Online Reporter
Business Reporter
PUBLIC and private sector investments are driving growth in the real estate sector, which is presently navigating both challenges and opportunities.
There have been noticeable investments in new hotels and lodges in towns such as Victoria Falls. Experts, however, believe continued investment in infrastructure is required to sustain the property market.
According to First Mutual Properties (FMP), sustainable construction practices, including green building technologies, water recycling systems and solar energy, are gaining traction.
“However, high construction costs and limited financing options remain key challenges, but public-private partnerships that leverage private sector expertise for large-scale projects are key to the sustainable development of Zimbabwe’s property sector,” said FMP chairperson Mr Elisha Moyo in the company’s financials for the year ended December 31, 2024.
High vacancy rates, he said, persist in the central business district (CBD) as tenants relocate to suburban offices and office parks.
“Businesses are moving away from traffic congestion, parking space shortages and unsatisfactory building conditions, such as malfunctioning elevators and air-conditioning systems in the CBD,” he said.
“Recent local plans, such as the Avondale and ED Mnangagwa Road local development plans, have also influenced demand as they permit mixed-use developments along major arterial roads.”
Further, private developers are increasingly investing in gated communities, town houses and apartment complexes, particularly in affluent Harare suburbs.
Mixed-use developments combining residential, commercial and retail spaces are also gaining popularity, he said.
The commercial property sector is experiencing moderate growth, driven by demand for retail and office spaces and sustainable
construction practices, including green building technologies,
water recycling systems and solar energy.
“Rental payments are mainly in US dollars, reflecting broader market trends. In contrast, operating costs, particularly utilities such as electricity and municipal rates, are settled in the local currency, in line with the country’s legal framework,” added Mr Moyo.
According to the Real Estate Investment Trust (REIT) Association of Zimbabwe, there is a business case to invest in REITs as the country already has well-documented residential and commercial infrastructure needs, as well as attractive investor returns.
REITs are companies that own or finance income-producing real estate across a range of property sectors. This market has been growing in Zimbabwe.
Zimbabwe’s pension funds are also heavily invested in properties, which represents a shift away from equities, where funds usually had the highest concentration.
IH Securities head of research Mr Lloyd Mlotshwa said brick-and-mortar is favoured as a long-term currency hedge.
Economist Mr Malone Gwadu said investments are largely driven by solid returns in portfolios, such as rental income and continuous revaluation gains.
“Therefore, the nature of this return aligns much with the investment objective of pensions, which is long-term investment returns that will then be able to cater for contributions when they crystallise,” he said.
“In addition, properties have been somewhat immune to market volatiles, such as inflation and exchange rate movements, and the resilience has acted as a hedge instrument for pension funds for value preservation.”
ZIMRE Holdings’ Eagle REIT has a development pipeline that is highly diversified, with a focus on tourism, hospitality, health, retail and residential sectors.
According to Tigere Property Fund, momentum across various sub-property categories has continued, with multiple new developments across the country.
“We opine that the success of new retail developments will depend upon the defined tenant mix, which should shield rental income from macroeconomic risks,” it said in its recent financials.
“National tenants with long lease tenures and a bias towards hard-currency generation will protect the ‘real’ yield posted by property developers.”
Land values, it said, have maintained their upward trajectory, thus affecting the net rental yield across the market.
It indicated that well-managed negotiations at the land purchase stage are paramount to a given property’s profitability.
The Revitus Property Opportunities REIT also said the real estate remains a preferred hedge against potential loss of value.
The property market has been experiencing a surge in demand, backed by diaspora remittances and complemented by the Government’s efforts towards modernising the country’s infrastructure.
However, Revitus believes there are inherent investment opportunities for repurposing CBD offices, which are still struggling with high voids as tenant preferences are shifting towards suburban spaces.
Online Reporter