columnBy Vengai Madzima
THE beginning of a year normally brings with it a new hope for better prospects in all facets of the economy. In the real estate sector we are anticipating a more buoyant year as 2012 was mainly
characterised by stagnancy mostly in the second and third quarter of the year.
The fourth quarter witnessed nominal activity, which can easily be mistaken as the small spark needed to rekindle the fire.
It is critical to note that the real estate sector in most cases is a reflection of the general economic performance of a country at any given time.
The 2013 National Budget presented by Finance Minister Tendai Biti in November last year emphasised the need to resuscitate mortgage finance.
This will be achieved through the proposed plans to re-introduce paid-up permanent shares (PUPS) which are designed to stimulate mortgage financing through mobilising private sector funds by enhancing building societies competitiveness in attracting deposits.
The Treasury also plans to offer exemptions on income tax to banks offering mortgage finance, which was a preserve of building societies. This will inevitably stimulate other banks to consider offering mortgage finance.
This is a welcome development in the market as only CABS and CBZ were the most active mortgage lenders in the preceding years.
Limited resources coupled by a huge demand resulted in expensive finance averaging 15 percent interest rate over a 10-year period. This is a hefty burden on mortgagers if one considers that prevailing mortgage interest in neighbouring countries like South Africa are averaging 8,5 percent over longer periods.
It is important to highlight that election years in most countries including Zimbabwe have an effect on real estate movements.
Many potential investors normally adopt a wait-and-see approach which slows markedly the numbers of real estate transactions recorded in that given period.
Most local real estate investors have realised through practice and experience that this period normally offer the best bargains when it comes to real estate investments. The general lack in property movements allow investors with available finance a huge bargaining leverage which is normally absent in non-election years.
The rental market is expected to remain buoyant this year with new developments designed specifically for achieving maximum rental return remaining a lucrative option.
The rate of construction of new developments is not meeting the demand in rental residential properties available in our current market, which remains high.
There is still the problem of tenants who because of the general lack of residential properties are residing in properties which they cannot afford resulting in an increase in defaults when it comes to rent payments in residential and commercial rental properties.
The risk of this problem can be minimised by contracting estate agencies with a proven record in property management.
It is important for the investor this year to quiz the agency on the measures it uses to ensure that one's property is managed well.
Compliments of the new season, as the real estate industry we wish all our investors a prosperous property year.