Zimbabwe property values are being depressed by various factors that are militating against maximisation of returns from property investments thereby disadvantaging pension funds and pensioners, a leading property expert has said.
Report by Clive Mphambela
Presenting a paper on Real Estate Valuations in Zimbabwe at a workshop arranged by the Zimbabwe Association of Pension Funds (ZAPF) on Wednesday this week, Trust Properties Limited MD Isaac Chimbetete, said there was a marked depression in the market values of properties chiefly due to valuation challenges associated with structural deficiencies in Zimbabwe’s real estate sector, amongst them the unavailability of a benchmarks discount rate in the economy.
He said while the economy had since moved from pegging property values and rentals in fuel coupons and Old Mutual Shares, there were still challenges in assessing the true value of properties in Zimbabwe due to the lack of widely and publicly available data on property transactions that are taking place in the market.
He bemoaned the absence of a visible property index and the lack of a comprehensive electronic database at the deeds registry, which property valuers can access for the purposes of accurately assessing the valuations of properties on the market.
“Right now, unfortunately, if one gives a property to three different valuers to get an estimate of value, he is likely to get three very different opinions,” he said.
Chimbetete said a correction was required in the market because at present one had to rely on his or her own professional network for information.
He, however, said Zimbabwe’s valuation sector was run by professionals who conform to best practices in valutaions and estate agency practice
He pointed out that to get significant valuation data, five or more years of market trading data or cashflows for a particular property were needed, but Zimbabwe’s property sector has been dollarised for just over three years.
“As a result of the information gaps, there are very few transactions happening in the market at the moment,”Is it information or liquidity? Chimbetete said part of the reason why Zimbabwe’s property values were lower was because Zimbabwe has lower rentals per square metre on average compared to the property sectors in the region.
However, research has shown that construction costs are significantly higher in Zimbabwe for most property classes compared to the region, he said.
Chimbetete said construction costs in the residential sector and mainly in the low and medium cost houses in Zimbabwe were more or less the same as those in neighbouring South Africa because most of the building materials can be procured locally.
According to Chimbetete, construction costs in other property sectors, namely; retail and shops, commercial offices, and industrial propertities were relatively cheaper in South Africa than in Zimbabwe because building construction estimates were based on current local supply and fix costs for building materials, labour, plant and equipment often after very keen selected competitive tendering and this is common in RSA considering the availability of local building materials.