adminand middle income properties.
The price bracket implored in defining what Upper Market Properties are for the purposes of this article is a basic minimum of US$140 000 per property. The table is only limited to residential or former residential properties that have since been converted to commercial use. Ratios were calculated using an average property of four bedrooms, lounge, dining room, fitted kitchen, en- suite bathroom and a separate bathroom.
It is critical to understand from the onset that prices of target properties in these target areas were not uniform as individual properties were valued according to state, extras, allure and design which resulted in differing prices in some by passing the million dollar mark. Stand size of individual properties were considered in an effort to maintain uniformity, however in areas like the Borrowdale Brooke it ignored because of its high price per square metre.
The table takes into account 26 suburbs considered to make up some of the upper segment of Harare’s property market, although this list did not exhaust all areas. We find that Greendale has the lowest Property Price Average (PPA) among the Upper Market Housing at US$155 000. Pricing may have been affected by the general lack of water in some parts of Greendale and the prevalence of old run down properties. Greendale is also primarily for residential purposes, as opposed to the commercialisation of areas such as Avondale, Milton Park and Belgravia.
However, it is imperative to note that Greendale is divided into two different pricing categories — Greendale North and the rest of Greendale. The latter, which is the greater part of Greendale, is where most clusters and dilapidated properties are situated, while the former borders Chisipite and follows similar pricing trends. Based on the ratio in size of the rest of Greendale to North Greendale, we find the PPA is reduced significantly. Surprisingly we find that though it has the lowest PPA,
Greendale had the second highest Annual Rate of Increment (ARI) in 2011 at 15.87 percent.
The table goes on to indicate Borrowdale Brooke as having the highest PPA, with residential land per square metre here being much more expensive than anywhere else. It also has the smallest average land size in the upper market. Such a phenomenal price on this land is largely determined by its exclusivity as the only golfing estate in Harare.
Admittedly there are some parts of other upper end locations that commanded a higher purchase price, such as the Borrowdale situated within the Golden Triangle where properties had asking prices as high as US$1,5 million. But the overall average price of Brooke homes remained the highest at an average of US$380 000.
Putting into consideration the current liquidity crunch and lack of adequate housing finance, such a price tag will not shoot up significantly — ensuring that
Borrowdale Brooke recorded one of the lowest ARIs of 2011 with 8,77 percent.
The economic hardships that our country has been facing translate to a volatile pricing system of property with no real pattern to increments. Idealistically in a stable and well-financed economy real estate should have an ARI or IRR (Internal Rate of Return) that falls between 13,5-15 percent. In Zimbabwe’s case we find that our ARI percentages are all over the place. Going as low as 5,17 percent and as high as 15,91 percent, there is a clear 10 percent differential as compared to an ideal 1,5 percent.
Without facilities such as Balloon Mortgages, it is hard to control property pricing as it follows more natural avenues of demand and supply in conjunction with available finance. The lowest ARI in the upper-market is for housing in Belgravia, whilst the highest is for the Grange, as mentioned earlier. Belgravia is a diplomat-populated area and serves both a residential and commercial use.
More importantly, Belgravia properties rarely go onto the open market, with most of it taken by owners without an intention of selling. This means that its prices are not as market driven as those that are found on a regular basis. The Grange, an upper market suburb that saw a lot of housing construction taking place, is an area that saw 2010 and 2011 marking the completion of a significant number of properties, and in turn an appreciation in land value. Hence Grange experienced the biggestpercentage leap in pricing.
Chisipite properties experienced the highest demand from buyers and least average listing period on the market in 2011. Most property investors and buyers looked to buy housing in this area as it had arguably the best location if one was purchasing to fulfill their esteem needs. Falling within the Golden Triangle, in close access to four shopping complexes, near private schools, a reasonable distance from the CBD, making it the biggest target area of investment. This is why Chisipite easily scores the highest ARI (12,36 percent) for suburbs with a PPA of US$300 000 and above.
Why Chisipite doesn’t score the highest ARI is because though housing in this area had the highest demand, the demand itself was for rundown housing by investors looking for cheaper and more compact housing by once off buyers due to financing constraints. This meant the more expensive houses in this suburb that could cost as much as US$800 000 had a much slower turnover rate and would not rise in price as quickly as the cheaper alternatives.
Demand of upper market housing was measured by the average of how long a property stayed on the open market before a successful sale was made. Chisipite averaged the quickest turnover time of three weeks two days with demand peaking around June to September, while Borrowdale was second at three weeks six days. With all these facts in mind, it becomes easier to make more sound property investments and even go on to speculate increase or decrease in property pricing.
- Vengai Madzima is a property investment consultant and analyst with Wisdom Properties. He can be contacted on 0772 468093 email: [email protected]
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