CALL +255 684 633 333

PIM. Issue no.14, Feb 2016 Feature

Investor Profile BY DOMINIC MWAKIFULEFULE

Renting vs Buying, Which is best for you?

FOR NEW GRADUATES, BUYING A HOUSE SEEMS A MAMMOTH TASK. Paying instalments for 10-15 years is deemed too much of a commitment. Sometimes the mere idea of affording to move out of your parents’ house is more alluring than having to wait a six month probation period at work and probably longer to qualify for a mortgage with your bank. So the natural inclination is to rent. This stage of life is the most crucial because the decisions made here determine whether you end up a tenant or landlord.

Renting allows one a great measure of freedom. It gives one the leeway to move if they simply don’t like the house or area they live in. For those with other binding costs like caring for dependent, this is simply the most convenient as there is some flexibility is getting some affordable low cost options which allows for more expendable income in the short term. No maintenance costs are involved when you are a tenant. Most lease contracts oblige the landlord to put these costs on their account which saves the tenant more money. In comparison to buying property, there are also very little start-up costs involved

when moving into a house for rent. Paying a security deposit for instance is usually not as pricey as making a down payment for a house which at times can be up to 20% of the property’s value. It’s clear that renting is a system that is not designed to tie one down because all the costs are short term and can be tailored to one’s immediate needs and wants. This can be the difference between you getting that better job offer in another town or having to let it go because there are mortgage payments to maintain. With rented properties, you just serve your landlord with notice (usually a month or two) before you are freed of your obligations as a tenant. In as much as this can serve you better momentarily, the fact is shelter is a basic human need that is listed alongside food and water. Eventually, even if one rents all the beautiful properties available for rent in a lifetime, there will always be there tormenting feeling to find a place they can call their own. Owning a home has been likened to taking care of a baby because a house has needs. Where to get the funds depends on your financial standing (employee, business owner) which qualifies you for the credit amount and even after qualifying for credit, you still have to find the right house, in the right area for right cost. There is no fixed manual that has been written about buying a house just like there is no manual for raising babies. A justified comparison but in practice, there are universal costs that every home owner bears and if you decide to use a third party to help acquire property, there are not just bank fees, down payment to the bank, property taxes and conveyancing fees to take note of but also estate agent fees. There is no mincing words about it, initial costs for buying a house are high.

However, owning a house offers long term benefits of security, equity and potential growth in personal wealth. Property generally appreciates in value over time. This is one of the few investments that do this. Depending on where you chose to buy a house, this appreciation in value can be exponential. A home grown example is the property owners in the satellite city of Kigamboni. Once an undesirable place to live because of the ferry crossing and lack of basic amenities, Kigamboni was home to the lowly and students looking for cheap accommodation. In just a decade, houses have more than doubled in value. This is why it’s always advisable to find out the plans for development that your regional governments have for the area you are planning to buy. What may look like a cheap wasteland when you buy can in a few short years be a coveted choice to live and buy property. Look out for plans to build roads, schools, basic amenities like water, sewage and possibly a shopping centre. Buying property empowers the owner tremendously with creative control. A home owner, equipped with an imagination can turn their property into a haven. Owning a home also gives one other forms of control, like the option to own to rent. Having a tenant can help pay mortgage payments effortlessly. It can also help the owner with an extra budget to expand the home or turn it into a multiresidential house to maximize profits. The key word is control because with a landlord, the possibilities are endless.

The Role of CRDB Bank in Promoting Mortgage Market in Tanzania Overview on CRDB BANK mortgage product - Jijenge CRDB Bank started giving mortgage loans branded “Jijenge” in July 2013 in order to facilitate acquisition of affordable quality houses through purchase, construction and refinancing. The loans are long term in nature up to 25 years hence constituting long term assets for banks and investors. Main objective of CRDB Bank is to maximize shareholders-wealth by providing banking services, including loans for various purposes. Through our financial intermediation functions, we create long term relationships with savers and investors.

Mortgage target market and advantages The mortgage (residential house financing) product targets potential borrowers including formally employed residents, self-employed, entrepreneurs and the diaspora who operate accounts with CRDB Bank. Affordable housing can provide wide range of benefits to families, communities and contribute to the overall economic well being. Among the benefits of mortgage financing include the following: a) Mortgage finance makes it possible for people to acquire decent housing within their early years of employment (or work life) as they have the option to repay in affordable installments over a long time. b) The mortgage finance creates employment directly and indirectly particularly in the construction industry and indirectly in other related sectors and value chains. c) Mortgage financing also opens opportunities for financial institutions to diversify their investments while at the same time paving an avenue for securitization and secondary market trading of mortgages. d) Housing as a basic need enhances security and healthy well-being of the society especially if the housing schemes are properly coordinated to give access to sanitation, schools and healthcare as opposed to slums. e) Mortgage financing may enhance remittances from the Diaspora in search for housing investments at home, and also inculcate a culture of domestic savings and long-term wealth creation.

