Botswana's economy contracted in 2025, with the Ministry of Finance estimating full-year GDP at -0.4% — the first contraction in a decade and a significant improvement on the -2.8% recorded in 2024. The decline reflects structurally weaker diamond revenues, fiscal tightening, and suppressed domestic demand, with the mining sector contracting 10.7% in the twelve months to September 2025. A more constructive signal comes from non-mining GDP, which grew 2.6% over the same period, reflecting underlying resilience in the broader economy. Q3 2025 returned a fractional +0.1% — the first positive quarter since Q1 2024 — suggesting a tentative floor. For 2026, forecasters are sharply divided: the Ministry of Finance projects a rebound to 3.1% and the Bank of Botswana/IMF to 2.3%, reflecting optimism around NDP 12 implementation and a moderate recovery in the mining sector. We regard these projections as premature. Continued structural weakness in diamond markets, constrained fiscal capacity, and insufficient non-mining substitution leave the near-term growth outlook more fragile than official projections imply. Our assessment aligns with the more cautious end of market commentary — projecting a continued contraction in the range of -0.5% to -1% for 2026, with a credible recovery remaining contingent on sustained diversification progress and stabilisation of the global diamond market.

The Bank of Botswana maintained the Monetary Policy Rate at 1.9% through the first four MPC meetings of 2025, before raising it by 160 basis points to 3.5% in October — a move explicitly characterised by the BoB as a policy recalibration to restore monetary transmission, not a tightening signal. Commercial banks were simultaneously directed not to raise their prime lending rates. Despite this, the average PLR climbed from 6.01% at end-2024 to 7.19% by December 2025, driven by a structural liquidity squeeze in the banking system as lower diamond revenues compressed government spending into the financial sector — creating a widening disconnect between the policy rate and actual market lending conditions. Headline inflation averaged just 2.7% for the full year, remaining below the 3% lower bound of the BoB's 3–6% target range for most of 2025 before reverting to the objective range from September. Looking ahead, inflation is projected to rise but remain within the target band in the medium term. The BoB has, however, identified material upside risks: BPC's proposed 46% electricity tariff increase in April 2026 — which carries direct implications for commercial property operating costs and tenant affordability — anticipated increases in public transport fares, the January 2026 foot and mouth disease outbreak and its impact on food prices, and proposed changes to VAT zero-rated items in the 2026 Budget. Long-term government bond yields have climbed sharply to 12.65%, compressing development feasibility across all asset classes and effectively raising the stabilised yield hurdle for new development to meaningfully above 9%.

Government fiscal stress is a material property market risk. Estimated government arrears to road contractors of approximately P15bn are creating balance sheet stress across the construction sector — a direct risk for development procurement and payment timelines. The 2025/26 budget deficit has been revised upward by 15.2% to P25.5 billion (9.3% of GDP), driven primarily by a 23.4% decline in mineral revenues to P12 billion — a stark illustration of the structural fragility of Botswana's fiscal base. Total government debt, including sovereign guarantees, stood at an estimated P90 billion (33% of GDP) as of December 2025, with domestic debt at P56 billion (20.5% of GDP) — already in breach of the domestic statutory ceiling of 20%. The debt trajectory is concerning: total debt is projected to reach 38.8% of GDP by end of 2025/26 and potentially 44.7% by end of 2026/27, the latter breaching the overall statutory debt limit of 40%. Government has signalled a willingness to address this constraint through a structural adjustment of the framework itself, with discussions around raising the statutory debt ceiling to as high as 60% — a move that would provide immediate fiscal breathing room but which, if confirmed, would represent a meaningful shift in the parameters of Botswana's fiscal discipline and a signal of the depth of the adjustment underway. Botswana retains investment-grade sovereign ratings from Moody's (Baa1 Negative) and S&P (BBB Negative), though both carry negative outlooks reflecting the deteriorating fiscal position and ongoing diamond sector uncertainty.

A further dimension to Botswana's macroeconomic vulnerability is the steady depletion of foreign exchange reserves. Reserves have declined from P84.9 billion (18.3 months of import cover) in 2015 to an estimated P47.4 billion (6 months of import cover) in December 2025 — a level the Bank of Botswana has explicitly characterised as a key vulnerability for the sustainability of the country's exchange rate framework. Six months of import cover represents the lower end of the internationally accepted adequacy threshold, leaving limited buffer against external shocks. Against this backdrop, the Pula's nominal effective exchange rate (NEER) depreciated 2.1% in 2025, with the real effective exchange rate declining 1.1%. The Pula currency basket was rebalanced to equal weights of 50% ZAR and 50% SDR in January 2025, and the annual downward rate of crawl was increased to 2.76% from July 2025 — a setting maintained for 2026. For commercial property, the Pula's depreciation trajectory has tangible consequences: imported construction cost inflation, increased cost of foreign-currency-denominated development finance, and upward pressure on the landed cost of building materials — all of which compound the already-challenging development economics in the current environment.

