Online Reporter
Business Reporter
LACK of debt financing is stifling growth in Zimbabwe’s real estate sector, despite companies holding large property portfolios, according to experts at the Zimreal Property Investment Forum currently underway in Harare.
Mr Stephen Kapfunde, general manager of Old Mutual Zimbabwe, said the industry was facing a significant “anomaly.”
“Companies are sitting on huge property balance sheets, which have zero guarantee,” Mr Kapfunde said.
“They have not released any equity from them because there simply isn’t debt financing.”
He emphasised that to fund major projects, companies require external capital from international lenders, urging the industry to seek financing beyond traditional mortgages.
Echoing this, Mr Kenneth Sharpe, chief executive officer of WestProp Holdings, a major property developer, highlighted his company’s vision of creating “inclusive smart cities” with a “15-minute walk” concept. He believes these developments, where residents can live, work, shop and play, will become more visible as the economy expands.
Mr Sharpe pointed to a recent study for the Mall of Zimbabwe, which found that the demand for retail space has doubled to 60 000 square metres in six years.
He added that the overall demand for retail in Zimbabwe is 200 000 square metres, while supply is less than half of that, resulting in a deficit of 100 000 square metres.
“Right now in today’s market, in the retail market, shopping malls are 100 000 square metres short,” he noted.
Other sectors identified for growth include warehousing and logistics, particularly in the Pomona area, as well as tourism-related properties, retail, offices and the SMEs sector, according to Mr Kapfunde.
Mr Munopashe Jera, the executive director of Tasimba Properties, highlighted new sources of funding for the sector, including record-high remittances and strong gold prices.
“I expect a lot of export proceeds to come into the property (sector),” Mr Jera said, adding that investment from the diaspora and hedging against currency risks would also drive capital into the market.
Mr Sharpe concluded with a plea for more support for mortgages, describing them as a “huge investment opportunity with very low risk” and high returns. He noted that his company’s mortgage book is currently earning a 15 percent annual interest rate.
Online Reporter