Property sector poised for positive turn

POLITICAL changes in the country are expected to bring better fortunes to Zimbabwe’s property sector, which has for years been characterised by depressed sales, falling rental rates and massive vacancies, a report by the Real Estate Institute of Zimbabwe (REIZ) says.

The report prepared by REIZ researcher, Francis Chinjekure, for The Financial Gazette, showed prospects of recovery for the sector on the back of political developments that took place in the country in November last year, following the resignation of former president Robert Mugabe who was replaced by his deputy Emmerson Mnangagwa.

“The unexpected change in the political dispensation which occurred in November 2017 seemed to re-ignite renewed interest in the real estate market,” said the report.

Offshore payment ban rattles property market

A BAN on offshore payments for property sales affected the property market last year, and could have a bearing on property sales during the current year.
A report by the Real Estate Institute of Zimbabwe (REIZ) revealed that 2017 ended on a bad note for the sector as many property owners, who had put their properties on the market, reacted to the ban by simply withdrawing the properties from the market.
Due to the severe cash shortages facing the country over the past two years, most property sellers preferred receiving payments in offshore bank accounts.
“Cash shortages also had a negative impact on sales transaction levels. This was exacerbated by the ban on offshore payments as property owners responded by withdrawing their properties,” REIZ said in a report.

ZPI managing director, Edison Muvingi.

ZIMBABWE Stock Exchange-listed property firm, Zimre Property Investments (ZPI), will tomorrow commission a $13 million shopping mall in Victoria Falls, as investors stampede to the resort town after its recent major airport expansion.

Following the $150 million upgrade of Victoria Falls International Airport in November 2016, major airlines expanded frequencies, while new carriers started flying to the prime destination.
Government has scaled up efforts to transform the town into a special economic zone and turn it into a regional financial centre to attract world class health services to complement an expected boom in tourism.
Zimbabwe’s largest financial institution by deposits, CBZ Holdings, entered the resort town last year to develop hundreds of residential stands.
ZPI said it had been attracted by the projected rapid expansion, and would be deploying significant resources to add a shopping mall to its growing list of top end real estate gems countrywide.
“Following the completion of the Victoria Falls Airport expansion and the increased tourist traffic thereafter, the Zimre Property Investments Ltd is constructing a $13 million shopping mall to complement such a major national development,” managing director, Edson Muvingi said.
The $150 million facelift to the Victoria Falls International Airport was bankrolled by the Chinese.
There has been a sharp rise in arrivals in the past year, which could have significant implications for the country’s tourism industry.
Victoria Falls accounts for 40 percent of Zimbabwe’s total arrivals, with the bulk of its visitors attracted by the millenia old waterfall at the heart of the mighty Zambezi, in addition to its wildlife-rich game sanctuaries.
Two weeks ago, Africa Albida Tourism (AAT), one of the country’s largest tourism firms, said following years of struggle to reach its potential, “Victoria Falls is back”, boosted by the landmark aviation facility whose runway has been stretched to four kilometres from 1,5 kilometres.
It can now handle 1,5 million tourists per annum, from about 
500 000.
There are forecast-busting statistics related to the airport upgrade, showing additional airline seats at a staggering 127 000 during the first year of the expanded airport’s operation.
In March last year, the industry had projected 80 000 additional seats.
Occupancy rates in the resort town’s 1 125 hotel rooms rose by almost 20 percent, according to AAT.
“There was an 18,5 percent increase in hotel occupancy in Victoria Falls in 2017 compared to 2016, with an additional 35 730 rooms sold across 10 hotels, which together have 1 125 rooms available per night,” said AAT chief executive officer, Rose Kennedy.
“These growth rates in key ratios are way in excess of regional industry norms, and add substantial weight to the fact that Victoria Falls is back and the future is looking very bright. This is extremely positive news as the first quarter is usually the poorest business period in the destination,” Kennedy said.
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The High Court has absolveda leading  real estate firm of negligence.

