The Herald (Harare)
3 November 2009
Harare — THE continuing improvement in the economic situation in the country and the commercial sector should in the medium to long term see an increase in demand for the limited office and retail space.
According to a report by EFE Securities Equity Research Analyst Mr James Chiuta the average vacancy rate on all property groups is five percent at present due to the current low business activity,.
"Therefore as the economy continues to recover, we should see a growth in demand for rental space, pushing rentals upwards.
"Retail space should lead this phase as we have witnessed a rapid recovery of most retail giants as well as the establishment of new and very aggressive retail outfits," read part of the report.
However, Mr Chiuta noted that it might be difficult to predict the actual time the property industry will recover, but the company believes that when the time comes, there will be a sharp increase in both the property values and rental yields.
The commercial sector is currently coming out of a recession where companies were forced to scale-down after the Reserve Bank of Zimbabwe's clampdown on speculative behavior.
Resultantly, there was an increase in vacancies in the commercial properties as most companies failed to meet the new US$ denominated rentals.
This caused most landowners to compromise on their rental revenues to prevent an increase in vacancies and at least maintain a decent income stream.
Property sales have also been subdued since the conversion to the multiple currencies regime as there was a lack of an established mortgage issuer as well as low levels of disposable incomes to support such transactions.
Therefore, it has been difficult to establish the market values of commercial properties over the year.
Meanwhile the absence of mortgage facilities, low disposable incomes as well as low market liquidity, should result in property prices remaining relatively lower than regional comparatives.
Most property groups with excess land banks reserved for property development made decisions to prioritise the renovation of their current properties to a standard in line with regional standards before they considered erecting new structures.
Residential properties took a real knock in value, with a house whose value was US$100 000 in July 2008 falling to US$65 000 by February 2009.
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