adminThis view although justified, lacks an in depth knowledge of the immense benefits of investing in the Zimbabwean real estate both for its short term to long term benefits.
Real estate especially here in Zimbabwe is the ultimate hedge against inflation.
Although to the common Zimbabwean it is superfluous to define inflation, I will never the less give a simplified definition of it.
It is the price of goods measured against a standard of ability to purchase those goods.
Stories abound of people who lost their financial savings and pensions during the high inflationary period.
If they had invested in real estate they will still have a tangible asset.
As an asset its value and rentals acrue in tandem with inflation or commonly at a rate that is higher than that of inflation. This makes it one of the safest modes of investment.
As other investments also qualify for the term “good’’ and can hedge their retail price with inflation, real estate is one of the few investments that actually appreciate over time.
Land values in Zimbabwe hardly depreciate even if the building on the land depreciates through wear and tear.
It becomes incumbent upon investors to maintain or increase value of the buildings on their land.
There are situations where a property is purchased mainly for its land value without regard to the state of its outbuildings or development.
Because of the design of some of our major cities, it is easier to identify potential hot spots that appreciate far above the national average.
When one invests in such hot spots, there is a high likelihood of recouping unimaginable profits in the long term resulting from surrounding developments or general land appreciation.
Local and foreign demand of our real estate has witnessed a steady increase of the value of our real estate especially in and around urban areas.
This increase in demand is projected to continue in the mid to long term because of the empowerment of our people through various vehicles coupled with the softening of the international community’s policy stance on Zimbabwe.
Studies of our demographics show that a high percentage of youths have been empowered. As mortgage finance is just rebounding in Zimbabwe (premised on the Finance Minister’s proposed measures in the national financial budget for 2013), a large percentage of our youths are still lodgers.
This is crucial information for the person who intends to invest in real estate for the purposes of a rental return.
A study of these demographics will clearly show the areas on demand, types of residential property in demand and the average rentals one can charge.
It is insightful in that it allows one to fully comprehend the potential demand for rental property in this country especially in and around major cities.
The high literacy rate and growing numbers of university graduates coupled with the steady but increasing rate of return of the Diaspora population to settle back in Zimbabwe will result in a growing demand of middle income residential property.
If our economy continues to grow at current rates, demand on our real estate will exponentially grow resulting in huge returns for investors.
These statistics are also good for potential developers and those investors who intend to benefit from this property market in the short to medium term.
The demand for affordable housing is insurmountable. The council housing list is backlogged by several years and the rate of new developments cannot match the growing demand from both the local and Diaspora market.
Another unique advantage that real estate has over other investments is the ability for its owner to control it.
In other investments like stocks a financial manager controls the stock for the investor while at the same time the stock is susceptible to managerial decisions by companies from which the stocks are purchased.
This mode of control allows one to manipulate rents based on market conditions. In essence, in real estate the investor is heavily involved in the management of their investment either personally or through an estate agent.
Last but not least it offers access to finance and loans offered in our cash strapped market by financial institutions.
If one has investments in real estate, financial institutions are more inclined to finance projects undertaken by such individuals.
This gives them a serious competitive edge against other players in the market involved in a similar project but lacking such financing to fully exploit potential.
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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