MALCOM LUMUMBA
JF-Expert Member
- Jul 26, 2012
- 21,775
- 71,893
First off, houses are for living, not speculation.
Secondly, houses and cars don't belong within similar category. Houses are inherently essential to human survival while cars are not. That is why The Law requires all land to be sold in a market price. And market price is determined by many things not only demand & supply, location, availability of services, safety and economic stature of inhabitants. Considering economic stature of inhabitants, properties in Masaki will surely have enormous prices than properties in Sinza. This is because Masaki is a business area, not only residential. Masaki and Oyster-bay were strictly reserved for providing residence for ruling elites, diplomats and business moguls that's why it is expensive.
A problem starts when we forget that Real Estate Market is interconnected. The Institutions both Government and Private, which regulate the market in Masaki, Oyster-bay, Mbezi Beach, Mbweni and Upanga which are Prime Areas, are also regulating a large percent of market in Sinza, Mwenge, Kigamboni and Kimara which are vibrant areas. If you look carefully, you'll find there is KFC in Masaki, but also KFC in Shekilango and another vibrant places. The people who invest in Masaki also invest in Sinza because they have capital. If the Government does not regulate the Real Estate Market prices will be out of control.
Thirdly, Tanzanian real estate is booming in Tanzania because of two main reasons: DE-REGULATION and STABLE INTEREST RATES. In De-Regulation, people do have a liquidity issue when selling their lands, because they don't pay enough taxes such as VAT and CGT as required by the law. A Person can sell a land for 10 billion, but in contractual documents they write 2 billion, in order to avoid taxes. I am dealing with real estate and have seen this happening. You cannot do this in USA or CHINA because of constant monitoring by governments. One of the effective ways the Government controls prices in through FISCAL POLICIES (Property Taxes, VAT and CGT) which Tanzanian Government has been lenient to utilize.
In STABLE INTEREST RATES: You have to understand that The Rich survive through bank loans. They acquire loans and build houses(properties) not for living, but as securities for their loans or selling them at a higher price. That is why RENTS and PRICES are skyrocketing to untenable proportions, because Landlords/Developers have loan commitments. Since the departure of JPM, banks have lowered the interest rates allowing rich and middle-class to borrow money in a spree. Suffice to say that, for the rich and middle-class loans are very cheap in Tanzania.
Now in this state of affairs, who bears the blunt for the loans acquired by the rich ??? : It is the Local Tenants (Families that live in big cities) and Home Buyers, because homes are not affordable. In this state of affairs, a serious Government can utilise both Fiscal and Monetary Tools by Taxing the Rich and Making Housing Loans for the rich Expensive.
=============================================================
This is how the Economy Works, A handful of people controlling the entire market.
Not Cool, Not Acceptable.....
Secondly, houses and cars don't belong within similar category. Houses are inherently essential to human survival while cars are not. That is why The Law requires all land to be sold in a market price. And market price is determined by many things not only demand & supply, location, availability of services, safety and economic stature of inhabitants. Considering economic stature of inhabitants, properties in Masaki will surely have enormous prices than properties in Sinza. This is because Masaki is a business area, not only residential. Masaki and Oyster-bay were strictly reserved for providing residence for ruling elites, diplomats and business moguls that's why it is expensive.
A problem starts when we forget that Real Estate Market is interconnected. The Institutions both Government and Private, which regulate the market in Masaki, Oyster-bay, Mbezi Beach, Mbweni and Upanga which are Prime Areas, are also regulating a large percent of market in Sinza, Mwenge, Kigamboni and Kimara which are vibrant areas. If you look carefully, you'll find there is KFC in Masaki, but also KFC in Shekilango and another vibrant places. The people who invest in Masaki also invest in Sinza because they have capital. If the Government does not regulate the Real Estate Market prices will be out of control.
Thirdly, Tanzanian real estate is booming in Tanzania because of two main reasons: DE-REGULATION and STABLE INTEREST RATES. In De-Regulation, people do have a liquidity issue when selling their lands, because they don't pay enough taxes such as VAT and CGT as required by the law. A Person can sell a land for 10 billion, but in contractual documents they write 2 billion, in order to avoid taxes. I am dealing with real estate and have seen this happening. You cannot do this in USA or CHINA because of constant monitoring by governments. One of the effective ways the Government controls prices in through FISCAL POLICIES (Property Taxes, VAT and CGT) which Tanzanian Government has been lenient to utilize.
In STABLE INTEREST RATES: You have to understand that The Rich survive through bank loans. They acquire loans and build houses(properties) not for living, but as securities for their loans or selling them at a higher price. That is why RENTS and PRICES are skyrocketing to untenable proportions, because Landlords/Developers have loan commitments. Since the departure of JPM, banks have lowered the interest rates allowing rich and middle-class to borrow money in a spree. Suffice to say that, for the rich and middle-class loans are very cheap in Tanzania.
Now in this state of affairs, who bears the blunt for the loans acquired by the rich ??? : It is the Local Tenants (Families that live in big cities) and Home Buyers, because homes are not affordable. In this state of affairs, a serious Government can utilise both Fiscal and Monetary Tools by Taxing the Rich and Making Housing Loans for the rich Expensive.
=============================================================
This is how the Economy Works, A handful of people controlling the entire market.
Not Cool, Not Acceptable.....