The property sector is anticipated to remain subdued this year, with hopes of picking towards the end of the year into 2021, market watchers have said.
2019 was already a tough year for the sector and the whole economy as the country battled foreign currency shortages, inflationary pressures, poor utilities supplies, waning disposable incomes and low demand.
A continuous decline in economic activity and disposable incomes means the property sector also remains under pressure due to declines in occupancy levels, especially in the central business district with rental income also falling.
With no clear and immediate solution in sight, the challenges are expected to continue in the short to medium term as the recovery will take a while.
This also comes as the country faces a potentially bad agricultural season, which may damage economic development, even after Government declared 2020 a year of increased national productivity and industrial growth as espoused in the 2020 National Budget. This year, budget is themed “Gearing for higher productivity, growth and job creation”.
Last year, the real estate sector experienced declines due to little activity in property sales as the majority of owners put their properties on hold following currency reforms implemented during the year.
Real Estate Institute of Zimbabwe (REIZ) president, Alexander Millin, however, maintains the sector will eventually see improvements this year, despite the numerous challenges.
“As always, a new year heralds a new beginning. It is important for players in the sector to remain positive and hopeful. Key challenges bedevilling the sector must be resolved by all stakeholders including the relevant Government departments working in concert.
“However, without significant mortgage funding and reluctance by sellers to sell, activity in the sector should remain low in 2020,” he said.
Following over a decade of economic meltdown, the property sector has suffered setbacks as companies downsized operations while others eventually closed, leaving huge voids.
Others negotiated for downward review of rentals, subsequently affecting earnings.
Demand, however, remains high for residential properties with national housing backlog estimated to be around 1,3 million units with Harare in need of over half a million houses to meet demand according to the 2020 Zimbabwe Infrastructure Investment Programme.
Mashonaland Holdings managing director Gibson Mapfidza, said the year will be tough although it’s not all doom and gloom.
“Traditionally, the real estate sector’s turnaround is buoyed by the macroeconomic recovery. As such, the property market difficulties of 2019 are most likely to persist into 2020 with recovery signs in fourth quarter and spilling into 2021,” said Mr Mapfidza via email.
“The biggest challenge facing the property market is the likelihood of an extended downturn against the urgent need to regenerate our CBD, renew building infrastructure to match international standards and the need to embrace and implement modern tech-enhanced real estate services,” he said.
“The property market cycle has been on a downward trend since 2013 and the trough has extended for seven years now, with no signs in sight for a sustained recovery,” added Mr Mapfidza.
Despite the challenges, various projects lined up for the year 2020 and beyond present good opportunities for the property market and residential property developments.
The devolution programme as well as Special Economic Zones implementation are expected to further boost demand for both housing and industrial properties as development cascades to provinces.
“The shortage of housing remains a major challenge. Real estate experts can and should work closely with the Government of Zimbabwe to craft innovative funding, design and construction models for housing.
“It is expected that with devolution and the establishment of economic zones there should be an increase in demand for residential, industrial and commercial space in the respective locations,” said Mr Millin.
Tourism and hospitality industry has also been identified as a low hanging fruit for both the economy as a whole and the property industry.
Indications are that Zimbabwe lags behind in terms of tourism infrastructure giving scope for real estate investors to tap into the market given the vast existing opportunities.
Arrivals in the country have been increasing and anticipated to further grow, and therefore the need for corresponding growth in accommodation facilities.
Apart from natural tourist destinations such as the Victoria Falls as well as heritage cites, real estate facilities can also be a source of tourism attraction for instance church buildings in Europe as well as skyscrapers in cities like Dubai, which Zimbabwe could draw inspiration from.
Figures show that Zimbabwe has 6 483 room capacity in total, which is less than Sandton in Johannesburg, South Africa alone.
In Las Vegas, USA, the Aria Hotel has over 4 000 rooms, which is over half of the whole of Zimbabwe’s room capacity, giving scope for property developers to tap into it.
Mr Mapfidza said his company was also focusing on projects that should contribute towards the tourism, business and housing sectors. Key among them is the conversion of Charter House in Harare into a state-of-the-art hotel facility.