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Zim crisis hits real estate market


Melody Chikono
Falling disposable incomes have hurt residential property sales in Zimbabwe, real estate firm Knight Frank Zimbabwe said this week.

Hyperinflation has returned to haunt Zimbabwe 14 years after the country was forced to abandon its currency when the inflation rate hit 500 billion percent according to International Monetary Fund estimates.

As in 2008, Zimbabwe is experiencing foreign exchange shortages, which have triggered turmoil compounded by currency fragilities that have led to low disposable incomes.

In its Africa Report 2022/23, Knight Frank said depressed demand had been compounded by pressure from sellers for foreign exchange trading.

But the Zimbabwean market is dominated by local currency customers as the majority of Zimbabweans do not have access to foreign currencies.

The mortgage market has been weak and most buyers need to find cash to acquire properties.

Sellers of goods and services in a cross section of the economy have turned to US dollar transactions to avoid loss of value.

Knight Frank’s managing director, Siza Masuku, said that unlike the problems faced by residential property dealers, the suburban office segment was booming.

The country’s biggest businesses have recently moved out of central business districts, which have been overwhelmed by informal traders operating from sidewalks and property entrances.

He said some consumer-facing businesses had moved, citing depressed trade after informal traders camped out in storefronts to sell cheaper goods.

“Hyperinflation and foreign exchange shortages affect economic stability, leading to the erosion of real disposable incomes and, therefore, negatively impacting confidence levels.”

“The real estate market remains in limbo. However, the suburban office market remains buoyant due to ongoing relocation activity away from the CBD,” Masuku added.

Zimbabwe’s property market has been affected on many fronts.

Companies have reduced the space occupied in buildings to manage soaring costs.

Since the outbreak of Covid-19 two years ago, many companies have ordered employees to work from home to avoid contagion, leading to a reduction in occupied space.

The economic crisis is expected to offset Zimbabwe’s goal of providing more homes for citizens as part of its Vision 2030 strategy, according to Knight Frank.

According to the government, the country is working on several strategies to reduce its national backlog of two million homes.

Experts say strategies to achieve Vision 2030 revolve around providing human settlements that meet people’s aspirations, while addressing aspects of affordability and modernization.

Under the National Development Strategy (NDS1), Zimbabwe is expected to deliver 220,000 housing units by 2025.

This should be achieved through the collective efforts of stakeholders and all parties involved in the provision of human settlements.

The Knight Frank report says that unlike neighboring Zambia where the property market has entered a post-pandemic recovery phase, house hunters in Zimbabwe have been shut out of the market due to currency issues and high inflation .

Annual inflation, which hit 50.1% in June last year, jumped to 256% last month.

However, it is not just Zimbabwe’s property market that has been affected.

The report says that Tanzania is also experiencing depressed performance in the residential property market.

According to the report, housing rental rates in Tanzania have fallen by almost 50% over the past two years as an oversupply of rental properties, combined with weakened demand, largely due to the pandemic, has undermined the market.

On the contrary, the residential market was firmly in recovery mode in Uganda, as evidenced by strong demand and rental indicators, the report notes.

Drivers of demand in the residential sector in this country include the return of expats to the country after the lifting of Covid-19 travel restrictions.

Renewed demand from professionals in the oil and gas sector following the signing of key petroleum agreements in April 2021 and the final investment decision in February 2022 has also increased demand for housing.

Botswana, South Africa and Mozambique were optimistic about their housing markets, Knight Frank said.

The report notes that the Algerian real estate market has been depressed after being hit hard by Covid-19 with values ​​falling.

The pandemic, the devaluation of the Algerian dinar and the general decline in purchasing power have added to the malaise in the residential market, he said.