CRDB BANK Mortgage Loan features: Depending on unique requirements and borrowers’ needs, the Bank offers Mortgage loans for the purpose of acquiring, improving, or constructing residential properties and plots, secured by the acquired, improved or constructed residential property. The loans are offered to customers aged between 25 to 70 years. Properties to be financed are those within Tanzania mainland in surveyed areas with title deeds. Our mortgage product offering includes: a) Individual loans up to TZS 500m, repayable on monthly, quarterly, semi-annual installments for a period of 20 years, and balloon payment. b) Special schemes tailored to suit groups of borrowers with common needs such as plots. c) Affordable interest rates. d) Options for accelerated repayments without prepayment penalties e) Mortgage Protection Insurance Cover against death and permanent disability.

Role of CRDB Bank in various real estate projects CRDB Bank has been involved in various projects, including ﬁnancing of real estate developers such as NHC and individuals in the construction and acquisition of homes. So far the Bank has signed memorandum of understanding with various developers to facilitate provision of mortgage loans to would be buyers of their houses. These companies are National Housing Corporation (NHC), PSPF, Joinven Investments (Jangwani Seabreeze Project) and AVIC Coastland Development Ltd. The Bank is also underway to sign similar agreements with Tanzania Buildings Agency (TBA), Watumishi Housing Company (WHC) and Hifadhi Builders (Dege Eco Village).

In 2014 the Bank’s real estate portfolio was TZS 64.8 billion out of 2.54 trillion of the total loan portfolios. As the construction industry grows the Bank has also experienced increased demand, for this year 2015 the Bank has recorded the increase in portfolio up to TZS 119.2 billion in real estate out of 3.1trillion which is a total loan portfolio as at 31st October, 2015. The rates charged by the Bank in real estate projects provide more favorable environment for customers and/or industry key players to raise investment capital. The aim here is to see people fulfilling their dreams of owning better housing and help developers in their effort of establishing commercial or residential areas that will help boost the economy of the country at large. In cognizance of the demand for surveyed plots by majority of Tanzanians, the Bank also signed memorandum of understanding with various companies dealing with town planning and Land surveying, namely ArdhiPlan (having projects in various areas countrywide), CityPlan (having project at Pongwe- Tanga), Tanzania Remix Center (having project at Chanika-Ilala) and Conreeb (with projects in Singida and Kahama). CRDB Bank has been playing a crucial role in the financing of real estate through mortgage financing. The Bank has been financing purchase of land for development and purchase of buildings and construction projects. The Bank has planned to increase the volume of business in the real estate sector through:a) b) c) d) e)

Financing of housing projects carried out by developers Continue granting mortgage loans to home buyers Financing purchase of plots for residential housing Financing construction of houses by individuals Financing refurbishment and remodeling of residential houses

The future of mortgage market The mortgage market in Tanzania has been growing steadily as the pace of housing investment picks up. Factors attributed to this increase include favorable interest rates, increased awareness on mortgage loans among borrowers, public awareness campaign by banks and the NHC, as well as the launch of mortgage loan refinancing facility by Tanzania Mortgage Refinancing Company (TMRC). The future of mortgage market is very promising given the economic prospects ushering a rapid growth in employment and income, as well as increasing investments in housing development led by National Housing Corporation (NHC). For instance, Public Servants Housing Scheme (PSHS) only is expected to build 50,000 affordable houses in the next 5 years and these will sharply add to the supply of mortgages in the market. Most Pensions funds are also actively engaged in granting mortgage loans to their members, something which further boosts the demand side of the mortgage market in Tanzania.

Challenges of the Mortgage Market The following are challenges facing the mortgage market in Tanzania: a) Inadequate affordable housing supply especially in major towns. b) Access to long-term funds which limits availability of financing. c) High interest rate in the market. d) Low level of incomes for the majority of Tanzanians e) Complicated legislation for land titling and registration f) High cost of houses exacerbated by high taxation of the same g) Lack of property price indices and a lack of information on the property market which hinder mortgage valuations. h) Lack of knowledge of the mortgage product and financial illiteracy i) Absence of Real Estate Regulatory Authority to control over-pricing of properties in the market.

Why choose CRDB Bank Jijenge facility CRDB Bank’s Jijenge offers a comprehensive range of mortgage products through its branch network. The Bank has experienced and dedicated team of staff to provide technical advice on matters related to mortgage financing including selection of property, insurance, property locations and well structured loan repayment terms. In addition, our mortgage products are competitive, in terms of: a) b) c) d) e)

Range of products to suit individuals and special schemes. Flexible repayments options from monthly installments to balloon payments. Formal arrangement with reputable developers to ensure availability of quality properties. Aﬀordable and competitive interest rates. Mortgage Protection Insurance Cover against death and permanent disability.

Your search for the best

Home Loan in town ends here!

CRDB Bank offers a complete and comprehensive basket of home loan solutions which are tailored to suit individual needs of our clients. Jijenge offer you simple and convenient access to the finest range of housing finance to help you build or buy your dream house. So, whether you are salaried or self employed individual, you can take advantage of our mortgage financing. Our high loan amounts, competitive interest rates, life insurance and quick processing are designed to ensure peace of mind throughout the process. Inquire about Jijenge today and discover how we can help you build a better life.

PIM. Issue no.14, Feb 2016

Technology

Upfront

High Tech Homes gets Smarter The automated and connected home of tomorrow is now here. It’s only a matter of time before millions become accustomed it.

