Property developers are capping payment terms and scaling back long-range plans over fears the adoption of Zimbabwe Gold (ZiG) as the sole currency by 2030 will trigger exchange rate losses.
The shift is being driven by Statutory Instrument 218 of 2023, which permits the existing multi-currency regime only until 2030. After this date, ZiG will become the sole legal tender.
“The current surge in property development is backed by the stability provided by the multicurrency regime,” Arnold Khanda, interim chairperson of the Property Developers Association of Zimbabwe, told businessdigest.
“Property development is a long-term business, with returns typically coming after three to five years after the initial investment.”
“Currently, all sales contracts are being made in US dollars, and consequently, most developers are only giving terms up to 2030 to avoid the exchange risk,” Khanda said.
“No one yet knows whether the US dollar will still be legal tender come 2030. Previous rapid changes in exchange rates have left many developers facing bankruptcy.”
He said developers typically require four to five years to map out long-term plans, leaving them exposed should the policy be implemented.
“So, as it stands, developers are either taking huge risks and offering terms beyond 2030 or are coming up with innovative strategies that will allow for a renegotiation of prices should the currency regime change. As we approach 2030, we are most likely to see a slowing down of new projects going for sale,” Khanda warned.
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He said current high activity from local and foreign investors in the sector was likely to shift.
“As we approach 2030, we will see most developers building stock for rentals, and I think even more will be investing in neighbouring countries where there will be less perceived exchange risk.”
Property mogul Ken Sharpe also warned during the Zimbabwe Independent’s Banks and Banking Survey and awards ceremony held in Harare last week that investments would slow down because of the policy, as investors required a stable currency.
“The ZiG is perceived as a risky currency. While there is growing confidence in the government’s fiscal discipline, that confidence has not yet truly transformed into confidence in ZiG,” Khanda said.