THE High Court has absolved leading real estate firm, Guest & Tanner Real Estate, of negligence in a case in which a Harare woman lost $47 000 in a fraudulent property sale.

The court ruled that Nellie Wanjowa had failed to prove that the real estate firm had not acted diligently and professionally when she and her husband bought a Mandara residential stand which later became subject of a police investigation after claims that the property had been sold fraudulently.

Bishow Parajuli is UN Resident Coordinator and UNDP Resident Representative in Zimbabwe

THE UK Department of International Development (DFID) on Friday announced a £21.5 million grant to the Zimbabwe Resilience Building Fund (ZRBF), which seeks to contribute to increased capacities of vulnerable rural communities to withstand shocks and stresses, ultimately leading to a reduced need for humanitarian responses and an improvement in their well-being.

In a signing ceremony held with UNDP at the UN office grounds in Harare, Annabel Gerry, Head of DFID in Zimbabwe said: “Climate change is already evident here – this year we’ve been experiencing hotter days and higher frequency of dry spells during the rainy season. Without adapting – poverty, food insecurity, malnutrition, and environmental degradation will continue to be serious challenges in Zimbabwe, particularly in rural areas – adding to the existing difficulties of the estimated one million Zimbabweans who are currently chronically food insecure.”

“Over 120,000 people have been supported to cope with the effect of climate change through various interventions and ZRBF gives us a unique opportunity to push forward the resilience building agenda in Zimbabwe, which as the break between rains this season has reminded us, remains a huge challenge but also an opportunity for the country”. 

The ZRBF is a five-year multi-donor fund managed by UNDP in close collaboration with the Ministry of Lands, Agriculture, and Rural Settlement, as well as other national players such as Ministries of Environment; Water and Climate; Public Services and Labour and Social Welfare; Local Government, Public Works and National Housing; as well as the Food and Nutrition Council.

Bishow Parajuli, UN Resident Coordinator and UNDP Resident Representative thanked DFID for the generous contribution noting it will enable ZRBF to reach communities living in extreme poverty and high levels of food insecurity because of negative effects of climate change and stressed on the great value for investments.  “Through the ZRBF, some 830,000 labour endowed vulnerable people in 18 rural districts are targeted with climate-smart agriculture; nutrition and livelihoods; productive asset creation; access to finance and value chain development; and community-based natural resources management interventions,” said Parajuli.    

Zimbabwe has for the last fifteen years, experienced a social and economic crisis due to effects of climate change or extreme weather conditions and poor economic development leading to the high levels of poverty. According to the Government’s Poverty Income Consumption and Expenditure Survey report, the national poverty rate stands at 62.6% while the rural poverty rate is at 76%, with 30.4% of the rural population living in extreme poverty and 33% of under-5 children stunted.

Resilience building of labour-endowed vulnerable people has emerged as a useful framework among humanitarian and development actors and the Government as a longer-term cost-effective poverty reduction strategy. Officially launched in May 2016 with generous financial and technical support from European Union (EU), DFID, Sweden and UNDP, the ZRBF prioritizes 18 vulnerable districts targeting over 830,000 people with a total budget of USD 75 million over the life of the programme.

The programme is implemented by consortia of international and local non-governmental organisations, community based organizations, academia and private sector partners. The overall objective of the ZRBF is to contribute to increased capacities of at-risk communities to protect development gains and achieve improved well-being outcomes in the face of shocks and stresses. This will be achieved through three interlinked components:

• Creating a body of evidence and building capacity for increased application of evidence-based policy making,
• Improving the absorptive, adaptive and transformative capacities of at-risk communities and
• Setting up a crisis modifier mechanism which will provide appropriate, predictable, coordinated and timely response to risk and shocks from a resilience perspective.