Notwithstanding the near-term headwinds, structural tailwinds remain compelling. Urban population has reached 70.9% and continues to rise. The Khoemacau copper expansion and NexMetals Selebi-Phikwe project are creating industrial and residential demand across the Kalahari Copper Belt. The Kazungula Bridge is operational, the Trans-Kalahari Railway study is advancing, and nascent energy infrastructure investment signals Botswana's longer-term ambitions — all medium-term demand drivers for quality commercial property.

Looking beyond the current diamond cycle, Botswana's resource base is diversifying in ways that are structurally significant for long-term commercial property demand. The Kalahari Copper Belt — anchored by the Khoemacau expansion and the prospective NexMetals Selebi-Phikwe project — represents a multi-decade industrial and logistics demand driver that extends well beyond Gaborone's primary catchment. The country's rare earth mineral endowment, still in early-stage exploration, adds a further dimension to the diversification story. On the energy front, the recently announced 500MW solar plant in Maun — a partnership between the Government of Botswana and NAQAA Energy LLC of Oman — marks a significant step in Botswana's transition away from coal dependency and signals the country's ambition to position itself as a regional clean energy hub. Taken together, these structural shifts — copper, rare earths, and solar — represent a meaningful broadening of Botswana's economic base that will generate real commercial property demand over the medium to long term, independent of diamond sector performance. Most recently, Botswana's energy diversification ambitions have extended beyond domestic generation: the country is in early-stage discussions with Angola to acquire a 30% stake in the $6.6 billion Lobito oil refinery — a 200,000 bpd facility currently under construction and targeted for completion in 2027 — which, if concluded, would deliver approximately 60,000 bpd of refining capacity and provide a meaningful structural reduction in Botswana's long-standing exposure to regional fuel supply disruptions. Zambia already holds a 26% interest in the same project, and while talks remain preliminary, the strategic intent is unambiguous: Botswana is actively building the foundations of a more resilient and diversified energy economy.

Rental Snapshot · Retail · Gaborone Capitalisation Rate Snapshot · Retail · Gaborone

The Gaborone retail market remains the most mature in Botswana, with an estimated ±400,000m² of formal retail space across the city and its immediate environs. The market continues to cater to a diverse spectrum of offerings, from super-prime regional centres in excess of 50,000m² to neighbourhood convenience strips. Despite the pressures of a competitive trading environment, super-prime and prime centres have demonstrated commendable resilience, with quality stock remaining in short supply relative to institutional demand.

Airport Junction remains Botswana's premier retail destination, continuing to command above-market line store rentals for select premium tenants. Game City, the largest centre by GLA at ±59,000m², has seen improved performance following resolution of historical access constraints. Riverwalk Shopping Centre maintains strong trading fundamentals, anchored by a compelling food and lifestyle offering that consistently attracts foot traffic.

The Fields Mall — the New CBD's 26,000m² enclosed regional centre — is entering its third year of trade and showing encouraging signs of maturation. Select tenants are reporting year-on-year turnover growth of between 15% and 30%, reflecting the centre's improving foot traffic and the gradual consolidation of its tenant mix. While the centre continues to bed down, the trajectory is positive and its performance is increasingly validating the New CBD as a credible retail destination in its own right rather than purely a commercial and office node.

The secondary retail segment faces meaningful and, in some cases, acute headwinds. Older convenience centres that have not been refurbished or repositioned are experiencing sustained rental pressure and elevated vacancy as tenants migrate towards newer, better-located offerings. Effective rental rates across secondary and convenience retail have in many instances regressed to levels last seen five or more years ago — a trend driven not only by tepid demand but by the increased negotiating leverage tenants are exercising in a market where alternative options have multiplied. Tenant incentive requirements have risen sharply, with landlords increasingly compelled to offer rental-free periods, fitout contributions, and reduced base rentals to secure or retain occupiers. The divergence between prime and secondary stock is expected to widen in the short- to medium-term. Landlords who have deferred capital expenditure on their assets do so at considerable risk — and in the current environment, the cost of inaction is compounding.

New development is not immune to these pressures. The A10 Mall — an 18,000m² development completed in Q4 2025 — has struggled to attract tenants since opening, with vacancies estimated at approximately 70%. The centre faces a challenging competitive environment, with the nearby Hill View Mall (±7,000m²) — opened in September 2025 — and Turnrite Mall (±6,000m²), both well-located in close proximity with established tenant mixes, presenting a compelling combined offer that has proven difficult to dislodge. Prevailing macroeconomic conditions have compounded the challenge, limiting the pool of expanding retailers and constraining landlord incentive budgets. The A10 experience serves as a cautionary reminder that new GLA alone does not guarantee leasing success — location, competitive context, and tenant mix strategy are equally determinative.