BY EMELDA MWAMANGA

Smart garages You can also control your garage doors from your Apple or Android phone these days. There are plenty of benefits – the obvious one being that you can open your doors without leaving your car. But, regarding home security, you can open them remotely, too. That means you won’t have to leave your keys stashed away in a flowerpot if anyone needs access to the garage while you are away.

The burglar alarm

In the near future, people will be going home every day to the sound of the porch CCTV camera, whirring around to capture whoever is at the front door. Soon, smart door locks and motion sensors will be staples for home security. Smart television sets will be able to easily record videos and photos for direct upload on the Internet. Smart refrigerators can keep health-conscious people on strict diets and even schedule payments for missing groceries. With the promise of Internet-connected homes and appliances is the promise of convenience and usability. However, this also opens a vast array of possibilities for cyber criminals, because wherever money and mass appeal is, they're sure to follow. Home security has always been a big issue, and these days many households are turning to technology to keep their living space safe. We’re going to take a look at some of the amazing options you have when it comes to protecting your home from intruders.

Smart doors The Internet of Everything is slowly starting to make an impression on all of our lives. And, one of the best examples is the smart door lock. It uses Blue-tooth technology to detect your presence, either from your smart-phone or a specially built key fob. Not only that but the most advanced smart doors will also talk to the rest of your house. So, when you leave every morning or go away on holiday, it can tell your heating to turn itself off, or turn on your lights every now and again.

OK, so the simple burglar alarm may not be the most modern piece of tech on this list, but it’s still one of the most important. In fact, having a burglar alarm system installed increases the safety of your home by almost 80%. It’s a visual and psychological deterrent that the vast majority of thieves won’t mess with. And, it acts as the centrepiece for all your other home security devices. Get one before you get anything else is our advice!

Remote viewing Remote viewing is really catching on these days; It lets you keep tabs on what is happening at your home whenever you are away. You can you check in and see if everything is safe while you are on holiday, which will give you a lot of reassurances. And, it’s also great for making sure your home child care is working out properly. You get real-time images and video sent to your laptop or desktop, and you can even send intruder alerts to the security company.

Automated home systems Last of all, something that can tie everything together. A complete home automation system can help you control everything from a computer or tablet screen, wherever you are in the world. You can make sure everything is locked, turn on lights at random times, and move cameras around to look for suspicious signs. The one thing we would say about these systems is that they can be quite addictive! Moving those security cameras around can become a habit, and an enormous time drain. You will need to be careful not to become an obsessive.

PIM. Issue no.14, Feb 2016 Upfront

Architect

This Conceptual Design Reinvents Power Plants as Mixed-Use Megastructures What if a power plant could also be a home, an office, or even a park? That is the question behind Cypher CO2ling Plant, a conceptual design developed by Kawan Golmohamadi, Shilan Golmohamadi, and Soad Moarefi. Power plants are a ubiquitous and inevitable byproduct of modern lifestyles, but they are typically located in remote areas, far from where the power is actually needed, due to their unsightly appearance and the emissions associated with combustion-fueled energy generation. Cypher CO2ling Plant proposes an alternative scenario that utilizes the infrastructure of the power plant’s cooling towers to support mixed-use development, while also mitigating the less desirable aspects of energy generation. All thermal power plants generate waste heat that must be rejected to allow effective operation. At many large plants, heat rejection is handled through large cooling towers using evaporative cooling. Massive concrete hyperboloid cooling towers form the backbone of the Cypher CO2ling Plant proposal. These towers can be as large as 200 meters high, approximately as tall as a 60-story

building, and since their function is purely dedicated to exhausting waste heat, they are physically separated from the actual power generation. The design team envisions their proposal as an innovative and sustainable solution, integrating previously undesirable elements into a functional, mixed-use urban setting with abundant green space, and capitalizing on the resulting efficiencies. Power generation continues to be a controversial and challenging subject, with pollutants and greenhouse gases generated by fossil-fuel combustion, safety concerns surrounding nuclear energy, and the comparatively high first-costs of renewables. Although the designers may not have fully addressed the inherent environmental problems of fossil-fuel power generation, especially greenhouse gas emissions and particulate air pollution, the Cypher CO2ling Plant proposal presents a compelling model of combining disparate functions with synergistic results–a model that will find increasing relevance in our rapidly urbanizing world.

The ultimate in luxury and Style

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Will house prices rise or fall? Will the government implement changes to the super system? And will customer continue with the trend of buying houses with a blank cheque and inflect the property prices as they used to do in previous years? With prospective buyers and sellers- more clued –up about property than ever before, agents need to stay one step ahead.