Under the 2016-2020 Zimbabwe United Nations Development Assistance Framework (ZUNDAF), the UN in Zimbabwe is supporting efforts to improve disaster risk reduction in all its dimensions of exposure, vulnerability; strengthening of disaster risk governance; preparedness to “Build Back Better”; and strengthening of partnerships. This initiative is in line with the outcome document of the fourth UN Disaster Risk Reduction Summit held in Cancun, Mexico in the second half of 2017.

Expressing gratitude to DFID for the financial support to the ZRBF, Ringson Chitsiko, Permanent Secretary to the Ministry of Lands, Agriculture and Rural Resettlement said “The ZRBF is consistent with the Government of Zimbabwe’s climate change response policies and strategies and national development priorities.”

Giving testimony as one of the consortia that are implementing ZRBF funded resilience projects, Mr. Solomon Mutambara, Team Leader of ZRBF Enhancing Community Resilience and Sustainability (ECRAS) Project said, “With financial support given by ZRBF, households and communities have begun to adopt practices that enable them to protect existing ways of making a living, diversifying their sources of income, or changing their livelihood strategies.” “The programme significantly contributed to the strengthening of targeted communities’ ability to withstand shocks during the flooding last year and the ensuing drought this year.”

Noting the convergence of ZRBF’s focus on climate resilient infrastructure, linking of smallholder farmers to markets, and DFID’s Economic Development Strategy, Ms Gerry said, “The ZRBF specifically targets women and aims to tackle gender inequality. Of the 830,000 beneficiaries targeted, at least 25% of the direct beneficiaries are from female-headed households. DFID helps marginalised groups, including people with disabilities with strategic sectors such as water and energy through promotion of good solar technologies for pumping water for agriculture production and domestic use.”
DFID is working to support the poorest Zimbabweans as well as at the same time helping lay the foundations for a more prosperous, peaceful and democratic Zimbabwe, driving growth and poverty reduction. DFID’s key priorities in Zimbabwe are: i) Strengthening peace, democracy, and good governance ii) Promoting economic reform and prosperity iii) Strengthening resilience and responding to crises and iv) Supporting basic services for the poorest and most vulnerable.

The agreement was signed in the presence of representatives from the Ministry of Lands, Agriculture, and Rural Settlement; other sister Line Ministries; UK; EU; Sweden; UNDP; the Media and the grant recipients.

THE High Court has reversed the attachment of an upmarket Harare property after the wife of the debtor, who is the co-owner of the house, challenged the process on the basis that her own share had been unlawfully included in the attachment.
Olivia Mukoko successfully challenged the attachment of the house that she jointly owned with her husband, Blessing Mukoko, after Stanbic Bank had sued the husband over a debt. The two are married out of community of property.
Justice Lavender Makoni ruled that evidence presented before the court showed that Olivia was the owner of the undivided half of piece of land in Greendale measuring 5 882 square metres, which the Sheriff had attached to satisfy the bank’s debt.
The court ruled that since the debt was owed by Blessing alone, the creditor (Stanbic) was supposed to instruct the Sheriff to attach an undivided half share of the property belonging to the debtor and not the entire property.
“In result, I am satisfied that the claimant owns an undivided half share of the attached property which was wrongfully attached. The attachment is null and void,” Makoni ruled
“The claimant (Olivia) prayed for costs on a higher scale on the basis that the judgment creditor continued opposing the application when it was clear that the attachment was null and void, causing the claimant to incur unnecessary litigation costs. I agree with the claimant’s contention. She was unjustifiably compelled to institute litigation and incur expenses in a matter which would have been resolved by
a concession by the judgment creditor.”
The court noted that the attachment of the property in 2015 had inconvenienced Olivia by putting her share of the property out of her reach.
“The claimant’s property is unjustifiably encumbered and she cannot freely deal with her property as deems fit. As appears from the papers she intends to sell her undivided half share.”
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Reserve Bank of Zimbabwe  governor, John Mangudya

