ZIMBABWE’S property market was subdued in 2012 with little growth in supply as investors remained wary of losing their capital in a country without policy certainty, experts say.
Report by Taurai Mangudhla
Bard Real Estate (Bard) MD Boysen Mutembwa said there had been insignificant activity on the local property market in the year under review owing to the high risk associated with investing in the country mainly due to policy uncertainty as a result of the indigenisation regulations.
“As a result, we haven’t seen a significant rise in property stock both on the commercial and residential side,” Mutembwa said.
“Going forward, it is hoped there will be policy certainty in order to attract investors.”
The country has huge investment opportunities in property with government figures indicating the nation has a backlog of at least two million houses because there has not been meaningful projects that have tried to reduce the housing shortage from 2008 to 2011.
This means a high demand for residential accommodation in Zimbabwe, which is also reflected in the statistics released by Zimstat.
The statistics indicated that out of an urban population of 11,9 million people, only 6,783 Zimbabweans own houses, meaning over 2,2 million people translating to 17% are renting and 9% are adults still staying with their parents.
At a Real Estate Summit last month, National Housing secretary David Munyoro said affordability was a major hindrance to property development, as most Zimbabweans still earn below a living wage.
Paradise Property Group head researcher Mennard Chekayi said despite liquidity constraints and challenges with amenities like water and electricity, high density residential property was the most lucrative investment in the sector this year.
“High density residential property had the best value this year because payment was assured as a result of good quality tenants, with defaults less than 5%,” he said, adding defaults were high in middle and low density areas.
“Most of the cases in court over nonpayment of rentals are in the low density areas.”
As result of economic challenges, Chekayi said businesses have converted their office space to retail, as companies fail to pay rentals which are as high as US$25 per square metre.
He said industrial property underperformed due to economic challenges as companies are still recovering from a decade of economic stagnation and hyperinflation.
“A lot of people who own industrial property have actually been applying land re-designation to convert the space to retail space because industries are not performing and the few that are performing mostly have their own space,” Chekayi said.