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Dar es Salaam, Tanzania’s commercial capital and Africa’s fastest growing city, has a current population of about 4.3 million which is expected to quintuple to about 20 million by 2050. Housing price per square metre averages USD 1,200 in Dar Es Salaam versus USD 1,235 in Nairobi while the rent of one-bedroom apartment in the city center is around USD 775.3 a month in Dar es Salaam versus USD 444.5 a month in Nairobi. The concept of absolute ownership of land is not recognized in Tanzania, where people have however the right to use and occupy the land in accordance with the approved use. Foreign companies and individuals wishing to have rights

The protectionist economy is opening up and connecting to the global market. Its vast geography covering over 945,000km², fast growing population of 49 million, and a rising middle class, make the country “quite exciting”. He notes the recent boom in Tanzania’s real estate market is synonymous with the growth story in most African economies. “I think that change is happening across the board from Kampala to Maputo, obviously at different speeds,

Will

anzanian Real Estate sector is experiencing a boom as both local and international investors stream into the country to cash in on the inadequate housing. The demand for affordable houses has continued to grow. For instance real estates and business services recorded a growth rate of 6.3% in 2012 a fast growing population of 53.47 million and that is expected to more than double by 2050. The Tanzanian housing demand has also been boosted by easier access to mortgages, with the number of mortgage lenders in the market increasing from 3 in 2009 to 21 in 2015 and the average mortgage interest rate in Tanzania falling from 22% to 16%. The current demand for housing in Tanzania is estimated at 200,000 houses annually, and a total housing shortage of 3 million houses, as explained Nehemiah Kyando Mchechu, Director General of Tanzania’s National Housing Corporation (NHC), the Government’s company established to undertake an array of business in real estate.

Mr. Suleimanji Lamudi Managing Director

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2016 What lies ahead in real estate industry?

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PIM. Issue no.14, Feb 2016

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to occupy and use land can only do so by acquiring derivative rights, applying to the Tanzania Investment Centre (TIC) or to landowners who have been granted right of occupancy.

The growth: The growth rate is attributed to increase in the overall weighted index of business services, rented dwellings and owner occupied dwellings. For the past five years we have seen few cities in Tanzania are mushrooming and commercialized into modern cities. Old houses have been demolished and new sky scrappers have been introduced. More international companies have been opened and occupy most of these spaces, paying lots of money for rent. Among the cities that we have experience massive growth include Arusha, Mwanza and Dar Es salaam.

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Lamudi is an online real estate marketplace where owners and agents list their property for rent or for sale. Mustafa Suleimanji, Lamudi’s managing director for Tanzania, Zimbabwe, Zambia and Mozambique, says the increasing appetite for real estate in Tanzania is partly driven by a thriving agricultural industry and recent oil and gas discoveries that have led to an influx of expatriates into the country. Trade is also a key driver, he says. Traders come from as far as Zambia, Nigeria, Congo and Mozambique to buy goods. Local wholesalers and distributors have made economic gains, especially at the bustling Kariakoo Market – Dar es Salaam’s busiest market – known to sell everything from food, to fashion, to agricultural equipment.

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Increase in the purchase of apartments

The construction of new expansive roads has also heightened interest in real estate. “In Dar es Salaam there is a huge increase in the purchase of apartments. People are buying three-bedroom apartments going for US$250,000 and then renting them out,” says Suleimanji. “Before you could rent a three-bedroom furnished apartment for $3,000, but now it’s even down to $1,500 because there are a lot of people who have made money in farming, hardware trade and consumer goods who are buying apartments [and then renting it out].” Says the Priority Property director, Mr. Moumin Samater. Many people thought that after the election of the new government in 2015. The business of properties would go down, but with our experience, there have been a lot more house inquiries. Companies and individuals have been buying a lot of properties lately. He says.

The following are trends we see a lot in the property industry;

On the seventh floor of Diamond Plaza, one of the new commercial buildings in Dar es Salaam, an IT company is setting up new offices. On the ground floor of this eight-storey building, the US restaurant chains Subway and KFC have already set up shop alongside Black Tomato, a homegrown coffee house.

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Foreign investors are growingly becoming interested by real estate plays in a market. The demand for affordable housing is high as a result of the rising population. High rise structures are increasing every other day. Rents are expected to be steady because most structures in the pipeline fall short of major tenants. Real estate developers are targeting more on building grade A houses focusing on expatriates whose market is saturated. Rural urban migration as people search for jobs and better opportunities continues to pile pressure on the housing sector.

“In Dar es Salaam there is a huge increase in the purchase of apartments,” says Mustafa Suleimanji, managing director for Lamudi in Tanzania, Zimbabwe, Zambia and Mozambique. This is one of the recently completed commercial projects in Dar es Salaam, where the real estate industry is taking off. At the heart of the city stand other recently constructed buildings, including the 37-storey PSPF Commercial Twin Towers, the 22-storey Viva Towers, and the 25-storey commercial and residential building called Uhuru Heights.

Investment opportunities in the sector

And beyond office buildings, shopping centers too are rising, as well as residential apartments. This evident boom in the property market is part of the reason why global property portal such as Lamudi launched in Tanzania.

•

The current development projects that are under way as well as those that are being planned have created opportunities for interested investors. Development of retail, industrial and residential spaces as well. Provision of mortgage finance

PIM. Issue no.14, Feb 2016 Feature

Cover Story

Challenges in real estate sector • • • • • •

Introduction of VAT on sale of properties Lack of enough developers leading to short supply of affordable houses. High costs of transfer and delays in the process of sale of some houses Poor statistics affecting growth of domestic real estate sector Facing acute shortage of houses as the population in urban areas increase The supply of high end and middle level residential units in the country is limited, estimated at between around 6,000 and 8,000.