By Farai Mabeza

RESERVE Bank of Zimbabwe governor John Mangudya has warned against making offshore payments for immovable properties sold in Zimbabwe.
Presenting his monetary policy statement last week, Mangudya said the central bank had realised that some payment arrangements for both the sale of immovable property and management fees were being done offshore.   “Stakeholders in the property market sector are advised that such practices are not consistent with current exchange control rules and regulations. Accordingly, all proceeds from the sale of immovable properties in Zimbabwe should be received in the country and accounted for through the normal banking channels,” he said.
Exceptions to this policy would require prior exchange control authority, he said.
“Similarly, the current policy that limits the annual payment of management, technical or consultancy fees to three percent of annual revenue shall continue to apply to all businesses with exceptions requiring prior exchange control approval,” Mangudya added.
Zimbabweans have been opting for offshore transactions to cushion themselves from a domestic foreign currency crisis.
Mangudya said as at December 31, 2017, the banking sector funded 5 700 new housing units valued at $172,08 million and this was projected increase to 11 611 units valued at $365,63 million as at December 31, 2018.
He urged banking institutions to come up with innovative and affordable mortgage funding models to meet the increasing housing demand.
“It is encouraging to note that the highest number of housing units continues to be targeted at low income households.
“Significant imbalances, however, exist in the housing market, wherein demand outstrips supply and to this end, the banking sector plays a central role in bridging this gap,” Mangudya said.
According to the central bank chief, the quality of banking sector loans has improved over the years.
The ratio of non-performing loans was 7,08 percent as at December 31, 2017, down from 7,87 percent as at December 31, 2016 as banks continued to strengthen their credit risk management systems in the aftermath of balance sheet clean-ups through the disposal of non-performing loans (NPL) to the Zimbabwe Asset Management Corporation (ZAMCO), which was set up by the central bank.
As at December 31, 2017, ZAMCO had acquired NPLs amounting to $987 million.
“These acquisitions have assisted banks to clean up their balance sheets so that they are better able to support the economy through provision of credit,” Mangudya said.
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The demand for housing has of late outstripped supply compounded by city to city migration especially to major cities such as the capital city, as individuals look for employment.

ZIMBABWE’S banking sector is projected to fund 11 611 new housing units valued at $365,6 million by December 31, 2018, the Reserve Bank of Zimbabwe (RBZ) has said.
Last year, banks funded 5 700 new housing units worth $172 million.
Presenting his monetary policy statement last week, RBZ governor John Mangudya said the provision of housing was a critical pillar in the infrastructure ecosystem of any economy and should be prioritised.
“The Reserve Bank opened up the building society segment to allow other banking institutions such as commercial banks, to offer mortgages to deepen the sector. As at December 31 2017, the banking sector funded a total of 5 700 new housing units valued at $172,08 million and is projected to increase to 11 611 units valued at $365,63 million as at December 31, 2018,” said Mangudya.
Government has a mammoth task of providing accommodation and reduce the ballooning housing backlog estimated at around 1,2 million houses, with Harare alone requiring about half a million units.
Mangudya said the highest number of housing units would be in the low income, high density segment. Significant imbalances continue to exist in the housing market, with demand outstripping supply forcing the banking sector to play a central role in bridging this gap.
“Against this background, banking institutions are urged to come up with innovative affordable mortgage funding models in order to meet the ever increasing housing demand,” he said.
Real Estate Institute of Zimbabwe president Mike Juru has said the country needed an estimated 15 to 20 years to clear its national housing backlog, which has been ballooning in recent years, pushed by the increased rural to urban migration.
The demand for housing has of late outstripped supply compounded by city to city migration especially to major cities such as the capital city, as individuals look for employment.
Government, which has indicated that it is mobilising $182 million for housing projects, is collaborating with various stakeholders including public sector entities, the financial sector and private individuals through self-financing schemes as well as housing cooperatives.
Meanwhile, the quality of the banking sector loan portfolio has improved over the past 12 months. The ratio of non-performing loans (NPLs) was 7,08 percent as at December 31 2017, down from 7,87 percent as at December 31, 2016 as banks continued to strengthen their credit risk management systems in the aftermath of balance sheet clean up through disposals of NPLs to the Zimbabwe Asset Management Company (ZAMCO).
As at December 31, 2017, ZAMCO had acquired NPLs amounting to $987 million. These acquisitions have assisted banks to clean up their balance sheets so that they are better able to support the economy through provision of credit.
“ZAMCO has now embarked on the resolution and recovery phase of its operating cycle. In this phase, all efforts are devoted towards implementing recovery strategies and collecting from the borrowers whose NPLs have been acquired by ZAMCO,” said Mangudya.
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TM Group of companies chairman, Tinashe Manzungu

