If the glimmers of improvement
in once depressed real estate markets suggest something larger, then a
long-term rebound may be getting underway mainly supported by the expected
growth in real estate markets for the next 10-15 years. Though it’s quite early
to make bold predictions about the rebound, positive developments have been
noted in the sector fully supporting the notion. However, the growth largely
depends on the successful commencement of the lined up projects, a stable
macroeconomic and political environment together with the will of investors to
continuously invest in the sector. Onus remains that as the professional body
that nurtures and build the matchmakers of the real estate game, we become ready
to grace and support the development.
The real estate market has its
main facades as Leisure, Industrial, Office, Retail and the
Residential market. It is in many peoples belief that, especially in the
current situation, real estate is just a servicing sector to other sectors of
the economy. People tend to overlook the potential of real estate as the main
pillar of the economy. However, recent developments in the market are showing
that real estate is a real investment platform that can be utilised to
propagate broader economic development.
A snap survey of the market
shows that the rental market has stabilised since dollarization with relatively
low yields, however, there increase in arrears has remained a scourge and the
prolonged legal process to deal with the defaulting tenants has done no good to
the sector. Industrial redesigning for warehouse and light industrial
production have shown some positive development while heavy industry remains
idle or with very low capacity utilisation. Home prices have stabilized by a
certain degree. This is a kick back after a rollercoaster for years. Sales are
setting for records again, despite cooling efforts from the government, and
people are worrying about a bubble. Home prices have doubled in the past four
years. Real estate has the potential to become the driving pillar of the
economy above all other sectors in the next decade.
So what’s stirring in the real
estate market to produce such hints of a budding recovery? This is one of the
questions that one might intuitively answer themselves by just taking a look on
some of the headlines that has been on the news even without technical
analysis. The market has been sending a lot of sentiments that reflect a
budding recovery and great potential for growth. Number one, there are a lot of
projects that the government and the private sector have lined up to initiate
in the near future. Major projects that are on the cards are the proposed
expansion of the CBD that will see some residential areas being incorporated
into the CBD, the Mall of Zimbabwe that is due to be built in Newlands, Russia
Zimbabwe deal could see new plant construction and employment creation, the
construction of the multipurpose and multi-storey complex adjacent to the Joina
City Mall in Harare and the recent calls by the Minister of Tourism and
Hospitality to transform Victoria Falls in to Zimbabwe’s Disneyland.
Low income housing projects
have also been on the increase in the bid to cover up the more than 1 million
housing demand backlog the market has been facing. Here it seems investors are
moving effectively to cover up the gap of which if the instance continues it
provides potential growth to the market. In this context for example CABS has
successfully completed construction of 1 186 low income housing units setting
the ball rolling for other players to tap into the gap. The case of
affordability has been the major setback in such projects since the market was
illiquid and potential buyers could not afford such houses. However, the recent
announcement by CABS to extend their mortgage tenure to 20 years can provide
solution to that problem enhancing more potential for the market to kickback.
A group of private investors
and business community leaders have been having significant success
transforming downtown areas of the city into a new hub for retailers, Web-based
and information technology start-ups. Several downtown properties that were in a
dilapidated state for considerable time are being renovated and now house
start-ups, computer services firms, clothing retailing and fast food
businesses. Small wholesale shops are also being opened together with cosmetic
shops. Still in the CBD of Harare some properties are going through
transformation and occupancy rates are slightly on the increase. The most noted
development is the increase of Meikles Stores and other wholesalers in the
south eastern sections of the CBD. Pick n’ Pay is also giving some old
buildings a new lease of life contributing to the growth of the sector. Chinese
developments such as the Long Cheng Plaza are also a positive development and
attributes confidence on the market.
These signs of activity now
visible in the real estate market do suggest there are some real potentials
here – and probably some serious opportunities.
REIZ
Research Department
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