Apartments sold even before building begins. “There is a developer I met when we first started Lamudi, and back then he only had two buildings. We got him on board and now he has 18. And all his apartments are sold before he breaks ground,” Suleimanji notes. Although “Tanzania is a slower giant”, Suleimanji says the protectionist economy is opening up and connecting to the global market. Its vast geography covering over 945,000km², fast growing population of 49 million, and a rising middle class, make the country “quite exciting”. He notes the recent boom in Tanzania’s real estate market is synonymous with the growth story in most African economies. “I think that change is happening across the board from Kampala to Maputo, obviously at different speeds,” he says.

Demand and Supply of houses

Will the governme nt im ple me nt ch an ge s

to er up es th ? tem sys

Outside Dar es Salaam, Lamudi has seen the most demand for its services in the Mwanza, Arusha and Mbeya regions. The lake district of Mwanza, which lies on the southern shore of Lake Victoria, is known for cotton farming, fisheries and smallholder agriculture. The country’s southwest region Mbeya has thriving agriculture, mining, and trade sectors, while Arusha (located in the north-eastern corner of Tanzania) is doing well in coffee farming and tourism.

Tanzania Housing Demand And Supply: Shortage Of 3 Million Houses According to the National Housing Corporation (NHC), the largest – state-owned – real estate developer established to support the growth in Tanzania’s property market, Tanzania’s housing demand is estimated at 200,000 houses annually, which represents 7.83% of the African daily housing demand. This results in a current housing shortage in Tanzania of 3 million houses. Tanzania Housing Demand: A Fast Growing And Young Population Moving To Urban Centers The Tanzanian housing sector’s fast-growing demand is mainly driven by the fast-growing Tanzanian population which is estimates to be 53.47 million and that is expected to more than double by 2050 while increasing its growing rate from the current 1.56 million per year to 2.98 million per year in 2025 according to the United Nations (UN). Tanzania has a predominantly rural population with only 31% of the population urbanized, but the country’s rapid urbanization rate estimated at 5.39% in the period 2013/2014 and above the average of 3.9% for African cities in the last decade, constitutes the main factor driving development of the real estate sector in the country, mostly focused on the commercial capital Dar es Salaam, but also on other major urban centers such as Mwanza, Arusha and Mbeya, due to growth in agriculture, mining and tourism sectors. In addition, Tanzania counts with one of the youngest population in the world with

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Construction policy of 2003

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Policy is to develop an internationally competitive industry that can undertake most of the construction projects in Tanzania and export its services and products more especially in Real Estate Sector.

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ion

Goals of the policy

Local contractors and consultants constitute 95% of the total number of registered construction industry firms. This has mainly contributed to the growth in the local development of the sector though the capacity is still not enough.

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Mortgage lending is the primary mechanism used in Tanzania to finance private ownership of residential and commercial property. Development of real estate sector has now become evident in many urban centres in Tanzania through using the mortgage finances.

Local firms

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Mortgage

• To develop an internationally competitive industry that will be able to undertake most of the construction projects in Tanzania • To ensure value for money to industry clients as well as environmental responsibility in the implementation of Construction projects.

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an average age of 17.3 years which is expected to increase to 22.2 years by 2050 and that represents a high potential growth for Tanzania’s real estate sector as this segment of the population is the largest borrowers in the country. This young and fast growing population represents most of the Tanzanian housing demand through either commercial loans to develop their own properties, or mortgage finance to acquire already built projects.

Mr. Moumin Samater Priority Property Director Many people thought that after the election of the new government in 2015. The business of properties would go down, but with our experience, there have been a lot more house inquiries. Companies and individuals have been buying a lot of properties lately.

Stability Will

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Tanzania is politically stable and real estate developers are enjoying a steadily growing economy.

se s

ice

Dar es Salaam, the largest city in Tanzania is growing fast as people move from the countryside to seek a better future hence making the demand for the houses. The population of Dar es Salaam is increasing at a rate of 4.39% each year making it the 3rd fastest growing city in Africa.

Urban Population growth

ris

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PIM. Issue no.14, Feb 2016 Feature

Real Estate

Rise In Online House Sales

BY GLORIA KOROSSO

The house hunting game has really changed over the last 10 years. It used to be that searching for a new property was a weekend job, but now people are looking for a new home during their lunch break, late at night, and even on holiday! In fact, recent stats showed that one popular property portal received over one million visitors on Christmas day! The increasing use of technology within the property market has had a huge impact on the property sector and, in reality, completely transformed the way the whole industry works.”

Top Tips for Selling your House Online If you’re keen to sell your property, finding a buyer online is your best chance of securing a sale. There are a few steps you can take to maximize your chances of achieving a quick house sale, these include:

Invest in your photography and make sure the images taken show your property off to its very best. Thoroughly declutter before the photographs are taken in order to show the size of your rooms.

t’s now estimated that more than 90 percent of house hunters go online to search for their new property. Online property portals are massively popular, which is largely due to the convenience of being able to find a property from your sofa. In days gone by, potential buyers would have to spend their Saturdays traipsing round the local estate agents’ offices trying to find suitable properties, but now they can search for a new year anytime and anywhere.

