19 December 2012

Zimbabwe: Local Rentals Low

ZIMBABWE has the second lowest rentals in the Southern African Development Community (SADC) region after Mozambique, a new report has indicated.

A recent comparison of rental fees for the property market compiled by Knight Frank indicated that rental fees per square metre for offices in the region ranged between US$16 and US$40.

The fees were at US$10 per square metre in Zimbabwe.

Rental fees for retail space ranged between US$35 and US$55 per square metre in most countries in the region but in Zimbabwe property owners charged US$15, the report indicated.

The Knight Frank report, which is quoted in an analysis of the property market by advisory firm, Platinum Groupe, looked at the property market in Angola, Botswana, Tanzania, South Africa, Namibia, Zambia, Zimbabwe and Mozambique.

It said in the industrial property market, Zimbabwe also charged the second lowest rentals at US$3 per square metre.

Prices in Mozambique were about US$2,5 per square metre.

Tanzania had the highest prices in the industrial property sector at US$10 per square metre.

South Africa had the second highest prices at US$6,5, followed by Angola and Namibia at US$6 per square metre and Zambia and Botswana at US$5 per square metre.

"Housing market metrics in the SADC region are almost correlated with few and far between differences in rentals per square meter and prime yields," Platinum said in their own analysis.

"Zimbabwe had the lowest rentals per square meter in US dollars for office, retail, industrial and residential property. Prices for residential property were benchmarked on a four bedroom executive house in a prime location. Yields on property segments were in the eight to 14 percent range with Zambia recording the highest yield of 14 percent in industrial property followed by Zimbabwe and Botswana which yield 13 percent," said the report.

It did not say why prices in Zimbabwe were lower than those in other countries.

But demand for space in Zimbabwe has been severely affected by the closure of companies, for industrial and office space. This could have pushed property owners to charge lower prices than the regional comparisons.

Retail space has also been affected by the poor performance of the retail industry, where several supermarkets have shut down, and those remaining are ailing.

But even with these low parices compared to regional comparisons, there has been an outcry in industries and other economic sectors that prices in Zimbabwe were too high.

The Affirmative Action Group last year led a campaign against high rental fees in Zimbabwe, with their biggest target being properties owned by Old Mutual. Generally the liquidity problems facing the economy have been blamed for the problems affecting industries

A recent report said Zimbabwe had reported a slowdown in the transfer of properties in the past few months, reflecting the effects of a liquidity crunch.

The report, also compiled by Platinum Groupe, said between July 2012 and September 2012, the transfer of properties on the Zimbabwean market declined by 51 percent.

"Total property transfers declined from 468 properties in July 2012 to 417 properties in September 2012," said Platinum in the report released last week. Platinum quoted statistics from the Deeds Office.

"The number of transfers of properties with a value of US$10 000 and above declined at a faster rate compared to the rate of decline of total transfers," the report said, adding that the decline was more pronounced in high value properties.

In a liquidity-starved market, buyers have failed to fund property market acquisitions, especially high value buildings.

"In July 2012 high value transfers were 66 percent of the total transfer before retreating to 61 percent in September 2012," Platinum said. -

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