THE international property management firm, Knight Frank, says demand for office space in Zimbabwe remained subdued during the second half of last year, with vacancy rates remaining high at between 30% and 40%.
In a market update, the firm said the biggest blows were felt after the real estate sector was not included among essential services when the government announced blanket lockdowns from March 2020, as the battle to frustrate the Covid-19 pandemic kicked off.
“High vacancy rates have resulted in landlords being saddled with higher operating costs resulting in lower rental returns,” Knight Frank said.
“Landlords have therefore resorted to re-purposing of space in old buildings for occupation by small enterprises and/or individuals,” it said.
Knight Frank said rental rates for offices currently range between US$3,5 and US$8 per square metre depending on location, quality and size.
“Moving forward, we anticipate that remote working will continue to impact the sector leading to subdued demand for formal space,” it said.
In spite of Covid-19 related lockdowns, Knight Frank said the retail sector remained relatively active with a stable demand for space for rent. However, consumption was negatively impacted by high inflation and low consumer disposable incomes.
As a result, prime rental rates declined to between US$12 and US$15 per square metre for suburban locations and between US$8 and US$10 for Central Business Districts, depending on size.
The industrial sector remained strong with regards to warehousing and logistics, the report noted, saying rental rates in Harare increased significantly depending on location and size of space, it said.
The firm said development remained limited without any major construction project.
“However, the sector continues to be impacted by the long-time challenges of power outages, poor water supply and deteriorating infrastructure. Lockdown measures further exacerbated the situation resulting in some tenants completely shutting down and therefore unable to meet their rent obligations. Moving forward, we anticipate that the subdued state of the economy will result in the majority of these defaults being written off.”
“We anticipate that the property market will remain subdued in the short to medium term, with limited movement in both supply and demand,” it said.