Mixed fortunes for real estate in 2021

Zimbabwe turns its back to 2021, which was a mixed bag for the real estate sector. From the central business district (CBD) office space, industrial, housing, office parks and retail space, the segments experienced varied performances.

Performance updates from listed property firms, Mashonaland Holdings and First Mutual Properties (FMP), show the sector was also affected by the adverse impacts of the Covid-19.

There was a general supply/demand imbalance in the country’s property sector worsened by the pandemic which saw corporates adopting remote working while the reduced economic activities across sectors also added to the woes.

Central business district (CBD) space ranked among the top affected segments together with shopping centres in high density areas. Resultantly, rental incomes were also affected although property owners adopted quarterly rental reviews as a cushion against inflationary pressures.

Rental incomes across segments were also predominantly indexed to foreign currency as landlords sought to preserve value of cash flows.

In a performance update, FMP said the half year to June 30, 2021 showed that transaction activities remained depressed, as property investors held on to real estate to preserve value.

“Space absorption remained subdued during the period with continued supply demand imbalances, pending full recovery of the productive sectors to support demand for space.

“The excess supply of space is mainly historical space redundancy, with the sectors worst affected being the CBD Offices, high density suburban shopping centres and the specialised industrial sectors,” said the group.

However, other experts in the sector said demand for retail warehousing, light industrial properties and office park properties remained strong.

In the CBD, there has been increased activity in the retail sector, which has seen the repartitioning of space to cater for increasing demand for selling space by small to medium enterprises.

In 2020, the residential sector development activity also remained firm mainly supported by the informal sector of the economy and the diaspora community.

Construction related companies have also cashed in on the increased developments which have seen demand for cement grow.

This comes as demand for residential housing has remained strong especially in the capital — Harare. Apart from individual residential developments, top mortgage lenders like FBC Building Society have seen increased activity in housing development.

The building society recently completed 150 housing units under its Fontaine Ridge project in Kuwadzana.

Parent company — FBC Holdings Limited company secretary Tichaona Mabeza indicated in a third quarter trading update that the housing units were developed under Phase 1A while the next phase should see 119 housing units being delivered by the end of the financial year.

“Phased construction activities by FBC Building Society are in progress at the Fontaine Ridge — Kuwadzana project with road formation works currently underway at phase 1B. “Phase 1A construction works were completed for 150 units and 119 units for Phase 1B are planned to be substantially completed by end of the fourth quarter,” he said.

Upon completion, the entire project will comprise a total of 858 housing units ranging from medium to high density with an average stand size measuring 200 square metres.

On the other side of town, Mashonaland Holdings said housing development was progressing well at its Mashview Gardens project in Bluffhill with the first batch of houses scheduled to be ready during the first quarter of 2022.

Experts in the real estate sector maintain prospects for the residential segment remain high in 2022 and going forward driven by the firm demand for housing.

There are also huge opportunities in student accommodation as well as tourism facilities to cater for the anticipated boom as the sector recovers from Covid-19 shocks.-The Herald