DIVERSIFIED Gweru based property development firm  TM Holdings has extended its footprints and portfolio into financing prospective home-seekers who are in need of finance to  construct their houses.

The rare facility can be processed in a record time of 30 minutes and the disbursement is done through the group’s subsidiary known as Tintrue Finance.The loans can be accessed by  formally employed. 

Speaking about this development, chairperson of TM Group of companies Tinashe Manzungu, said the loans were introduced to cater for prospective home seekers.

“We now offer instant loans for clients whom we say are salaried. These are formally employed and receive salaries in time. These can apply and get the loan after 30 minutes of application. We also have come up with loans for the in-formalised sector who have been of late not been recognised by the banks as they do not have collateral. These loans are disbursed within 24 hours of application,” said Manzungu.

He said the  salary-based loans were emergency loans designed to sustain and cushion the lifestyle of their clients until end of month and the loans attracts  maximum intrest of  10 percent per month.

The launch of this service has been met with an overwhelming  response which has seen an influx of walk in clients and those who have already joined the facility for mortgage loans.

The company enjoys a lucrative ‘catchment area’ as it is located within the vicinity of giant miners Unki Mines and Midlands State University where the employees from these institutions stampede to get the service offered by the diversified group which boasts of portfolios in construction, real estate and land development, financial services, hospitality, health insurance and agriculture (Beef production).

In essence, the business model of TM Holdings’  through its subsdiary Tintrue Finance  allows  clients either in the formal or non formal sector access to finance to construct  dream home and the premium is paid over an agreed number of years.

The company has embraced the new dispensation which they believe is creating a conducive environment for doing business.

Meanwhile,  Tinashe Manzungu the visionary of TM Holdings is an award winning entrepreneur  and the diversified firm has Zimbuild construction, Zimbuild Property Investments, Luxury Living Interenational, Tintrue Financial Services, Zimbabwe General Medical Fund and African Heaven Funeral Services. Manzungu is a holder of a Geography and Environmental Science Honours Degree from the Midlands State University and obtained a Master’s and Doctorate in Business Leadership from the International Women’s University. He opened his first company “Tinshel Properties and Construction”, a company born out of empty coffers but through his ‘charisma’ negotiated a deal that saw him acquire a piece of land at Ascot, Gweru, at zero deposit.

President Emmerson Mnangagwa

REAL estate development continues to be hampered by lack of capital, the Real Estate Institute of Zimbabwe (REIZ) has said.
REIZ vice president, Alexander Millin, told a land workshop recently that the sector’s problems had been worsened by lack of a clear land policy.
“There is tremendous potential for real estate development. We have barely scratched the surface as the market has considerable depth.
“It, however, lacks the capital, reputable independent developers and researchers which, when combined with a clearly defined, demonstrable and realistic land tenure policy will boost activity in the sector,” Millin said.
The absence of long-term financing has restricted residential and commercial developments, with some projects being done in phases, while others have been abandoned.
The real estate sector has also been affected by the serious liquidity problems in the country. This, coupled with the absence of meaningful economic activity, has resulted in the dearth of long-term capital loans and foreign direct capital investment.
For years now, Zimbabwe has witnessed few commercial property developments and traditional players have withdrawn from the market.
On the housing front, illegal settlements have sprouted in urban areas that need to be regularised or removed through either relocation or eviction of settlers.
Housing development has been dominated by land barons, who have parcelled out State and urban land, creating unplanned settlements.
President Emmerson Mnangagwa recently appointed a six-member Commission of Inquiry on Urban Land to clamp down on illegal land allocations. Most of the land barons are linked to the ruling ZANU-PF party and take advantage of this for protection.
Most of the settlements do not have basic services such as water and sewer reticulation. Residents of these illegal settlements depend on shallow wells and blair toilets, which are built in cramped spaces, creating a serious health hazard.
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Real Estate Institute of Zimbabwe president, Mike Juru

