High demand keeps commercial properties pricey
Experts in the real estate industry expect the cost of commercial properties in Zimbabwe to remain high compared to regional dynamics, a trend that should continue in the short to medium term amid strong demand.
According to the law of supply and demand, prices are determined by the relationship between supply and demand. If the supply of a good or service outstrips the demand for it, prices will fall. If demand exceeds supply, prices will rise.
WestProp Zimbabwe chief executive officer (CEO) Ken Sharpe said the country had an undersupply of properties, especially upmarket commercial properties, which is driving prices.
“There is an undersupply of properties which is the reason prices are relatively higher than our regional peers. This is going to be the same in the next three to five years,” said Mr Sharpe responding to questions during the company’s first analysts briefing in Harare.
Since it was established in 2007, West Property Zimbabwe has been involved in several upmarket property developments in the capital Harare, and currently has a solid project pipeline targeting the high-end market.
The business, which is expected to debut on the Victoria Falls Stock Exchange (VFEX) on April 28, 2023 is looking at raising US$30 million through an Initial Public Offering (IPO) which opened on March 27 and closes on April 21st.
The IPO offers one million ordinary shares at US$10 each and US$5,4 million preferential redeemable convertible shares at US$5 with a regular 7,5 percent coupon.
According to Mr Sharpe, the capital raise is expected to accelerate its projects among them the Pokugara Residential Estate, Pomona City, Mall of Zimbabwe, Millenium Heights, Warren Hills Golf Estate and Millenium Heights Office Park.
According to studies, Zimbabwe has an undersupply of about 100 000 square metres of retail space, creating scope for more developments catering for both retail and office space, especially for the upmarket.
Global real estate experts Knight Frank have also indicated the booming satellite cities not only in Zimbabwe but across the region create vast opportunities for property companies.
New world-class facilities are expected to be developed in such new towns in line with global standards. The construction of a state-of-the-art Parliament building in Mt Hampden, for instance, is expected to anchor and attract more modern developments in the area, which has been earmarked for a smart city.
“The futuristic Cybercity, for instance, is projected to anchor the ‘New Capital City’ or the ‘New Harare’ in the Mount Hampden area, 26 kilometers Northwest of Harare and will feature luxury homes and high-tech offices,” said Knight Frank.
The 2,5 million square metre project includes 250 townhouses, around 50 villas, several apartment buildings, state-of-the-art office facilities in a 15- story commercial tower, and landscaped gardens within a gated community.
Overall, the real estate and construction sector is expected to grow in line with the Government’s general economic projections for the year 2023.
Treasury is projecting the economy to grow by 3,8 percent supported mainly by increased activity in mining, which should be a US$12 billion annual revenue sector starting this year. Increased agricultural production is also expected to support the economic growth mantra.
This anticipated growth is also expected to reflect in the real estate sector and construction where it will be supported mostly by public investments, although it may not be all rosy due to a host of challenges like foreign currency shortages and exchange rate volatility.-herald