The rental pressure dynamic extends beyond purely secondary assets. The underlying driver is a consumer under genuine stress: rising living costs, constrained government expenditure — which has materially reduced the disposable income of a public sector workforce that anchors much of Botswana's formal retail demand — and the broader economic contraction of 2025 have combined to suppress retail sales volumes and compress retailer margins across virtually every trading category. National retailers navigating their own profitability pressures are pushing back hard on lease renewals and new lettings, leveraging a market where the pool of actively expanding operators has shrunk considerably. Even within the prime tier, line store rentals are under growing strain, and landlords who previously operated from a position of strength on renewals are finding that tenants are willing to vacate rather than accept terms that no longer make commercial sense. Super-prime anchors and dominant convenience formats are relatively insulated by their essential trading profiles; it is the discretionary and fashion-oriented line store segment where the pressure is most acute and where vacancy risk is most likely to crystallise over the next 12 to 24 months.

Node Focus — Setlhoa

The Setlhoa node continues its strong growth trajectory, consolidating its position as Gaborone's most dynamic emerging retail precinct. With ±25,000m² currently under construction — comprising Walkway Mall (±10,000m²) and Sebele Lifestyle Centre (±15,000m², Time Projects) — and a further ±20,000m² of proposed retail development in the pipeline from additional undisclosed developers, the node is entering a new phase of retail densification that will materially expand its offering over the next two to three years. The confluence of large-format retail, lifestyle offerings, and commuter-oriented convenience anchors along the A1 corridor has created a compelling value proposition that continues to attract both institutional tenants and independent operators. Developers and tenants should note that the cumulative new supply will require careful positioning to avoid cannibalisation within the node.

Node Focus — Mogoditshane

Mogoditshane represents the most significant near-term retail development opportunity within the Greater Gaborone catchment. With a population estimated at over 100,000 and a retail offering that remains overwhelmingly convenience-oriented, the node is absorbing its first major formal retail development — Kopano Point (±20,000m²), currently under construction and targeting an Easter 2027 opening. The centre is expected to serve as a catalyst for further investment in the node. We do not anticipate meaningful additional formal retail supply beyond Kopano Point in the near- to medium-term; however, the node's demographics and residential growth profile suggest latent demand for big box value retail offerings — a format that remains largely absent from the Greater Gaborone market and which could find a natural home in Mogoditshane as the node continues to densify.

Node Focus — Francistown

Francistown — Botswana's second-largest city, with a population of approximately 150,000 — is home to nine formal shopping centres offering a combined retail GLA of approximately ±85,082m². The market is anchored by Galo Mall (±30,000m²), with Blue Jacket Street serving as the established convenience and services corridor. Maru Group estimates a formal retail undersupply of ±76,570m² GLA in the catchment — a figure that points to meaningful medium-term development opportunity, subject to the prevailing cost of capital and the ability to secure anchor tenant commitments at viable rental levels. With 56% of households falling within the lower-income segment and a further 20% in the lower-middle segment, the Francistown market is best served by value-oriented retail formats with a strong grocery and everyday services anchor. The node benefits from a regional draw that extends into north-eastern Botswana and the cross-border trade corridor into Zimbabwe, providing a broader catchment than the resident population alone would suggest.

Node Focus — Selebi-Phikwe Node Focus — Maun

Maun — the gateway to the Okavango Delta and Botswana's tourism capital — presents a retail market dynamic that is instructive of the challenges facing smaller urban centres. The arrival of Mall of Maun (±20,000m²) has materially altered the supply-demand balance in what is, at its core, a relatively small market of approximately 85,000 residents. The centre is showing genuine operational momentum — select anchor tenants, notably in the grocery segment, are performing strongly — though fashion and discretionary line stores continue to find trading conditions more challenging as consumer spend remains constrained. The more significant structural issue is one of retail cannibalisation. Several national retailers who already operated stores in Maun prior to Mall of Maun's opening have taken space in the new centre, effectively splitting their own trade across two locations rather than growing the overall market. In a catchment of this size, that dynamic is difficult to overcome in the short-term. Delta Palms Mall (±7,000m²) has struggled to retain occupancy in this environment — a dynamic that is perhaps unsurprising given that several of its tenants committed to Mall of Maun during its planning phase. The Maun experience serves as a broader market lesson: in smaller urban centres, new large-format retail supply does not create new demand — it redistributes existing demand, and the weakest existing assets absorb the vacancy.

Node Focus — Palapye

Palapye — a fast-growing town situated on the A1 corridor between Gaborone and Francistown — is beginning to attract institutional investment attention. The acquisition of Diphalane Mall (±14,000m²) by Khumo Asset Management on behalf of the Botswana Public Officers Pension Fund in 2025 is a noteworthy transaction that speaks to continued institutional appetite for investment-grade retail assets beyond Gaborone. That a fund of BPOPF's standing has deployed capital into a secondary town retail asset is a meaningful signal — notwithstanding the current market headwinds, quality retail in the right catchment continues to attract serious institutional interest. Full transaction metrics will be reported once confirmed.

