Housing Investment Landscapes: Lesotho

This country report for Lesotho, authored by Davina Wood, forms part of CAHF’s Housing Investment Landscapes series which aims to reduce information asymmetries on who makes investments in the African housing sector–why they are made, and how. With the intention of identifying and championing increased investment in affordable housing, the report includes insights into and analysis of the depth and breadth of investment in Lesotho’s housing and housing finance sector. This project has collected data and highlights gaps and opportunities in the investment landscape. The report profiles investors and investment instruments with the greatest impact on the housing finance market within the Southern Africa Development Community (SADC).

The research indicates that investment in housing in Lesotho has been low and the need for new stock is growing. UN-Habitat estimates 99 000 dwellings will need to be constructed by 2025 to meet demand, and an estimated 5 200 dwellings a year are needed to meet urban housing demand. While this number seems large, there is notable local government interest in closing the affordable housing supply gap. The Lesotho Housing and Land Development Corporation (LHLDC) plans to deliver formal housing on 300 sites in the Leribe District. Low financial inclusion is reflected by minimal investment in housing finance: only 4 percent of the population has an outstanding housing loan. Most households acquire land and build their own homes incrementally, and 70 percent of the total urban housing stock in Lesotho is provided through informal channels. Given that the demand for affordable housing in the country’s capital is expected to continue to grow unabated, the unmet demand for housing in Lesotho presents as an investment opportunity, though various impediments to market growth exist. To this end, the report profiles local institutional investors (capital markets and pension funds), government investment (LHLDC) and foreign institutional investors, including DFI investment, international NGO activity and Chinese investment.