FINANCIAL services giant Old Mutual Zimbabwe says it plans to repurpose some of its buildings in line with current market dynamics where tenants have scaled down occupied space.
Most of the affected buildings are located in central business districts (CBDs).
The crisis facing the country’s real estate sector has been precipitated by long-running economic turbulence locally, which has seen a massive closure of firms.
However, in the past two years, Covid-19-induced hard lockdowns have seen companies changing the way they operate, with some leading firms reducing space as staff work from home.
The result has been a low appetite for rental space in CBDs.
Worsening conditions in CBDs, such as the mushrooming of street vending, congestion, noise pollution and high operating costs have also pushed tenants out of CBDs.
Many of these have relocated to emerging real estate gems that have cropped up in quieter locations on the peripheries of CBDs. Traditionally, pension funds and insurance firms have invested in properties as they tried to hedge against inflation and other economic ills.
Retrenchments have also contributed to huge voids.
Old Mutual Life Assurance Company managing director Rutendo Magorimbo recently told this publication on the sidelines of the Zimbabwe Association of Pension Funds annual conference that pension funds had been affected the most.
“The issue is around post-Covid-19 where we have a number of companies that are now doing more work from home and are using less office space, resulting in a number of offices in the CBD having many voids,” Magorimbo told businessdigest.
“So we are looking at repurposing our buildings by looking at where the demand is. There is a lot of demand for student accommodation. There is demand for smaller spaces in terms of shops. You have seen what we have done with the Eastgate market.
We have created smaller compartments as we respond to the demand in the market.” she said, adding that there was a lot of demand for student’s accommodation and space for shops.
Magorimbo said the group was also looking at diversifying the property asset allocation.
She said the group was previously concentrating in the CBDs.
But it was now looking at developing office parks in line with the shift out of CBDs.
“Where we are not able to dispose, we are looking at repurposing the buildings,” she said.
Old Mutual follows several other property firms that have announced plans to repurpose their buildings. Some firms have indicated that space being left empty by companies in CBDs could be transformed into residential apartments