Node Focus — Mahalapye

A notable mixed-use development is advancing in Mahalapye, with BR Properties — a subsidiary of Botswana Railways — entering a joint venture with Estate Construction to deliver a three-storey complex incorporating retail, a private clinic, and a filling station. The project is contingent on road infrastructure upgrades currently under review, with construction scheduled to commence approximately four months following access approval and an 18–24 month build programme thereafter. The development is expected to create around 200 construction-phase jobs and 250 permanent positions upon opening, and has attracted strong community support. Strategically positioned along the rail and A1 road corridor, Mahalapye's emerging mixed-use node reflects a broader trend of institutional and developer capital looking to secondary towns with established transport infrastructure and underserved catchments.

Rental Snapshot · Office · Gaborone Sales & Yield Snapshot · Office · Gaborone

Supply continues to outstrip demand across the secondary office segment in Gaborone, with older stock in peripheral nodes experiencing elevated vacancies and sustained rental pressure. The New CBD, Fairgrounds, and Setlhoa Village remain the primary destinations for institutional demand — though it should be noted that while Fairgrounds rentals are under pressure, the node retains a strong financial services identity that creates genuine occupier inertia; tenants whose peers and clients are concentrated in Fairgrounds often find it difficult to justify relocation to the New CBD on purely economic grounds. Landlords in peripheral and secondary nodes who have deferred repositioning capex face a narrowing window to act.

Fairgrounds continues to perform steadily, offering occupiers a credible alternative to the New CBD at rentals that remain approximately 20 to 25% lower for comparable grade space. Sectional title demand in Fairgrounds has been resilient, with owner-occupier appetite — particularly among SMMEs — proving durable despite broader market softness. Secondary nodes such as Main Mall and International Finance Park continue to experience rental stagnation, with asking rates having effectively bottomed out; we do not expect meaningful movement in either direction in the short- to medium-term.

The Setlhoa Village office node is maturing rapidly and has established itself as a credible third pillar of the Gaborone office market. Its proximity to Airport Junction, lower congestion relative to the New CBD, and the availability of modern, well-serviced product at competitive rentals bodes well for continued leasing momentum in the near-term. A development pipeline of approximately ±20,000m² of new office GLA is set to come online in the node in the short- to medium-term, which will test the market's ability to absorb new supply at prevailing rental levels — though the quality of the incoming product and the node's continued residential and commercial densification provide reasonable grounds for optimism.

The New CBD pipeline is anchored by The District — a landmark mixed-use development that will deliver substantial new premium office GLA to the node and, when complete, is expected to reset the benchmark for super-prime office product in Gaborone. The development's retail and hospitality components — including a 148-key Curio Collection by Hilton Hotel — further reinforce the New CBD's position as the city's premier mixed-use business destination.

Rentals & Yield Snapshot · Industrial · Gaborone

The industrial sector presents a study in contrasts. Vacancy rates across prime nodes are negligible, institutional demand from logistics and distribution users remains robust, and quality stock is effectively fully let — all the hallmarks of a market in rude health. Yet beneath this surface resilience lies a structural tension that will define the sector's trajectory: nominal rental rates have been flat since 2021, implying a real rental decline of approximately 20% against cumulative inflation, while construction costs have continued to escalate — industrial build costs now ranging from P8,000 to P14,000/m² inclusive of land. This widening disconnect between achievable rentals and the cost of delivering new product is materially constraining the pipeline and raises a fundamental question for developers: on what basis does new greenfield industrial development pencil in the current environment?

We believe the answer lies in a shift in development thinking. The Botswana industrial market has historically been built around conventional warehouse formats — relatively low eaves, standardised bays, and generic specifications. This approach is increasingly difficult to justify at current build costs and flat rental levels. Developers who rationalise space around the specific operational requirements of target tenants — maximising cubic capacity through higher eaves, improving yard geometry, and reducing redundant GLA — are better positioned to achieve premium rentals that justify the cost of delivery. The near-total absence of 12m – 15m eaves-height facilities of the kind that are standard across South Africa's prime logistics nodes represents both a gap and an opportunity: occupiers who require this specification currently have largely no domestic option and are effectively underserved by the market.

Sebele and Setlhoa Village have emerged as Gaborone's most dynamic industrial growth nodes. New-build, modern-specification facilities in Setlhoa are achieving super-prime rentals of P65 – P70/m², though rates at the upper end are typically confined to smaller units — larger big-box facilities are generally concluding leases closer to P65/m². The A1 corridor exposure, proximity to major retail anchors, and relatively uncongested road access continue to attract multinational logistics and distribution users. The recent completion of Barloworld Equipment's state-of-the-art Caterpillar dealership facility — an estimated 4,200m² premium-grade development completed in 2024 — is a tangible demonstration of multinational appetite for best-in-class industrial space when the right product is made available. Phakalane remains in strong demand but faces well-documented congestion and infrastructure constraints that, if unresolved, risk tempering the node's growth trajectory in the medium-term. Established nodes — GICP, Gaborone West, and Block 3 — continue to perform steadily, with activity predominantly driven by within-market moves rather than new entrants. GICP retains its position as the premier industrial node nationally.

