Johannesburg — Zimbabwe's residential property market is still steaming ahead, despite the economic and political woes in the country. About four years ago the country's property market was booming because it was seen as a shelter against runaway inflation.

Although there was a dip in property prices in 2004, South African real estate groups operating in Zimbabwe say the market is performing well, with prices almost doubling over the past two years. Juliet Harris, MD of Pam Golding Properties Zimbabwe, says one of the reasons for the positive performance is that property is one of the only asset classes that has kept its value in real terms.

Harris says the commercial property market is also "still viable" in Zimbabwe. She says her agency's main client base is Zimbabwean, but there is a "huge amount" of interest in property from foreigners, including South Africans and Britons. "The interest is due to people thinking they are going to come in at cheap prices," says Harris. But Zimbabwe is only relatively cheap compared with SA. She says that over the past two years there has been a 50% increase in residential property values in real terms. The average price of a house two years ago was between $150000 and $180000. Today it is between $200000 and $230000. Stuart Manning, CEO of Seeff Property Services, which has offices in Zimbabwe, says there is "no doubt the prices have escalated far in excess of inflation".

"Property has been seen as a good investment," says Manning. He says that, from a commercial property perspective, a lot of businesses are "climbing back" into Zimbabwe in anticipation of political and economic change. Manning says businesses believe that with political change there will be "moderate governance", which will create greater confidence in the economy and resolve issues such as sanctions.

"If you look at the mines in Zimbabwe, companies like Anglo American have started catering for housing for their employees. We are talking about thousands of properties which they have to construct. This is the sign that things are about to change."

But he says that despite the fact that house prices are increasing, it is "very difficult" to trade under the economic conditions, which are "prohibitive of any normal trade". "Despite the difficulties in Zimbabwe, the Seeff offices in Zimbabwe traded successfully for the last eight years." Prior to this, the offices traded for 25 years under the name Gainsborough. Explaining the price rises in Zimbabwe, property economist Francois Viruly, of Viruly Consulting, says: "You may find that people who traditionally lived in rural areas are congregating in urban areas. "If we look at the land policy that has been followed in Zimbabwe, it is understandable that there could be an influx into urban areas."

He says if investors believe the sociopolitical environment will change in the medium term they could also be taking a "speculative punt at the market".

"At the end of the day what is critical for any property investment is the security of property rights."