Zimbabwe’s real estate sector is navigating both challenges and opportunities with public and private sector investments driving growth.
There have been noticeable real estate developments in the country, like in the tourism and hospitality towns including Victoria Falls, where there has been elevated activity in new hotels, lodges and resort developments.
However, experts believe investment in infrastructure is required to sustain the property market. According to First Mutual Properties (FMP), within the country’s real estate sector, 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 Mr Elisha Moyo, the FMP chairman, commenting on the company’s financials for the year ended December 31, 2024.
Mr Moyo said within the property market, high vacancy rates 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.
“Recent local plans, such as the Avondale and E D Mnangagwa Road Local Development Plans, have also influenced demand as they permit mixed-use developments along major arterial roads,” he said.
He added that there have been noticeable real estate developments in the country and in the tourism and hospitality towns, including Victoria Falls, and there has been elevated activity in new hotels, lodges and resort developments.
“Further, private developers are increasingly investing in gated communities, townhouses and apartment complexes, particularly in affluent Harare suburbs.
“Mixed-use developments combining residential, commercial and retail spaces are also gaining popularity,” he said.
Mr Moyo said the commercial property sector is experiencing moderate growth, driven by major cities’ demand for retail and office spaces and sustainable construction practices, including green building technologies, water recycling systems and solar energy, are gaining traction.
“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 local currency, in line with the country’s legal framework,” said Mr Moyo.
According to the REIT Association of Zimbabwe, the country has documented residential and commercial infrastructure needs, coupled with the attractive investor returns, presenting a compelling business case for the broader market to invest in REITs.
REITs are companies that own or finance income-producing real estate across a range of property sectors, and this market has been growing in Zimbabwe.
Zimbabwe’s pension funds are also heavily invested in investment properties, a shift away from equity investments where traditionally the funds had the highest concentration.
Mr Lloyd Mlotshwa, the head of research at broking firm, IH Securities, said brick and mortar is favoured as a long-term currency hedge, and this will likely become more pronounced as we head towards 2030 if anxiety around currency is not abated.
Financial economist, Mr Malone Gwadu, said property investments can be attributed to convincing returns that are currently being earned 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.
“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,” he said.
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, construction momentum across various sub-property categories has maintained its course with multiple new developments occurring 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 macro-economic risks.
“National tenants with long lease tenures and a bias towards hard-currency generation will protect the ‘real’ yield posted by property developers,” it said in its recent financials.
It noted that land values have maintained their upward trajectory, thus affecting the net rental yield delivered across the market, and it maintained 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 in the wake of continued macroeconomic instabilities.
It said the property market has been experiencing a surge in demand backed by diaspora remittances and complemented by the Government’s efforts towards the improvement of infrastructure.
The REIT said optimistic investment opportunities exist for repurposing CBD offices which are still struggling with high voids as tenant preferences are shifting towards suburban spaces. – Sunday News
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