The secondary node of Gabane is emerging as a noteworthy addition to Gaborone's industrial geography. FaR Properties recently delivered approximately 14,000m² of new industrial GLA to the node, with a substantial development pipeline anticipated to follow in the medium-term. While Gabane occupies a secondary position relative to the established Gaborone nodes, its expanding supply base and improving accessibility suggest it will increasingly attract occupiers priced out of — or unable to secure space in — the prime corridor.

Beyond Gaborone's primary catchment, two distinct demand signals are emerging. In the Kalahari Copper Belt to the west, the Khoemacau copper expansion is generating growing demand for logistics and light industrial property in support of mining operations and related supply chains — a structural rather than cyclical dynamic that creates genuine medium-term opportunity for developers and investors willing to look beyond the capital. To the east, the NexMetals Selebi-Phikwe project is driving renewed interest in the Phikwe industrial node, a market that has been largely dormant since the closure of the BCL smelter. These are geographically and economically distinct demand drivers, but both point in the same direction: the Botswana industrial opportunity is increasingly a national story, not a Gaborone one.

Francistown is well-positioned to be a meaningful beneficiary of this national reorientation. Situated at the confluence of two primary logistics corridors — the north-south route connecting Gaborone to the Kazungula Bridge and the Zimbabwean border, and the eastern route from Martins Drift border post through which significant cross-border truck traffic from South Africa flows directly into the city — Francistown serves as a natural staging and distribution hub for regional trade flows that are expected to deepen as cross-border infrastructure matures. We anticipate that regional distributors will look to establish or expand large-format, super-prime industrial facilities in Francistown in the near- to medium-term, and that this demand will translate into the city's first meaningful cycle of institutional-grade industrial development. The fundamentals — location, corridor access, and a regional catchment extending into north-eastern Botswana and beyond — are compelling.

Gaborone is entering a new phase of large-scale mixed-use development that, over the next decade and beyond, has the potential to materially reshape the city's commercial and residential landscape. Several landmark schemes are either under construction, in advanced planning, or in early-stage development — each of sufficient scale to function as a self-contained urban precinct rather than a conventional single-asset development. While the short- to medium-term delivery of these projects will be tempered by the structural headwinds facing the Botswana property market — most notably the impact of elevated mortgage rates on residential demand and the cost of capital constraints facing developers — their long-term significance to Gaborone's urban form should not be underestimated.

The most ambitious mixed-use vision currently in the Gaborone market is the Eco-City precinct being developed by RIC, situated adjacent to Commerce Park and extending toward Mokolodi. The scheme is conceived as a fully integrated urban precinct, with a programme that includes over 3,000 residential units, medical suites, a hotel, and a 15,000m² lifestyle retail centre to be known as Kgale City Lifestyle Centre. The precinct's retail ambitions are anchored by Flamingo Mall — a ±3,000m² convenience centre currently under construction and the first phase of what is envisaged as a substantially larger retail offering over time. It should be noted, however, that the broader Eco-City vision carries a long development horizon and meaningful execution risk. The residential component in particular will be sensitive to prevailing mortgage rates and the depth of the owner-occupier market; in the current environment, with lending rates elevated and household affordability under pressure, the pace of residential absorption will be a critical variable in determining whether the full precinct programme can be delivered to the originally envisaged timeline. The Kgale City Lifestyle Centre remains at planning stage and its delivery is contingent on meaningful residential densification of the precinct first. We believe the concept is sound — the locational fundamentals and catchment demographics are compelling — but a word of caution should be heeded by investors and tenants alike: execution will be measured in years, not months.

Perhaps the most consequential long-term development opportunity in Gaborone's pipeline is the Botswana Development Corporation's 77-hectare Block 5 site. The scale of the site places it in a category of its own — large enough to accommodate a genuinely mixed-use urban quarter spanning multi-residential, commercial, retail, medical, and educational uses. Development activity is anticipated to commence within the next few years, though the full build-out of a site of this magnitude should be understood as a generational undertaking — a 15 to 20 year horizon at minimum. The scheme's ultimate impact on Gaborone's urban fabric will depend heavily on the quality of the masterplan, the sequencing of uses, and the ability to attract institutional capital at each phase of delivery. What is not in doubt is the site's strategic significance: at 77 hectares in an established Gaborone location, it represents one of the largest single development opportunities in Southern Africa's secondary city markets.