Get a floor plan made and uploaded with your property listing. Some estate agents charge more for this service, but it’s worth paying the extra to help potential buys get a feel for the layout of your property and how it might work for the,.

Make your property description as thorough as possible; include room measurements, and particularly desirable features and any scope for development. The more information you can give potential buyers, the better informed they will be before arranging a visit. You don’t want to waste your time getting the house ready for the viewing if the property is definitely not going to be right for the person coming to see it. The more information you give, the more likely it is that your viewings will turn into a sale.

BOKOTMIZA ESTATE KIBAHA Bokotimiza Estate is a Property International project located in Kibaha Maili Moja which is 30 kilometers from Dar-es-salaam Central Business District and 6.5 kilometers from the main road to Morogoro. It is made up of 354 residential, commercial, hotel, religious, hospital, school and open public plots with a road network coverage of 9 kilometers. Water supply and electricity are available within the project. Tumbi hospital is just a walking distance away.

Tsh. 12,000/= PER SQM

0684 633 333

P. O. Box 45548 | 8th Floor Mariam Tower, Songea Road / ShauriMoyo Road Dar es Salaam, Tanzania E mail: info@propertyinternationalltd.com

www.propertyinternationalltd.com

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PIM. Issue no.14, Feb 2016 Feature

Tips

BY GLORIA KOROSSO

Renovation Rock Stars

hey don’t call it renovation hell for nothing. Cost overruns, endless waits for those Italian tiles you’ve chosen, the structural wall that you pulled down yourself to save money and now you need an army of tradespeople and a sympathetic bank manager to come in and save you. Don’t worry. It doesn’t have to be this way. Three experts share their tips on how to avoid renovation hell, complete with the stories about those who have learnt the hard way.

Anita - Interior Designer

Hottest trend ? WALLPAPER! Its the single most effective way to change a rooms decor, by simply applying paper to wall, an elegant design is instantly present in your home / office. Top tip? Work out your budget and where to put the money to get the best back out of it. It’s honing in on how you want to live and how best to spend the money to make it work for you.

Biggest renovation disaster? I have had a couple of renovation disasters over the years, especially at my house where i try every interesting trick i can see over the internet, but there is once back then when i went to visit a good friend at the time, I decided I'd "surprise” her with my new interest in interior designing. so when she went out of town one weekend i decided on a quickie bathroom makeover, one that I expected to take about 8 hours of work total, just stripping off old, already peeling wallpaper and then painting the walls white…., yeah, well, turns out the bathroom had been wallpapered EIGHT times and each time new paper was just slapped on top of the old. It took me 16 hours (there was only about 50 square feet of wall to work on) just to strip the paper and the only way I could do it was to soak bath towels in warm water and completely wet the wallpaper to be able to peel it off. Sadly, I was not done peeling off the wallpapers by the time she got home

Perfect client? A perfect client for me would be someone who already knows what they want! we try to make our clients dream a reality! but first we need a glimpse of their dream. Worst client? Well, the worst client we have come across is this one man that had approved all the artwork and later on, in the middle of the project decides, he has seen something better and alters the whole design. But, we still love all our clients. Biggest budget overrun? It would be at my own home, i wanted to make it like my own little palace, little did i know that it would go over 35%. We are located at Shop No: 3, First Floor, Swahili Plaza, Swahili & Narung’ombe St. Kariakoo, Dar es Salaam. contacts us on : +255769111665 Info@classicrealestates.com www.classicrealestates.co.tz

Top tip for a successful project? Good planning. Biggest renovation disaster? It’s non that I have done but, I once witnessed a couple who were trying to renovate their house without any plans. They took down supporting wall and didn’t put structural beam in so everything was falling. Everything they did was beyond building code so the house ended up to be very dangerous and they couldn’t sell it. Isaac Samweli - Architecture/ Designer Hottest Trend in renovating? I see many people looking to reupholster their furniture instead of buying new,’ especially if they know the quality of their existing furniture is better than a lot of the furniture they see In stores. People are more aware today of the environmental impact a throw away society can have.

Perfect client? I don’t think I’d design for anyone who didn’t have faith in me to begin with. I’ve been really lucky in that everyone I’ve worked with has given me free rein to come up with ideas that they feel will suit them. Worst client? I’ve had some clients who don’t know when to let go, which is always tough. They’re control freaks and they don’t know

done and having it pre-coasted before it goes to the builder, so there are no rude shocks. You need to get all the drawings casted as you go along. And employ professional people to do the design and engineering work. The more decisions you make up front, the easier the construction process. It’s all about lead times. You can’t walk into a shop and say I want marble tiles and expect them to be in stock. It can be a 12-week lead-time.

