Is 2025 a good time to buy real estate in Mozambique?

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Everything you need to know is included in our Mozambique Property Pack

Are you considering buying real estate in Mozambique? Are you wondering if now is a good time to make a move?

When it comes to market timing, people have varying opinions. The Mozambican real estate agent you know may suggest that it's currently a good time to buy property, but your childhood friend living in Maputo suggests waiting for a couple more months.

At TheAfricanvestor, when we create articles or update our pack of documents related to the real estate market in Mozambique, we base our analyses on factual data and statistics rather than opinions, minimizing biases and uncertainties.

We have thoroughly examined all the official reports and statistics available on government websites. Now, we have a comprehensive database of reliable information and we can help you determining whether it is currently advantageous to purchase real estate in Mozambique.

Dive in and enjoy!

How is the property market in Mozambique these days?

Mozambique is, as of now, a vulnerable and fragile country

Negative

Stability should be the first thing you look at when you want to invest in real estate because it ensures a supportive economic and social framework. It is an information you need as a foreigner who might buy a property in Mozambique.

Sadly, Mozambique is going through a period of great instability. The last Fragile State Index reported for this country is 92.5, which extremely low.

Mozambique is currently vulnerable and fragile due to ongoing conflicts with insurgent groups in the northern Cabo Delgado province, which have led to significant displacement and humanitarian crises. Additionally, the country faces economic challenges exacerbated by natural disasters like cyclones and floods, which strain its limited infrastructure and resources.

It does not seem to be the right time to buy a property in this country. Let's check more data.

Mozambique is forecasted to grow massively

Positive

Second thing to do before investing in Real Estate: evaluate the economic situation of the country.

According to the IMF, Mozambique is likely to finish 2024 with a growth rate of 5%, which is a robust number. Regarding 2025, the figure we're looking at is 5%.

It gets even more promising for the future: Mozambique's economy is expected to increase by 30.7% during the next 5 years, resulting in an average GDP growth rate of 6.1%.

The expected massive growth in Mozambique means there will likely be increased demand for housing and commercial spaces, driving up property values and rental income potential. This creates a promising opportunity for real estate investors to achieve significant returns on their investments.

That being said, there are other indicators to monitor.

Mozambican business owners are steadily increasing their trust in the economy

Positive

While the GDP growth is important for assessing the property market, it may not fully capture business community sentiments. Fortunately, in Mozambique there is a designated metric that is regularly reported. It's not the case for every country, so we're lucky.

The Business Consumer Index (BCI) is a metric that reflects the confidence of business leaders in both the current and future economic conditions. It's established using surveys and assessments.

According to the Instituto Nacional De Estatistica's data, the latest Business Confidence Index value is -1 for Mozambique. For interpretation, it's quite low.

If we look at the data, however, we can see some positive signs. It's going up: the BCI score, 12 months ago, was -13.

The minimal level of business confidence in Mozambique can lead to a stagnant property market. With a less optimistic economic outlook, investment may be restricted, resulting in slower property development. Consequently, buyers might experience a shortage of available properties and face challenges in finding quality real estate options.

Mozambique's population is growing but getting poorer

Negative

When it comes to buying real estate, population growth and GDP per capita play a significant role, because:

• a growing population means more people needing homes
• a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)

In Mozambique, the average GDP per capita has changed by -3.9% over the last 5 years. It's a bit concerning. However, the Mozambican population is growing (+18% in 5 years).

You'll get good rental yields in Mozambique

Positive

Let's now turn our attention to the rental yield.

It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Mozambique is purchased for 10,000,000 MZN and generates 500,000 MZN in annual rental income, the rental yield would be 5%.

According to Numbeo, rental properties in Mozambique offer gross rental yields ranging from 4.6% and 7.3%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Mozambique.

It's a good number.

Everything you need to know is included in our Mozambique Property Pack

In Mozambique, inflation is projected to remain minimal

Neutral

In two words, inflation is when prices escalate.

It's when your favorite plate of peri-peri chicken costs 400 Mozambican meticals instead of 350 Mozambican meticals a couple of years ago.

If you're considering investing in a property, high inflation can offer you several advantages:

• Property values have a tendency to increase over time, leading to potential capital appreciation.
• Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
• Inflation reduces the real value of debt, making mortgage payments more affordable.
• Real estate can act as a hedge against inflation, effectively preserving the value of the investment.
• Diversifying your portfolio with real estate provides stability during periods of inflation.
• Tax advantages, such as depreciation deductions, can help offset the impact of inflation.

According to the IMF's estimations, over the next 5 years, Mozambique will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.

This data means that Mozambique is expected to have near-zero inflation then. Unfortunately, buying a property now may not lead to significant price increases or high profits in the future.

Is it a good time to buy real estate in Mozambique then?

Time to conclude !

While Mozambique's economy is expected to grow significantly over the next few years, making it seem like an attractive time to invest in property, there are several factors that might make 2025 not the best time to buy. Firstly, Mozambique is currently a vulnerable and fragile country. This means that despite the promising economic forecasts, there are underlying issues that could pose risks to property investments. Political instability, infrastructure challenges, and other socio-economic factors could impact the real estate market negatively, making it a risky venture for potential buyers.

Moreover, the anticipated economic growth could lead to increased demand for housing and commercial spaces, which might drive up property values and rental income potential. While this sounds promising, it also means that property prices could become inflated, making it more expensive to buy in 2025. For investors, this could mean that the initial cost of purchasing property might outweigh the potential returns, especially if the market becomes overheated.

Another concern is that while Mozambique's population is growing, it is also getting poorer. This could lead to a situation where, despite the economic growth, the average Mozambican might not have the purchasing power to afford higher rents or property prices. This could limit the rental income potential for property investors, as they might struggle to find tenants who can afford the increased costs, thereby affecting the overall profitability of their investments.

Lastly, even though inflation in Mozambique is projected to remain minimal, the current rental yields, as reported by Numbeo, range from 4.6% to 7.3%. While these yields might seem attractive, they may not be sufficient to offset the risks associated with investing in a fragile and vulnerable market. Therefore, potential investors should carefully weigh these factors and consider whether the potential returns justify the risks involved in buying property in Mozambique in 2025.

We genuinely hope this article was useful!. If you need to know more, you can check our our pack of documents related to the real estate market in Mozambique.

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.