THE Real Estate Institute of Zimbabwe (REIZ) says it is concerned about the huge variations in valuation by its members on properties, a situation that raises questions about ethics and professionalism in the sector.
This emerged in Harare last week when REIZ held a seminar on good corporate governance and continued professional development for members.
REIZ president, Mike Juru said members were not adhering to internationally accepted valuation standards.
“We are aware of the valuation standards that are in the Valuers Act… it talks about international valuation standards,” he said.
“It is a voluminous book to read, but have we taken time to go through that? We are busy managing properties, but have we taken time to look at the standards that are available for property management? For us, when a client comes to any one of us, we can compete on anything else, but at the end of the day we should be able to deliver the same service,” Juru said.
Internationally, when valuers assess the value a property, a variance of between five percent and 10 percent is acceptable. But in Zimbabwe, the difference may be seven fold, a development that has raised fears of serious lack of skills, professionalism and ethics among valuers.
Apart from the common purpose of selling, there are many other reasons why properties have to be valued. These include speculative valuing for investment purposes, valuing for the purpose of calculating tax, while financial institutions require professional valuation services for the purposes of assessing the value of collateral assets pledged for loans.
Valuers are also required in cases of disputes such as in matrimonial or corporate divorce or sharing of deceased estates.
In many of these cases, chances are that some people may try to either inflate or deflate the value of assets depending on their interests.
However, some valuation reports have only served to worsen the disputes because of the huge differences between them.
Kudakwashe Chadambuka, general manager for valuation services at Dawn Properties, said the problem of disparities in valuation reports was a result of a combination of factors.
“Most people treat the transaction that they would have made as a secret so you have a situation where company A would have transacted in Mabelreign and when I want to do a valuation in Mabelreign, automatically it should be based on that information, but that information is not readily available unlike in other countries like in South Africa where that information is made available on a website,” she said.
Former REIZ president, Mhlanguli Mpofu, urged members not to be influenced by interested parties in coming up with valuation reports, but to strictly adhere to professional valuation standards.
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Property sector poised for positive turn

POLITICAL changes in the country are expected to bring better fortunes to Zimbabwe’s property sector, which has for years been characterised by depressed sales, falling rental rates and massive vacancies, a report by the Real Estate Institute of Zimbabwe (REIZ) says.

The report prepared by REIZ researcher, Francis Chinjekure, for The Financial Gazette, showed prospects of recovery for the sector on the back of political developments that took place in the country in November last year, following the resignation of former president Robert Mugabe who was replaced by his deputy Emmerson Mnangagwa.

“The unexpected change in the political dispensation which occurred in November 2017 seemed to re-ignite renewed interest in the real estate market,” said the report.

