Real estate sector seeks essential service status

Stakeholders in the real estate sector are pushing for essential services status as it is tied to other sectors that are already considered essential.

This comes as activity, especially property sales in 2020, took a dip due to the Covid-19 induced lockdowns, which affected many other sub-sectors across the value chains for instance, taxation, insurance sector and pension funds.

Integrated Properties chief executive officer Dr Mike Juru, revealed the number of transactions during the year took a dip owing to several disruptions caused by the lockdowns.

Zimbabwe was at different levels of lockdowns since March 30, last year.

As a result, viewing of properties on sale was difficult, which reduced the number of transactions. Additionally, buyers could not verify records and documents for due diligence which also delayed the purchase process.

Additionally, rental payments were negatively affected, there were voluntary space surrenders resulting in high voids and lower returns. Enforcements, inspections and repairs were difficult to carry out during lockdowns.

“Businesses cannot operate without the real estate sector, and during lockdowns tenants are unable to make rental payments which affects the performance of the sector. The insurance sector and pension funds are also affected,” said Dr Juru during the 2020 Property Report Webinar held last week.

“Transactions need to be concluded online that is signed, sealed and delivered. More needs to be done to digitalise Government departments.

“In order to continue operating, there is need for the real estate sector to push for essential service sector,” he said.

While performance was generally depressed especially the commercial office space, residential segment proved to be resilient and pulled through the shocks. Demand for residential properties remained steady during the year.

However, like office space which suffered voluntary space surrenders as the market adopted virtual offices, the hotel and hospitality segments were also badly affected.

As the global economies implemented travel restrictions to limit the spread of the pandemic, the travel and tourism industry was hard hit which saw some operators in the country completely shut down their facilities.

Recovery is expected in 2022/3 although the sector is not expected to return to pre-Covid-19 era. While the warehouse segment also proved to be immune to the impacts of the pandemic, Dr Juru said more still needed to be done in this segment.

“More warehouses are still required in strategic locations and close proximity to residential areas for distribution.”

Dr Juru also highlighted the need to restructure properties in line with the changing market dynamics for the sector to remain sustainable.

“Observe what works at this particular, where is the current demand and how do you meet that demand in order to stay in the game,” he said. ==herald.cl.zw