The resuscitation of the property market can be achieved through sector specific solutions which respond to market needs, the Real Estate Institute of Zimbabwe (REIZ) has said.
Speaking to The Financial Gazette, REIZ president Mike Juru said property sector players, who are able to adapt and provide properties that can service the needs of the market, were expected to yield better results going forward.
He said the commercial office sector, which was currently experiencing low demand for rental space ― increasing voids and tenant defaults in the process, was exerting downward or stagnant pressure on new investments in Real Estate.
The unstable economic environment was also negatively affecting the sector's performance.
"Proceeding with the traditional thinking will only enhance chances of business closure. As such, the need for new thinking in a new economy is a must, especially with the new players in the market that are discerning and clear of their requirements. The resuscitation of the property market can be achieved through sector specific solutions," he said.
Juru said solutions to revive the sector also lie in a sustainable, practical and coordinated approach from all stakeholders in the real estate supply chain, starting with the basics.
"There is need for the town planning regulations (local development plans) to be revisited to reflect the current demands. The mixed-use concept should be reconfigured and applied on a respective stand wherein a property can be used for retail, offices or residential at the same time. The central business district should not strictly be only commercial and offices; and further, the operating hours should not be confined to 8am to 5pm and leave the city to sleep," he said.
It is generally accepted that there are three major forms of investment, namely ― money, stock market and property market, which Juru says is not formally regulated.
"The lack of a formal regulated vehicle that can be used to drive property development means as a nation, we cannot unlock value and attract international capital to develop properties and at the same time, locally, the investors or beneficiaries of property investment are not protected and do not have tax benefits," said Juru.
He said in other economies where real estate was booming the sector had regulated mechanisms available for property investors through real estate investment trusts which provide for tax breaks and formally regulated property investment structures.
"There is need for Zimbabwe to create such to allow funds to go into property development in a coordinated and regulated manner," he said.
Zimbabwe's model building by-laws, which stipulate the minimum expectations for construction in Zimbabwe, were last revised in 1975 and with technological advancement, modern technologies and innovation, the sector specifications have been overtaken by events and were making construction expensive and discouraging investors and making investment into property not viable.
"Steel-framed and prefabricated structures are not permissible, yet it is a faster and cheaper way of construction. There is urgent need to revise our model building by-laws to move with global trends and thereby reduce costs and delays in construction," he said.
The property market fundamentals have largely remained depressed during the year due to the tough macro-economic climate and at the same time the operating environment has remained difficult due to low demand and low capacity.
This has, in the main, contributed to the nature of activities taking place in the sector.
The property market has been a mixed bag of fortunes with residential developments taking centre stage largely being demand driven and riding on the back of an estimated 1,2 million national housing backlog.
"On taking a look at all towns and cities around the country, significant housing developments are taking place, however, in a majority of cases on land that is partially serviced.
"Without completely serviced land, no title deeds can be issued by the Registrar of Deeds," Juru said adding that the developments taking place were inadequately funded because no banks lend where there were no title deeds. The lack of finance resulted in poor quality of housing on the market.
The bulk of activities in the residential sector were concentrated on the lower end of the market which is high density and all this to some extent points to a new economy emerging in the low to middle class supported by the informal sector.
Despite the majority of banks offering mortgage finance, the low income levels were ultimately affecting uptake. The prevailing low income levels, compounded by high interest rates and high property values have resulted in limited capacity for the majority to
afford houses resulting in the high demand properties for rent.