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Property market hits a new low

A FEW years ago, an empty house in any of the country’s residential areas attracted a lot of attention so much that it amounted to marketing itself.

By Taurai Mangudhla

The situation has changed drastically after a wave of low-income housing co-operatives coupled with increased allocation of land to first-time home owners in the country’s cities and towns under different government and private sector schemes.

As the liquidity crunch and a general macro-economic slump that costs thousands of citizens formal employment and steady income streams continue to bite, Zimbabweans now go for affordable residential space as part of an adaptation strategy. The industrial and central business district (CBD) areas have actually experienced the biggest voids recently as companies are either scaling down or closing shop due to a myriad of economic challenges.

Vacant residential spaces are everywhere including upmarket areas with no takers.

Apart from that, tenants with residential land around the capital also opted to build makeshift temporary structures on their stands in order to start saving for development.

This has cost landlords, resulting in huge property voids and defaults on payments.

“I have genuinely struggled to pay rent on time due to problems at work. This is now common and instead of chasing me out like what used to happen a few years back, my landlord is happy to collect the rent when it comes for as long as it’s not too late. He even accepts instalments now because he knows how difficult it is to find a new tenant who can actually pay,” truck driver Joe Manyambo,who resides in Borrowdale said.

“I know for a fact that landlords are struggling because mine has agreed to reduce my rent on two occasions, when my salary was cut by 20% and when my wife lost her job last year August. It was reduced from US$350 for a one-bedroomed cottage to US$320 and now US$290.”

Manyambo is just among many Zimbabweans that continue to bear the brunt of the country’s ailing economy which has suffered huge de-industrialisation, costing thousands their jobs.

According to trade unions, nearly 30 000 workers across various sectors have been rendered jobless as a result of a July 17 Supreme Court ruling which allowed employers to sack staff on three months’ notice. A total of 4 610 companies closed down between 2011 and 2014 resulting in the loss of 55 443 jobs.

The country’s capacity utilisation fell from 36,5% in 2014 to 34,3% in 2015 while the unemployment rate sits around 85%.

“I use only four rooms out of about 20 rooms in my yard including the big cottage because the rentals are my source of income, but it seems I will now be earning less as I am forced to reduce rentals every time I lose a tenant,” Douglas Nyamanza of Borrowdale said an interview with businessdigest.

“A good landlord like myself, who is flexible and maintains the property well, only lost tenants when they were moved to a different town or when they moved to their own house, but now tenants move out to find cheaper accommodation because of economic hardships. I have one very large room which has been available since December and its going for US$250. I have been forced to reduce it from US$300 to US$280 and now US$250, but still no one is taking up the rental, it seems I will have to reduce the rental even further otherwise it remains vacant forever.”

Amina Kachisi, a property owner, with residential space around Harare’s low and high-density suburbs said: “I noticed my houses in the high-density areas give me more money because I can get US$600 for seven small rooms in a suburb like GlenView which is more than what I can get for a three-bedroomed house on Msasa Park, let alone my space in Borrowdale. I have a seven-bedroomed house in Borrowdale, but I can only get offers of around US$1 500 per month which is peanuts really, but what can I do?”

“I was in Europe as a journalist and only came back to Zimbabwe around 2000. I am now old and all I have is my two houses, one in Cranbourne and another one in Mt Pleasant,” said Kachisi.

Currently, property owners have resorted to different social and mass media platforms to market their space, at times with no joy as voids remain high.

Real Estate Institute of Zimbabwe president Siza Masuku recently said real estate companies are grappling with a myriad of challenges stemming from economic problems which have left businesses battling for survival and struggling to pay rentals. This, Masuku said, has resulted in growing defaults and property voids reaching 60%, forcing the sector to adopt survival tactics such as offering rent holidays to new tenants, reducing rentals and offering free internet services in the face of de-industrialisation that is threatening viability of Zimbabwe’s real estate industry.

Problems in the property sector took a toll on the performance of players with listed Pearl Properties last year reporting a 3,85% drop in revenue to US$5,6 million for the eight months to August 31 2015.

The company’s rental income declined to US$4,258 million from US$4,431 million in 2014.

Pearl Properties said occupancy levels declined to 77,37% from 79,93% due to evictions and voluntary vacation while rental per square metre declined to 7,51% from 7,78% in 2014.

Zimre Property Investments in 2015 indicated it was mulling the disposal of its properties in the CBD saying it had good buildings in the wrong place.

Reflecting on the sector’s performance in 2015, property expert Gilbert Gumpo said financial results for listed property companies show that there has been a decline in basic rentals ranging between -2% to -7%.

“Rental increases have been few and far between, limited to sectors that can afford these increases,” said Gumpo.

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