adminresulted in industry in general and the real estate sector in particular failing to grow substantially.
In this installment I would like to evaluate the trends that normally occur after a country emerges from the transition that we are going through.
I have researched on post war and post economic crisis economic development and discovered that the fundamental growth areas in such economies are similar, the only differences are the laws enacted to curb the growth of the chasm between the rich and the poor.
If Zimbabwe follows the trend set by South Africa post-apartheid then real estate is going to be one of the major economy drivers given a resurgence of our economy.
South Africa experienced a surge in property prices at an average of 20 percent annually for 10 consecutive years peaking to 37,5 percent in 2004.
This was followed by a steady period until 2008 when the global crisis emerged.
One may then make assumptions that the property price increases that we have been experienced since dollarisation are a drop in a river compared to the property price increases that are associated with the first 10 years in a post crisis economy.
In South Africa the property price increases where attributed to significant international capital inflows and the surge of an empowered middle class.
Post crisis economies experience a gradual return of Diaspora community coupled with an exponential influx of migrant workers and new foreign investors coming to seek work and investment opportunities.
If Zimbabwe is to experience the same it may put a strain on the residential property market and to an extent the commercial property market due to demand.
Zimbabweans who had money overseas will inevitably bring it back home to reinvest it so as to take advantage of a growing post crisis economy.
This pattern is best portrayed by what happened in South Africa in the first 10 years after apartheid.
It is recorded that most of the investments in South Africa were by South Africans with external funds directed towards real estate as the safest option available at that time.
During our own challenges, real estate emerged as the safest investment area, it then follows that this area will be the first option of investment.
This may inevitably result in the increase in rental asking prices and property selling prices as a natural reaction to increased demand.
The construction and tourism industry are normally the first indicators of an economy on the rebound.
In Zimbabwe mining will play as significant a role if not more in the resurgence of our local economy. This will create more capital plus empower more people financially.
This will go a long way in curbing our housing crisis with around a 100 000 people recorded on Harare City Council housing waiting list.
These figures may not fully reflect the reality on the ground, as they do not take into account the positive effect of the land redistribution programme, which has reduced inner city housing demand.
International capital inflows and the growing of Government coffers may give rise to social housing development initiatives and new constructions like the one earmarked as the ‘new city’.
This will create new jobs in the real estate industry and go a long way in providing new housing to satisfy the huge demand prevalent.
The demand for holiday real estate will inevitably increase making investments into holiday homes, hotels and resorts a viable option in the short to long term.
The success of Indigenisation laws coupled with banking laws that ensure that banks do promote local capital retention will create capital to finance industry and private developers.
It may also be a boost to the mortgage finance market, which will increase accessibility of housing to the ordinary person.
It is however critical that one mentions at this stage that the first beneficiaries of mortgage finance and those currently benefiting may find themselves being holders of expensive bonds with more stringent terms owing to lack of competitiveness in the current market and the first few years post crisis.
Capital availability for business financing and property mortgages will also mark the death of the “unbonded” property currently prevalent in our economy.
The general appetite for borrowed money in our economy has seen many people loose houses and assets to loan sharks.
If this trend is continued post crisis it will inevitably lead to more borrowing resulting in more property losses come an economic crunch.
Vengai Madzima is property consultant and analyst and writes in his personal capacity, he can be contacted at [email protected] or phone: 0772 468093
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