REAL estate consultancy Knight Frank Zimbabwe has cited ageing and poorly maintained infrastructure, rising crime and traffic congestion among key factors that have driven property vacancy rates in Bulawayo to 40 percent.
The development has reportedly forced about 30 percent of businesses previously located in the city’s Central Business District (CBD) to relocate to suburban areas such as Kumalo between 2020 and 2024.
A similar trend has been observed in Harare, where several banks have either relocated their head offices, are planning to move, or are in the process of constructing their head offices in northern suburbs like Highlands, Newlands and Borrowdale.
Many tenants are leaving the CBD areas of the country’s major cities due to traffic congestion and high rental rates.
In its latest report, Knight Frank noted that Harare’s vacancy rate had reached 60 percent.
The real estate firm further observed that “the quality of tenants occupying the CBDs of most urban areas worsened in the period under review due to the informalisation of the market.”
The decline has impacted rental prices across the country, with only a few prime locations and high-quality assets maintaining premium rental values.
“Vacancy rates in Harare and Bulawayo’s CBDs have reached 60 percent and 40 percent, respectively. This significant level of vacancy can be attributed to several factors, including ageing and poorly maintained infrastructure, a reported 13 percent increase in crime within the CBDs between H2 (second half) 2023 and H2 2024, and limited and expensive parking options, with average casual parking costs in the CBD reaching US$1 per hour compared to free parking in most suburban locations,” Knight Frank Zimbabwe said.
The report also notes that passive voids and vacant spaces with little prospect of being filled were increasingly common in the industrial and office sectors, creating a structural issue.
As a result, investors are incurring significant losses due to fixed operating costs, including deferred maintenance, municipal rates and taxes, insurance and security.
“Passive voids are common in the industrial and office sectors and have now become structural. These have pushed investors into huge losses caused by fixed operating cost obligations such as deferred maintenance, municipal rates and taxes, insurance, and security.”
The report reads that default rates vary from one asset class to another, with retail carrying the lowest risk at less than 10 percent, followed by offices at 15 percent and the industrial sector above 25 percent.
“Retail tenants fight to retain space and can easily switch merchandise to trending products and services because of easy access to the market.”
According to the report, some of the factors that weigh down property yields are the quality of a property, tenant quality, lease terms and conditions, inflation, vacancy and default rates.
The office sector returns averaged 9 percent, the retail sector at 8 percent and the industrial sector is pegged at 13 percent.
According to the report, Harare faces growing town planning challenges, with businesses encroaching on residential areas and the CBD struggling with informal activity.
The proliferation of service stations, driven by the lucrative foreign currency trade in fuel, poses environmental and safety risks, it noted.
“The unchecked growth of commercial businesses in residential areas contributes to traffic congestion, loss of community character and potential health hazards.”
Bulawayo-based architect Mr Adams Mapingire said there was a great need to address challenges that lead to low occupancy, notably dilapidated buildings, noise pollution, parking issues and congestion.
“To revitalise the CBD and attract businesses back, the following measures could be implemented: infrastructural upgrading, introducing contemporary architecture in building designs and maintenance,” he said.
“(There is need to) collaborate with investors to refurbish ageing buildings, ensuring they meet modern standards and safety compliance. There is a need to offer tax breaks or subsidies for businesses that relocate to or remain in the CBD, particularly for those investing in building upgrades.”
He added that there is a need to offer flexible leasing terms or reduced rents to start-ups and SMEs to fill vacant spaces.
Property expert Mr Gift Rusungo said a combination of factors, ranging from ageing buildings, outdated infrastructure and inadequate maintenance, has made many CBD properties unattractive to potential tenants.
“Landlords, facing financial constraints, often struggle to renovate or modernise their buildings to meet current business needs,” he said.
“Despite the declining demand for commercial space, rental costs in the CBD remain relatively high. Many property owners hesitate to lower rents due to economic uncertainties and inflationary pressures.
“Additionally, rigid lease agreements and high upfront costs deter new businesses from renting office or retail space.”
Mr Rusungo also noted that the rise of informal traders and street vendors in the CBD has affected formal businesses.
“Many small traders operate without fixed rental costs, undercutting formal retailers who pay rent, taxes, and other expenses. The growing presence of informal businesses has discouraged potential tenants from occupying traditional commercial spaces.”