Shempemba Elbariki - Architecture Hottest trend? LED lighting, which was prohibitively expensive, is really affordable now; people are using for under cabinet lights as well as their recessed can lights. It’s very nice and comes in a lot of color temperature. Top tip? Lots of pre-planning, at least a year out. I had someone come to me last week who wanted to settle on a property in six weeks and wondered whether the builder could start then. It just doesn’t happen that way. It comes down to getting all the design work

Perfect client? Someone that leave the consultant or architect to design the work without any interference and comments on the output, someone who is on the same page as me, someone who sees value in paying the architectural fee and invests in an architect’s skill base. You give more as an architect if there’s an emotional commitment to the job. And that client understands what you’re doing. Also someone who pays their bills on time. Worst client? Is a person who does not know their role, these types of clients wanted to be both the client and consultants.

when to trust a professional. Design these days is as much about psychology as it is about design. You’ve got to manage their expectations. You’ve got to underpromise and over-deliver. And you’ve got to constantly make them feel like they’re the ones leading you down the path rather than the other way round. Biggest budget overrun? Probably 40 per cent. Most common renovation mistake people make? They simply don’t plan. When you don’t plan you wind up going over budget, you start one trade before another one’s finished so all the trades are overlapping each other. Good planning will save you money and deliver a more accurate, precise design and, ultimately, a better return on investment. Mkwepu Street Opp TWB, Exporter Building 2nd foloor, plot no. 204, jordan884@btinternet.com

Biggest budget overrun? Projects generally don’t go over budget because we have them carefully costplanned. We don’t do a job – big or small – without using an independent cost planner. We’ve done many projects and I can’t remember one that’s really raced away. Anything that has surprised you? I understand that most people build from their own resources, the biggest mistake people make is when, they start by saying they don’t have money it really demoralizes the contractor therefore it is okay to build on a budget. However it is not good to wait on a contractor to give you a certain budget for a bigger plan that you once agreed on, only to decline at a time of implementation. Biggest mistake that people make? There are so many. It’s a mistake to think you can probably live through it. You can’t. Better to get out of the house. People don’t often understand how much work there needs to be on infrastructure to make it work. Shemita Architects, 0757 973110, 0713 436542, shemitaarchitects@yahoo.com

PIM. Issue no.14, Feb 2016

Legal Help Desk

Feature

How do attorneys manage your property deposits? Attorneys hold your money in trust while waiting for the bond registration and transfer of the property.

Find out what happens to the deposit that you've given to your attorney when buying a property, and why the money is necessary.

There are three types of trust money, covered by legislation: •

The first two types are for funds that are held in trust, together with other client's funds. These funds are held in a current or an investment account and the interest accrues to the Attorneys Fidelity Fund and not to the individual clients.

via this computer linked system. The efficiency of the system meant that the banks could pay more competitive interest rates on the deposits and also have very competitive fee structures. Attorneys throughout the country use these systems to manage their client's deposits, so when you enter into a property transaction, check with your conveyance attorney:

•

The third type is where an attorney opens an individual bank account in the name of the individual client and the interest accrues to that client.

•

Whether they are using an efficient system to manage your deposit to ensure a speedy resolution of the property transaction?

•

Whether they are depositing your funds at a competitive interest rate?

•

Whether the interest earned on that account would accrue to you?

In earlier days, when individual accounts were required, attorneys used to open multiple accounts at the various banks, by either physically visiting the bank or faxing the relevant information to the bank to open the accounts. This process was administratively cumbersome and very inefficient. Each account was also managed individually by the bank and often the interest rate paid on each deposit was accordingly low. Since 1988, when one of the banks introduced a computer system, linking attorneys and the banks, this process has been enhanced and has grown from strength to strength, enabling attorneys to open and manage client accounts more efficiently

• What fees are the banks levying on your account? If you have any questions on the trust fund process, please discuss them with your attorney.

Next Issue

Meet Hazel Chonya Property International Legal Officer Topic: Power of Attorney

LIPIA 20% YA THAMANI YA KIWANJA

ARDHI NI MTAJI, MILIKI ARDHI LEO UTIMIZE MALENGO YAKO Mradi wa african palm upo km 27 kutoka ferry na km 12 kutoka katika daraja jipya la Kigamboni ni viwanja vilivyopimwa vyenye hati miliki. Eneo lipo katika mandhari ya kifahari na mvuto wa kipekee lenye maji, umeme na barabara. Viwanja vinapatikana kwa mkopo. Unahitaji kulipia asilimia 20 tu (20%), usipitwe na nafasi hii ya kipekee.

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Residential Plots Commercial Residential Plots Sold

Tsh. 20,000/= kwa mita ya mraba

PIM. Issue no.14, Feb 2016

LOOKING FOR A POTENTIAL INVESTOR IN SCHOOL DEVELOPMENT

VIKURUTI Estate is a Property International Ltd estate project located in Mlandizi some 50 kilometers from Dar-es-salaam and 6.5 kilometers from the Dar-es-salaam-Morogoro highway. Property International Limited has an exclusive site for Primary School Development. The Company is now seeking a development partner to take up this noble project. Interested investors can now speak to George, our Educational Projects Expert.

+255 787 129 983 40â&#x20AC;&#x201A;

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PIM. Issue no.14, Feb 2016

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PIM. Issue no.14, Feb 2016 Feature

Floating Homes

Floating Ho T

anzania is one among few countries, which are highly surrounded by water. We are surrounded by Indian Ocean, lake Victoria, lake Nyasa, lake Tanganyika, to name just a few. The idea of constructing floating homes will be one of the best in just near future.

