Offshore financial hub to drive Vic Falls real estate

The emergence of Zimbabwe as an offshore financial hub will put the country on the radar for real estate investments, which will benefit the economy, experts in the sector have said.

As part of initiatives to attract foreign direct investment in the country, the Government identified the resort town of Victoria Falls as an offshore financial services centre.

The successful implementation of this plan will also hinge on infrastructure development to support the plan.

As such, activity in the real estate sector is expected to be high as the resort town adopts the model used by Dubai and Mauritius to attract global and regional banks and other financial services providers to develop structures in the tourism resort centre.

Already, the resort town witnessed the launch of the Victoria Falls Stock Exchange (VFEX) three years ago as part of the initiatives towards that broader plan.

Real estate consultants Knight Frank see this as one of the key trends to watch in the region, going into 2024.

“Zimbabwe’s economy is expected to become supercharged following the Government’s decision to establish an offshore financial services centre in the resort city of Victoria Falls,” said Knight Frank analyst Boniface Abudho, in their Africa Horizons report, which offers the continent’s unique guide to real estate investment trends and opportunities for 2023/24.

“The offshore financial centre will be modelled on Dubai, Mauritius, and the Isle of Man and will offer investors an environment comparable to these jurisdictions.

“The centre operates in US dollars and offers tax incentives, making it an attractive destination for global banks’ African headquarters,” said Knight Frank.

One of the first steps to this, the launch of the VFEX in Victoria Falls, has already seen a surge in listings, driven by incentives that include trading in US dollars, tax exemptions on capital gains, and the ability to repatriate funds from a country where foreign exchange is in short supply.

The real estate sector remains a lucrative investment opportunity in Zimbabwe with the ability to hedge against inflationary pressures. Activity has been high in the residential cluster and expected to remain on the back of strong demand for housing. Apart from the residential cluster, experts also opine that the warehousing segment continues to present growth potential following increased activity in both mining and agriculture sectors.

The trend is expected to remain in the absence of more development to service the market, according to analysts’ projections.

Apart from agriculture and mining, retailers are also coming in with strong demand for space.

“In recent years, there has been a shift from traditional in-store shopping to online shopping resulting in an increased demand for warehouse space.

The worldwide prevalence of e-commerce has also made industrial real estate, particularly warehouse real estate, an attractive investment,” said IH Securities in a real estate sector report.

According to eMarketer, the e-commerce industry is expected to grow at a CAGR (Compounded Annual Growth Rate) of 8,8 percent until 2026, attracting a lot of investment in infrastructure that makes e-commerce possible. Experts in the real estate sector also say supply for warehousing space has remained limited resulting in a spike in demand as industrial activity has been on the increase following relaxation of Covid-19 restrictions.

According to the Africa Report 2022 / 2023 by Knight Frank which analyses trends across the region: “In the industrial sector, demand remains strong but is largely unfulfilled due to limited supply. There have been no significant warehouse completions recently and most new developments are owner-occupied.

“The positivity in the sector is to an extent continuing to be tempered by power outages, low capitalisation, poor water supply and deteriorating infrastructure.”-herald