admin
Enacy Mapakame
The real estate sector is expected to see a mixed bag of opportunities and challenges during the financial year 2024, according to analysts’ projections.
According to analysts, one notable trend that is expected to continue is the increase in vacancy rates, particularly in the central business district (CBD), but prospects still remain high in other areas outside the CBD.
“However, it is crucial to emphasise that while demand has waned in the CBD, it has not disappeared entirely,” said Equity Axis in a property sector review.
“Instead, occupiers have redirected their focus to suburban areas, seeking alternative locations for their offices. In fact, numerous prominent corporate entities have already made the strategic decision to relocate to the suburbs, recognising the potential benefits of such a move.
“This shift in preference has paved the way for property owners to capitalise on the changing dynamics and realign their investments accordingly,” said Equity Axis.
The residential segment is expected to remain stagnant, with lackluster sales performance.
One of the primary factors contributing to this situation is the insistence of sellers on conducting transactions exclusively in US dollars.
This unwavering stance is driven by their concerns about the depreciating value of the Zimbabwean Dollar and their desire to preserve value.
“Consequently, this rigid approach to currency has dampened demand and effectively excluded domestic buyers from participating in the market, as they are unable to fulfill payment obligations in US dollars,” said the market watchers.
During the past financial year, the sector showed growth which was sustained by surge in residential properties subsector while the commercial real estate also realised growth but at a constrained scale.
This also comes as corporates and investors have been undertaking bite size projects with lucrative returns.
However, the industrial property subsector remains a laggard mirroring the performance of the broader industrial sector.
The sector is not immune to the challenges experienced in the country ranging from foreign currency shortages, currency volatility and waning disposable incomes.
The segment responds to performance of the economy and industry, although there have been pockets of demand and opportunities for warehousing facilities driven by the agriculture sector and retail sector.
In terms of investments on the capital markets, another trend to watch out for is the proliferation of Real Estate Investment Trusts (REITs), not only in Zimbabwe but across the region and in third-world countries in general.
This is attributed to several factors among them being their inherent appeal as an investment vehicle that offers numerous advantages.
“Firstly, REITs grant investors the opportunity to engage in real estate ventures without the burdensome requirement of direct property ownership.
“This feature enables individuals to diversify their investment portfolios, thus spreading their risk across a broader spectrum of assets encompassing residential, commercial, and industrial properties,” said Equity Axis.
Zimbabwe currently has two REITs, the Tigere and Revitus on the Zimbabwe Stock Exchange (ZSE).
For more Business news visit businessweekly.co.zw
Online Reporter