Foreign currency choking the economy have drastically reduced the number of transactions in the real estate market, businessdigest has learnt.
By Kudzai Kuwaza
The development comes at a time the country’s economic crisis is characterised by a debilitating liquidity crunch, a severe cash shortage, low investment inflows and company closures.
Real Estate Institute of Zimbabwe president Mike Juru said the shortage of foreign currency has virtually halted transactions in the sector, creating a domino effect.
“In a market where we do not have the United States dollar, those selling their properties are requesting their payments in US dollars. This has slowed down transactions.
Transactions have nearly gone down to zero,” Juru said. “The transactions that go through the agents have also been reduced. It is not just us who are affected but also the lawyers who do the conveyancing and the government who do not have the revenue from stamp duty and capital gains tax. The foreign currency shortage has caused untold suffering. The lawyers, the estate agents and government are losing out. ”
He said higher end property owners were using their investments as a hedge against inflation, whittling down activity in the sector.
Juru added that the foreign currency deficit had also impeded the development of property as most materials used to do so are imported.
“Unfortunately, our local industry is not yet producing the fine finishings that would make a property attractive,” Juru pointed out. “You talk of ceiling boards, floor tiles and melamine boards which all need to be imported for quality housing. However, because of the lack of foreign currency we will not have as good quality for our real estate sector.”
As a result of scarce foreign currency, the local manufacturing sector could not fill in the gap to produce the fine furnishes needed to develop properties in the real estate sector.
“It is a catch 22 which is evolving around the issues of forex. Projects which have been started are stalled because there is no forex,” Juru said.
He noted that there has been an alarming influx of bogus estate agents, a situation which was tarnishing the sector.
“People just wake up and want to transact and do work that is supposed to be done by professionals and the loser at the end of the day is the public,” Juru said. “People should know who is registered to avoid tarnishing the image of the industry because of a few unscrupulous individuals.”