Property market remains in the doldrums of yesteryear

Ngoni Chanakira

AS long as Zimbabwe does not create an enabling environment for its citizens, especially those living here, the property market will remain as quiet as it was at the beginning of the year, sa

ys Real Estate Industry of Zimbabwe (REIZ) president Abraham Sadomba.


“I believe institutions and individuals will continue with the wait-and-see attitude they had at the beginning of the year,” he told property consultants gathered in Masvingo for their annual general meeting last week.


“In terms of the residential property values, I believe they will remain stable in line with the demand in the housing market. However, one must be prepared for a sudden jump in values if economic fundamentals change. This is because the gap between the cost of construction – which has always been higher than the cost of buying an existing house, and is increasing in line with inflation and the open market values – is widening. There is however a lot of activity in the sub-sector where houses are being sold for between $50 million and $150 million. This activity will tend to increase values in this seb-sector.”


He said for industrial and commercial properties, increases in open market values were currently being pushed by increased net rental values rather than demand and supply factors.


“The situation will continue to the end of the year,” he said.


A spokesperson for Guest and Tanner told businessdigest in an interview that there was little response on the residential property side because individuals were cash-strapped.


“There are limited loans available for customers,” he said. “Banks are offering about $120 million and this can only be used for houses in high density suburbs such as Kuwadzana and Budiriro. There are no takers for houses in the $200 million range because there are few cash buyers due to limited amounts being offered by banks.”


A spokesperson for Southgate and Bancroft, on the other hand, said residential property sales had picked up and prices would be increasing soon if the situation remained the way it is.


“Just follow the trend of the Zimbabwe dollar against the other major currencies and you will be able to see what is actually happening in the property market,” he said in an interview.


“There are good sales in the commercial area. Our flats, for example, have been completely wiped out because many bank employees were given money to buy properties.”


He said high density suburb houses were now fetching between $80 million and $160 million, middle income between $160 million and $250 million, while upmarket properties were now ranging upwards of $500 million.


Stands in plush suburbs such as Borrowdale and Highlands are fetching $1 billion.


Sadomba said in June 2003 when he took over as president of REIZ he felt encouraged because he had the feeling that “I was going to lead a group of wealthy or prosperous professionals”.


“A lot of our key staff/professionals were leaving the country for ‘greener’ pastures outside Zimbabwe,” he said.


“While this was generally the sad state of affairs I felt encouraged because I had a feeling that I was going to lead a group of wealthy or prosperous professionals. I had this feeling because our profession is unique as sometimes we prosper whether the general economy is doing well or badly. In the year 2003 our professionals engaged in the various disciplines – valuations, agency, property management and property development – and were very busy despite the poor economic conditions that were prevailing.”


Sadomba said the hazy conditions prevailing in the property market when he took over as president remained until the end of November 2003.


“Towards the end of November 2003 the property market was affected by high interest rates which put an end to demand from those who were purchasing properties for speculative purposes – individuals and institutions alike,” he said.


“The financial services sector was also faced with liquidity problems. Interest rates rose overnight to more than 600%.”


He said the high interest rates reduced activity in the property market by those who had access to cheap money.


“It also reduced the amount buyers wanting to borrow from building societies could afford,” he said.


Sadomba said there was a lot of uncertainty in the market with some sellers holding on to their properties in anticipation of higher prices.


Estate agents contacted say the situation has not changed.

Some potential purchasers stopped looking, expecting property prices to go down as they were anticipating that those who had purchased property for speculative purposes using cheap money would dump their properties on the market to settle their debts.


“In general, at the beginning of the year buyers and sellers adopted a wait-and-see attitude and as a result there was no meaningful activity in the market,” Sadomba said.

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