“Basically, the outlook would see marginal growth of the sector with stability in rentals, reduced voids and operating costs, appreciation in capital values and improved profitability. The economy is expected to continue on a growth trajectory, driven mainly by mining due to the partial recovery in international commodity prices and agriculture on account of timeous support from both the government and the private sector. The positive developments from the two sectors are expected to benefit the rest of the economy,” the report said.
The institute said 2017 was a bad year for the property sector due to liquidity challenges and foreign currency shortages, which affected industrial production and the commercial sector.
“This resulted in marginal increases in voids and rental decline as companies surrendered space. Marginal decrease in capital values were also felt in property portfolios mainly due to rental reductions. Very few sales were recorded in the commercial and industrial property sector. Low disposable income saw increased demand for low income housing. Demand for properties with a price below $200 000 remained positive.”
The report indicated that rental decline during the year averaged between eight percent and 20 percent depending on the sector and operating costs increased by between 20 and 30 percent, while vacancies remained extremely high at around 70 percent.
“Demand for CBD office space remained unstable with more movements/companies reviewing rentals to keep tenants in the CBD. Office parks and suburban offices were more attractive compared to CBD offices. (There was a) two way movement in rental arrears as some companies managed a reduction but some saw an increase.”
It said the sector remained a sellers’ market; sellers dictated the level of stock on the market despite an improvement in the level of mortgage funding and there was an uptick in demand for undeveloped stands and cluster houses.
The report added that the 2018 National Budget presented by Finance Minister, Patrick Chinamasa, which was predicated on creating conditions for production-led economic recovery, attracting foreign investment and creating conducive environment for investment, was set to increase activity in the market.
“Investment in infrastructure and special economic zones must be vigorously pursued. Liquidity constraints need to be contained or at best eradicated. Demand for real estate by the Diaspora could be the catalyst that proves to be the ultimate game changer in the sector.”
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Despite the tough operating environment, FMP recorded a 48,75 percent increase in profit after tax.

PROPERTY concern, First Mutual Property (FMP), expects a turn in fortunes under President Emmerson Mnangagwa’s government as it seeks to stem a decline in revenue due to increasing voids during the full year to December 31, 2017.
The firm, which has had to review rentals downwards in an attempt to hold onto a thinning portfolio, anticipates demand for space to increase in the near future on the back of Mnangagwa’s drive to attract investment.

Tenants continue to shun exorbitant office and residential space, seeking refuge in former light industrial areas.

THE property market remained depressed in the first quarter of 2018 due to a subdued economy, with rental income suffering a knock as voids increased during the period, a report by Old Mutual Securities (OMSEC) said.
In its first quarter economic and equities review released on Monday, OMSEC said the unstable economic environment had an adverse effect on the property market, resulting in increased voids, arrears, decreasing property returns and values across the board. The sector was, however, expected to recover in response to the country’s economic development.
“The drop in economic activity and higher voids and rental arrears has seen property yields remaining depressed. High financing costs as well as the high cost of building materials for new property developments will see property prices remaining comparatively high when compared to regional peers. In the outlook, we expect a nascent recovery in this sector that will be linked to the level of economic activity,” said OMSEC.
Various property sector reports released in the year to December 31, 2017 indicated that the retail property sector recorded marginal returns, although rentals within that sector have declined.
The office property sector had been the worst affected during the period under review as more vacancies and arrears were recorded, while the industrial property sector continued to perform poorly due to low capacity utilisation in the manufacturing sector.
Tenants have continued to rationalise space occupied in order to reduce the rental costs and related expenses. Most buildings have also become white elephants due to prohibitive rentals.
Tenants continue to shun exorbitant office and residential space, seeking refuge in former light industrial areas.
Commenting on the money market, OMSEC said average interest rates for money market investments were restricted by the Reserve Bank of Zimbabwe (RBZ) interest rate floor and ceiling of between six percent and 12 percent. “The RBZ’s active involvement in money market investments through their seven percent investment savings bond is expected to thin margins for institutional money market players as minimum deposit rates could rise towards seven percent. We do not expect interest rate spreads to improve on the money market given RBZ interest rate controls and continued moral suasion to lower bank lending rates,” said OMSEC.
Going forward, OMSEC said pro-business policies were expected to maintain the momentum of improved recovery prospects for Zimbabwe.
“The equity sector remains attractive in the short to medium term whilst money market yields are expected to improve for entities that can invest directly in government and quasi government paper. The property sector is not expected to grow significantly in the medium term,” OMSEC said.
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