Enacy Mapakame Business Reporter
Zimbabwe is turning its back on 2021, which was a mixed bag for the real estate sector. From the central business district (CBD) to offices, industrial, housing, office parks and shops, the segments experienced varied performances.
Performance updates from listed real estate companies, Mashonaland Holdings and First Mutual Properties (FMP), show that the sector has also been affected by the adverse effects of Covid-19.
There has been a general imbalance between supply and demand in the country’s real estate sector, made worse by the pandemic, which has seen businesses embrace remote working while the reduction in economic activities across all sectors has also worsened The problems.
The Central Business District (CBD) space ranked among the most affected segments along with shopping malls in high density areas. As a result, rental income has also been affected, although landlords have adopted quarterly rent reviews as a cushion against inflationary pressures.
Rental income across all segments was also primarily pegged to foreign currencies as owners sought to preserve the value of cash flows.
In a performance update, FMP said the six-month period ended June 30, 2021 showed transaction activity to remain depressed, with real estate investors holding onto real estate to preserve value.
“Space absorption has remained moderate during the period with persistent imbalances in supply and demand, pending the full recovery of productive sectors to support the demand for space.
“The oversupply of space is mainly due to historic redundancy of space, with the areas most affected being CBD offices, high-density suburban malls and specialist industrial sectors,” the group said.
However, other industry experts said demand for retail warehouses, light industrial properties and office parks remains strong.
In the CBD, there has been increased activity in the retail sector, which has seen the allocation of space to meet the growing demand for retail space by small and medium-sized businesses.
In 2020, residential sector development activity also remained strong, supported mainly by the informal sector of the economy and the diaspora community.
Construction-related companies have also benefited from increased developments which have seen demand for cement rise.
It comes as demand for residential housing has remained strong, particularly in the capital, Harare. Besides individual residential developments, major mortgage lenders like FBC Building Society have seen increased activity in housing development.
The construction company recently completed 150 homes as part of its Fontaine Ridge project in Kuwadzana.
Parent Company – FBC Holdings Limited Secretary Tichaona Mabeza said in a third quarter business update that the units have been developed as part of Phase 1A, while the next phase is expected to see 119 units delivered by the end of the fiscal year.
“FBC Building Society phased construction activities are underway on the Fontaine Ridge – Kuwadzana project with road formation work currently underway in Phase 1B.
“Construction works for phase 1A have been completed for 150 units and 119 units for phase 1B are expected to be substantially completed by the end of the fourth quarter,” he said.
When completed, the entire project will include a total of 858 housing units ranging from medium to high density with an average stand size of 200 square meters.
Across town, Mashonaland Holdings said housing development is progressing well on its Mashview Gardens project in Bluffhill, with the first batch of houses to be ready in the first quarter of 2022.
Real estate experts maintain that the outlook for the residential segment remains high in 2022 and is moving forward, driven by strong demand for housing.
There are also huge opportunities in student housing as well as tourist facilities to cope with the expected boom as the industry recovers from Covid-19 shocks.