Maun is also emerging as a mixed-use development destination in its own right. The Maun East Smart City — a 139-hectare smart, green mixed-use estate officially launched in the town — represents an ambitious vision for Maun's urban evolution, blending residential, commercial, cultural, and ecological uses within a single integrated precinct. The first phase will commence with 200 residential units, intended to activate cashflow and unlock the rollout of the broader mixed-use programme. As with all large-scale mixed-use schemes of this nature, execution will be measured over years rather than months — and the quality of the finished product will ultimately depend on the developer's ability to attract the capital, expertise, and tenant commitments that a project of this ambition requires. What is not in question is the underlying demand rationale: Maun's rapid urban expansion and improving economic profile demand a more sophisticated development response than the town's existing stock currently provides, and a well-executed smart city precinct would find a ready market.

Gaborone's hospitality market is characterised by a structural mismatch between supply and demand that has persisted for several years. The city's accommodation stock is dominated by upper-midscale and budget offerings, with no true luxury or five-star product currently in the market. Occupancy performance reflects this — budget corporate properties are achieving occupancies in the range of 20% to 40%, upper-midscale assets are performing at approximately 45% to 55%, and only a select number of upper-midscale properties offering near four-star quality and well-located within the primary business nodes are consistently achieving occupancies above 60%. The majority of the upper-midscale tier, however, is settling at 50% to 55%, reflecting the broader softness in corporate travel demand.

The most significant near-term addition to Gaborone's hospitality stock is the BDC-Radisson development at the Fairscape Precinct in Fairgrounds — a P700 million, 150-key five-star hotel operated under a 20-year management agreement with Radisson Hotel Group, scheduled to break ground in April 2026. The development addresses a long-standing gap in Gaborone's accommodation offering and is deliberately positioned to unlock the MICE segment, strengthening Botswana's ability to attract large-scale international conferences and events. At P700 million for 150 keys, the development economics are ambitious and success will depend heavily on the hotel's ability to stimulate new demand rather than redistribute existing corporate travel spend. The MICE thesis is credible as a long-term nation-building play — and explains government's willingness to deploy development capital into a segment that the private market has consistently declined to fund — but the broader market context of suppressed corporate travel and below-average occupancies across the existing stock raises real questions about the asset's near-term commercial viability without ongoing institutional support.

The New CBD has also seen a recent addition to its hospitality offering with Hotel 430 — a 100-key property that further consolidates the node's position as Gaborone's primary business travel destination. Its arrival, alongside the forthcoming Curio Collection by Hilton at The District, signals a growing recognition that the New CBD's commercial density is sufficient to support a meaningful hospitality cluster.

Node Focus — Maun & The Okavango Delta

Maun functions less as a conventional hospitality market and more as the primary gateway to one of the world's most sought-after wilderness destinations — the Okavango Delta. The town's hospitality offering spans a spectrum from budget transit accommodation serving overland travellers to the luxury lodge and tented camp experiences that define Botswana's global tourism brand. It is at the upper end of this spectrum where the market is performing most compellingly: luxury camps and lodges within the Delta are achieving occupancies approaching 100% during the high season, underpinned by robust international demand from high-net-worth travellers for whom Botswana's low-volume, high-value wilderness experience represents a near-irreplaceable destination. Low season occupancies soften, as is characteristic of the sector, but the overall demand trajectory for premium wilderness product remains strongly positive.

New supply at the luxury end is selective and intentional — as it should be in an ecosystem of this sensitivity. The recent opening of Grays Eden Sanctuary Boutique Hotel, a P45 million riverfront facility situated along the Thamalakane River in partnership with Ker & Downey Botswana — a subsidiary of Chobe Holdings — is a notable addition to Maun's town-based hospitality offering. The development, which attracted foreign direct investment from the United Kingdom and was facilitated through BITC, signals continued international investor confidence in Maun as a hospitality destination in its own right, beyond its gateway function.

A further signal of Maun's maturing hospitality market is the development by Estate Construction of an intimate luxury apartment complex — approximately 12 to 14 units — targeting the long-stay hospitality segment. The product is designed to serve the diverse base of extended-stay occupiers that Maun's unique economy generates: safari operators, conservation and NGO sector workers, and corporate and expatriate residents who require a quality residential-hospitality hybrid that the town's existing stock does not adequately provide. The development is a small but meaningful indicator that investors are beginning to read Maun's demand profile with greater sophistication — recognising that the town's hospitality opportunity extends beyond the transit and gateway function and into a longer-stay, higher-yield accommodation segment.

