A real estate expert says Zambia’s property market is yet to fully reflect the recent Kwacha gains, as the impact of the stronger local currency has so far been more structural than visible in pricing.
Ngosa Nkandu told Money News in an interview that although the appreciation of the Kwacha against the US dollar has brought a measure of stability, property prices have largely remained unchanged, with high inventory levels still characterizing the market.
Mr. Nkandu attributed this to prevailing market conditions, including substantial property stock and sellers maintaining price levels in anticipation of future movements.
He said one of the most significant developments in the market has been the directive requiring goods and services in Zambia to be priced in local currency rather than in US dollars.
“I am sure you have heard of the directive where anything that is being sold in Zambia has to be priced in Kwacha, unlike the US dollar. So how that is helping, in my opinion, is that it is actually benefiting either the seller or the person that is renting out the property. As the Kwacha is gaining, you find whoever is pricing their properties in dollars, are losing to the one that is buying,” he noted.
Mr. Nkandu stated that in the property sector, this shift is altering how transactions are structured and who ultimately benefits from currency movements.
“The time that maybe a property was going for US$400,000, before the Kwacha gained, when it was at about K21 or K23 to a dollar somewhere there, if you do the same calculation of where it is today, at about K18, you would find that now the price has actually gone up for the person who is buying property.”
“When the Kwacha gains, someone pricing their property in dollars may effectively lose out compared to when the exchange rate was weaker,” Mr. Nkandu explained.
He said the same US$1 million that converted to about K20 million when the rate was K20, now translates to roughly K18 million at K18, representing a difference of nearly K2 million in purchasing power.
Mr. Nkandu explained that as a result, the appreciation of the local unit has reduced the Kwacha equivalent of foreign currency investments.
“This means diaspora buyers and foreign investors now receive fewer Kwacha for the same amount of dollars, slightly diminishing their immediate buying power in the local market. In contrast, the stronger currency is seen as more beneficial to local buyers whose incomes and savings are denominated in Kwacha,” Mr. Nkandu stated.
He highlighted that with properties now required to be priced in local currency, Zambian-based purchasers are shielded from sudden exchange rate fluctuations that previously drove up prices when the dollar strengthened.
“In the short term, a stronger Kwacha may discourage some investors because when they convert their dollars, they get less in local currency terms. But for long-term investors looking at capital appreciation and future exchange rate shifts, Zambia remains attractive,” he said.
Mr. Nkandu stressed that if the Kwacha was to weaken again in future, foreign investors who entered the market during a period of strength could potentially benefit from favourable currency movements.
