Tigere Property Fund Predicts Tight Liquidity Due to ZiG

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The Real Estate Investment Trust (REIT) Tigere Property Fund has forecasted a tight liquidity environment as the Reserve Bank of Zimbabwe continues to implement the Zimbabwe Gold (ZiG) currency.

On April 5, the Reserve Bank of Zimbabwe introduced the new ZiG currency, a structured currency backed by gold and other precious minerals, in an effort to address the country’s ongoing economic crisis. The ZiG currency is intended to circulate alongside other foreign currencies and is currently trading at a rate of 13:56 against the US dollar, with a stable and less volatile exchange rate.

In its trading update for the three months ending March 31, 2024, Tigere Property Fund anticipated a significant tightening of liquidity.

“The official exchange rate depreciated by a noteworthy 256% during the period under review, largely due to the continued closure of the auction system and depressed prices of platinum group metals (PGMs). Going forward, we estimate a tightened liquidity environment as the new central bank Governor works to ensure stability in the recently issued Zimbabwe Gold (ZiG) currency,” stated the company.

Tigere’s projections align with current observations of limited availability of the new ZiG currency in its initial month of circulation. Experts attribute this scarcity to the structured nature of the currency, arguing that an expansion in gold reserves will be necessary for further issuance.

Despite these challenges, Tigere reported sustained demand for quality retail infrastructure, though the supply has been constrained by unattractive financing options.

“Notwithstanding, the development of clusters, student accommodation facilities, corporate housing, and warehouse space has continued on an upward trajectory. Ongoing infrastructure projects will provide opportunities as road networks expand to new areas and shorten travel distances,” Tigere noted.

The introduction of the new currency has affected tenant receipts for the first quarter. In line with its growth strategy, the REIT has undertaken strategic capital expenditure projects. New tenants are expected to enhance long-term net income and improve the tenant mix within the portfolio. Highland Park Phase 1 continued to benefit from record customer visits, along with the opening of Phase 2.

As Tigere navigates this evolving financial landscape, its focus remains on adapting to the new currency environment and capitalizing on infrastructure developments to sustain growth and profitability.