A notable shift is also emerging on the capital side. Botswana's institutional investment community — historically anchored in listed equities and conventional commercial property — is beginning to direct capital toward the luxury tourism and conservation sector, driven in part by government's deliberate push for pension funds to broaden their investment mandates into an industry that contributes approximately 12% of GDP and which is increasingly viewed as a strategic counterweight to the country's diamond dependency. This is not a new dynamic for international and regional capital, which has long found a natural home in the Delta's luxury lodge sector — but the entry of domestic institutional money represents a meaningful evolution in the market's investor base. A tangible expression of this trend is the forthcoming Singita Elela Lodge, opening in 2026 on an exclusive 170,000-hectare concession in the Okavango Delta — a development that counts Botswana institutional capital among its investors and which, by any measure, represents the global pinnacle of conservation-led luxury hospitality. Singita's expansion into Botswana is a powerful endorsement of the Delta's enduring position as one of the world's premier wilderness destinations.

Node Focus — Kasane & The Chobe Corridor

Kasane has established itself as one of Botswana's most compelling hospitality nodes, offering visitors access to the Chobe National Park and the Zambezi river system at a price point that is materially more accessible than the Okavango Delta's luxury lodge circuit. The town's proximity to Victoria Falls — one of the world's premier natural attractions — further enhances its appeal, with visitors increasingly using Kasane as either a base for day trips to the Falls or as a natural stop on a broader southern African touring circuit. This combination of Chobe's exceptional wildlife offering and convenient access to Victoria Falls creates a dual demand driver that few safari destinations in the region can match. The node's relative affordability compared to the Delta is its defining competitive advantage and one that continues to drive healthy occupancy levels across the hospitality spectrum, with both international visitors drawn by Chobe's exceptional wildlife density and the favourable exchange dynamics of a weak Pula, and domestic travellers for whom Kasane represents a premium but attainable bush experience.

The supply side is responding to this demand with meaningful new investment. Chobe Safari Lodge has recently completed a significant refurbishment of its rooms and common areas, meaningfully elevating the quality of its product and reinforcing its position as one of the node's anchor hospitality assets. More significantly, a major expansion project is currently under construction at one of Kasane's established hospitality properties — a development that will deliver approximately 200 keys and a 1,000-capacity conference facility, positioning the asset as the node's first serious MICE destination. Completion is anticipated in 2026, and while the scale of the ambition is notable, delivering a project of this complexity to the required specification in the Kasane market presents real execution challenges. We would not be surprised if the finished product reflects the constraints of the build environment — with rooms coming to market at accessible price points but potentially falling short of the premium specification that a MICE-oriented positioning demands. The development will nonetheless represent a meaningful addition to the node's supply and, at the right price point, will find a market.

A word of caution should be heeded, however. The Chobe corridor is beginning to show early signs of the tourist congestion that has challenged other high-volume safari destinations globally — boat traffic on the Chobe River in particular is becoming a notable pressure point. This dynamic does not yet represent a material constraint on demand, but it is a trend that park management and the hospitality sector will need to monitor carefully to protect the quality of the visitor experience that underpins the node's appeal. The Kazungula Bridge — which was expected to catalyse a new wave of regional tourist flows into the node — has yet to generate a measurable uplift in visitor numbers, and its tourism impact should be understood as a medium- to long-term dynamic rather than an immediate demand driver.

Cresta Marakanelo, the only listed hospitality company on the Botswana Stock Exchange and the country's most significant institutional holder of business-focused hotel assets, provides the clearest window into the structural pressures facing Botswana's corporate travel market. The company recorded revenue of P365.2 million for the year ended 31 December 2025 — a 5% decline on the prior year — driven by lower occupancy levels and softer average room rates across its business-focused portfolio, which accounts for 77% of total room inventory. The diamond market slowdown's knock-on effect on corporate travel demand was a material headwind, most acutely felt at Cresta Jwaneng, which recorded an impairment loss of P14.1 million following a reassessment of recoverable value in a tightening discount rate environment.

Gross profit margin compressed from 38% to 34%, reflecting the combined impact of lower revenue and higher depreciation charges. Shareholders' equity declined 15% to P139.3 million. On a more constructive note, the company ended the year with a positive cash position, no utilisation of its overdraft facility, and meaningfully reduced debt service obligations following a successful restructuring of its ABSA facilities. Management has flagged market diversification, leisure segment growth, and digital distribution as the primary levers for recovery in 2026 — credible priorities, but ones that will be tested by a macroeconomic environment that shows limited signs of near-term improvement in corporate travel demand. Cresta's results are, in many respects, a proxy for the broader Botswana business hospitality market: structurally sound, operationally resilient, but navigating a cycle that has yet to find its floor.

Botswana's hospitality market is best understood as three distinct but complementary demand stories operating in parallel. Gaborone anchors the business and corporate travel segment — a market navigating genuine cyclical headwinds but retaining structural depth, underpinned by the country's institutional and diplomatic economy and the long-term MICE ambitions now being given physical expression through the BDC-Radisson development. Maun and the Okavango Delta represent the country's most internationally recognised leisure asset — a low-volume, high-value wilderness experience that is effectively supply-constrained by design, commanding premium rates and near-full high season occupancies from a global audience for whom it remains a bucket-list destination. Kasane and the Chobe corridor occupy a compelling middle ground — offering world-class wildlife access and proximity to Victoria Falls at a price point that attracts both international and domestic visitors, with a supply pipeline beginning to respond meaningfully to that demand.

