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Advice for locals in the diaspora

THE flickering economic gains experienced in the last couple of months have seen the vultures circling.

Profiteers and speculators are prowling the streets again

as evidenced by the ridiculous assertion by some estate agencies that Homelink, the money transfer system set up by the Reserve Bank, will see more Zimbabweans in the diaspora buying properties at the currently inflated prices.

I believe that Zimbabweans in the diaspora should be warned: the current prices, even if you have a billion dollars to spare, are still inflated.

Personally, I know of countless speculators and at least one company that is sitting on houses collectively worth $6,7 billion.

But that valuation is based on the prices they paid when they were speculating that the economy was going to collapse and they would be able to realise a 150% profit on the subsequent sales.

Estate agencies have also been quoted saying that sellers are withholding their properties in the hope of the speculators returning to senselessly pour money into the vastly inflated property market. Again, this confirms the speculative attitude that still rules this sector.

My advice to Zimbabweans abroad is to sit tight, put their money either on the money market or on the stock market where it is guaranteed to grow. Should any of them be stupid enough to pay $300 million for a house that is worth $100 million, then they will only have themselves to blame when the long overdue property crash takes place.

The thinking that Zimbabweans outside the country are easy pickings for speculators is surprisingly common amongst the speculators themselves and I am sure a few will be fleeced, but I am also hopeful that the majority will do the wise thing and postpone buying property at these ridiculous prices until the speculators have left the scene.

For those who are not yet wise to the fact, get online wherever you may be and check out the classifieds back home: one property which has been sitting on the books at a local estate agency was first advertised for $450 million two months ago. It has been progressively coming down in price and is now on offer for $230 million. If you can read, you will quickly realise that the $400 million was not the true worth of that property.

But the new price is still a speculative one and I am willing to bet anyone who cares that the property will come down to below $200 million before long. This is the case with roughly 70% of properties listed today.

Refuse to be taken for a ride simply because you are far from home. You can still get a pretty good picture of what the market conditions are.

Estate agency websites are not the best places to look for trends. Talk to friends and relatives and you will find, as I recently did, that people know of a specific property advertised early last year for $350 million but which, at auction, had its price driven up to $950 million by a speculator (who has since been arrested for using his clients investments in this manner).

That speculator, who now has to pay back all the money, knows for sure that he will never recoup the inflated money he paid, but you can bet your bottom pound that he will try to keep the price as high as possible as he sells, so that he gets back as much as possible.

You have been warned and those who get caught up in the imminent crash will only have themselves to blame.

Denford Magora,

Alexandra Park.

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