Pemba

Flooding is a natural function of rivers. Sea levels are predicted to rise. There are two types of floating homes, permanently floating homes and homes that float only when flood waters swell, but sit on the ground during the dry season. Requiring the later on new construction within floodplains, and considering same for threatened shorelines, is one way to plan for the future. Although floating homes near the coast need protected waters, wave attenuation through wave walls and dykes (as used in Europe) are a future possibility. Inaction is costly.

Some inspiration for those on waterways. Exp. 1Lilypads: floating eco-cities. Each 50,000-person pad is a designed as a zero-emission floating community that uses solar, wind, tidal and biomass power to generate energy for its inhabitants. –

South Africa

2 Floating Hotel -- The connecting bridge is planted with trees, giving the impression of land projecting into the sea. Designed by the Giancarlo Zema Design Group for an Arabian commission 3: Netherlands -- ‘New Water‘ will be the world’s first floating apartment complex, The Citadel. They will use 25% less energy than a conventional building due to the use of water-cooling techniques. Architect: Water Studio – Holland. This is a two level home. The bedrooms and bathrooms are below sea level -

Nentherland

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PIM. Issue no.14, Feb 2016 Review

Books/Puzzles/Jokes

Must read!

"just the knowledge that a good bookis awaiting one at the end of a long day makes that day happier." Kathleen Norris.

Your step-by-step guide to financial peace of mind!

How can you become financially secure with the resources at your disposal? What is the safest way to invest, and accumulate, money? And why is it never too late to start planning your financial well-being? Money plays a role in nearly every aspect of our lives, and yet very few of us know how to save, where to invest and how to avoid money troubles. This highly accessible book is aimed at anyone who wants to improve their financial situation, from the financial novice who needs clear basic guidelines on how to deal with money to those who are more financially savvy but want to supplement their knowledge. Covering a range of topics, from saving, investing, debt management, buying a house to blunders to avoid, Become Your Own Financial Advisor provides people of all ages and levels of wealth with practical information on how to improve their finances. And, in the process, proves that financial freedom is possible for everyone.

Legally avoid property Taxes

There is nothing illegal in avoiding tax, and this book sets out 51 top tips to enable you to keep more of your income from property. Legally Avoid Property Taxes is not a tax textbook, it is written in user-friendly, engaging jargon-free language by someone with over 30 years' tax experience, who brings fun to tax but above all who is a full-time property investor. The book is packed with practical examples and real life examples of where you could end up paying too much tax and what you can do to legally avoid it. It will also enable you, with the correct planning, to preserve the capital wealth that has either been created or arisen through price inflation. In the world of property taxation, the big five are: Income Tax, Capital Gains Tax, Inheritance Tax, Corporation Tax, and Stamp Duty Land Tax. Iain Wallis's handy new book helps readers avoid the big five, not stumble across them and then see a large tax bill! Whether you are taking the first steps on your property journey, whether you are a seasoned campaigner or whether you want to preserve the family wealth, this book is packed with tax tips and useful examples which will enable you to legally pay less tax, keep more of your property income, and increase your wealth.

House builder bibble

Whether you’re a first-time selfbuilder or seasoned professional, this book tells you how to succeed at housebuilding. It explains everything you need to know about managing a build, buying and using materials, finding and employing the right people – and doing it all without the pitfalls. Previous editions have won huge praise. ‘It contains all the things the trade know and take for granted, but that non-trade wouldn’t know,’ said one reader. Another wrote: ‘This is a fantastic book for anyone who wants to understand the options when building or improving a property.’ Written in a highly readable style this eleventh edition is fully updated and comes complete with tables for costing your building project.

Making money out of property:

Jason Lee, Making Money out of Property in South Africa Specialist property investor and businessman Jason Lee’s bestselling book, “Making Money out of Property in South Africa”, has been recently revised and updated to include the latest information on tax issues related to the property market, the provisions of the new Companies Act and the new Consumer Protection Act, as well as advice on how to invest in commercial property and how to buy property on auction. Lee’s property guide, which sold more than 50.000 copies since publishing, focuses on the professionals’ bestkept secrets, offering step by step procedures and advice for any first time property purchaser and even more experienced investors. Its local market flavour, capturing storytelling and down-to-earth practicability make this property guide an essential compendium for the South African investor.

www.azaniabank.co.tz

• Masdo House.Tel: 022 2117998-9, 2118025-6, 2121911 Kariakoo, Tel: 022 2184635 • Mwenge, Tel: 022 2773830, 2774031/2 • Mawasiliano Towers, Tel: 022 2412030/3/4 • Tegeta, Tel: 022 2630427/9 • Mwanza - Mwaloni, Tel: 028 2541753 • Nkrumah, Tel: 250 1107/11/38, Rwagasore, Tel: 028 250 0248 • Mbauda - Arusha, Tel: 027 254 7105/6, 254 6712/3 • Shinyanga - Kahama, Tel: 028 271 0924, Kagongwa, Tel: 0737 201 771 271 0797, 271 0128 Moshi, Tel: 027 2754561 • Arusha city, Tel: 022 2773830, 2774031/32 • Geita, Tel: 028 252 0204-5 • Geita - Katoro, Tel: 0737 199 763 • Simiyu - Lamadi, Tel: 028 2622738/9 • Tunduma - Mbeya, Tel: 025 253 0019, PO Box 357 Barua pepep: info@azaniabank.co.tz