Across all three nodes, the common thread is a market bifurcating along quality lines — assets offering a differentiated, well-maintained product are performing; those that do not are feeling the pressure of a more discerning traveller and a more competitive supply environment. Perhaps the most significant structural development, however, is the emergence of domestic institutional capital as a serious participant in the hospitality and conservation investment space — a shift that, over time, has the potential to unlock a new cycle of quality supply across Botswana's tourism nodes and to deepen the market's resilience against the commodity cycle volatility that continues to define the broader economy. For developers and investors, the hospitality opportunity in Botswana is real — but it increasingly rewards specificity of product, precision of positioning, and patience of capital.

Botswana's commercial property market enters 2026 navigating a more complex operating environment than at any point in the past decade. GDP contraction in 2025, a sharp rise in the cost of capital, government fiscal stress, and suppressed domestic demand have combined to raise the bar for new development and investment — and to accelerate the bifurcation between quality assets and secondary stock across all asset classes. With long-term bond yields at 12.65%, stabilised development yields need to meaningfully exceed 9% to justify the risk premium, and developers and investors who cannot demonstrate that case will find capital increasingly difficult to source.

The retail sector's prime nodes remain structurally sound, underpinned by urbanisation at 70.9% and sustained demand from national and multinational retailers. However, rental pressure is a pervasive theme across the market — not confined to secondary stock but increasingly visible across the prime line store tier. A consumer under genuine stress, with rising living costs, reduced government expenditure, and compressed retailer margins, is translating directly into weaker sales volumes and a more combative leasing environment. Effective rentals across secondary and convenience retail have regressed materially, tenant incentive costs have risen, and the pool of actively expanding retailers has contracted. With ±900,000m² of formal retail nationwide and ±60,000m² in the current development pipeline, the market's ability to absorb new supply will depend critically on pre-let depth and the quality of anchor tenant commitments — the experience of recently delivered centres demonstrating that new GLA without a credible competitive positioning strategy is a value-destructive proposition. The office sector continues to work through legacy oversupply in secondary nodes; flight to quality is entrenched, and the New CBD, Fairgrounds, and Setlhoa Village remain the primary destinations for institutional demand. Landlords in peripheral and secondary nodes who have deferred repositioning capex face a narrowing window to act.

The industrial sector presents the market's most nuanced picture. Prime vacancy is negligible and institutional demand is robust — yet flat nominal rentals since 2021 have produced a real rental decline of approximately 20%, while build costs continue to escalate. This disconnect is constraining new supply and demands a rethink of how industrial product is conceived and delivered. Developers who move beyond generic warehouse formats — rationalising space around tenant operational requirements and delivering higher-specification product, including the large eaves-height facilities of 12m – 15m that remain largely absent from the Botswana market — will be better positioned to achieve the rental levels that justify delivery. The opportunity is real; the execution bar has simply risen.

The medium-term outlook carries genuine upside. The Khoemacau copper expansion, the Kazungula Bridge, the Martins Drift corridor, and the Trans-Kalahari Railway are creating structural demand tailwinds that will outlast the current diamond cycle. Francistown's emergence as a regional logistics hub, the Kalahari Copper Belt's growing industrial footprint, and the continued densification of Gaborone's satellite nodes all point toward a market that is broadening geographically as well as deepening in sophistication.

Amidst the near-term noise, Botswana's long-term commercial property fundamentals remain intact and, we would argue, underappreciated. The country's urbanisation trajectory, institutional depth, political stability, and improving logistics connectivity continue to underpin a market that — at the quality end — has demonstrated remarkable resilience through a genuinely difficult cycle. Super-prime and prime assets in the dominant nodes have held their value, maintained occupancy, and continued to attract institutional capital; it is a market bifurcation, not a market collapse. And the structural story is getting stronger. Mineral diversification — through copper and rare earth investment across the Kalahari Copper Belt and beyond — combined with transformative clean energy commitments including the 500MW Maun solar plant developed in partnership with Oman's NAQAA Energy LLC, are laying the foundations for a Botswana economy that is materially less dependent on diamond revenues than at any point in the country's modern history. The lesson of this cycle is not that Botswana commercial property is broken — it is that node selection, asset quality, and tenant mix have never mattered more. Investors and developers who apply that discipline will find that the fundamentals remain as compelling as they have ever been.

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This report has been prepared by Maru Group for general information purposes only. Whilst Maru Group has endeavoured to ensure the accuracy of the information contained herein, no warranty is given as to the accuracy of the content. Recipients should conduct their own due diligence and seek independent professional advice before making any investment or leasing decision.