The Zimbabwe real estate market showed notable resilience in 2023 despite the ongoing economic instability and even saw world-class project development in the residential, commercial, and industrial property segments.
From a financing perspective, transactions are mostly in the US Dollar currency with the market accepting both cash (US Dollars) as well as Nostro mortgage payments, although the government Nostro facilities are facing a level of resistance from property sellers. The country intends using the USD as currency until 2030, which creates stability for real estate transactions.
Economic Factors Affecting the Market
Economic challenges persist, such as low disposable incomes, local currency depreciation, high interest rates, limited mortgage availability, and exchange rate risks. Despite these hurdles, the stability offered by the country's ongoing use of the USD until 2030 provides a conducive environment for real estate transactions.
Zimbabwe experienced a significant drop in interest rates to 130% in October 2023, with expectations of further gradual decreases in the foreseeable future. However, the Central Bank of Zimbabwe remains committed to a tight monetary policy to temper inflation and foster economic stability.
Most in Demand Properties in the Real Estate Market
In 2023, the real estate sector in Zimbabwe witnessed a surge in residential and retail properties, primarily driven by the burgeoning urban population and the expanding informal sector. The residential segment, in particular, saw heightened demand for high-quality living spaces and comfortable homes, prompting a notable increase in residential developments and investment nationwide.
The demand for residential properties was further fuelled by the availability of foreign-denominated individual/joint mortgages, employer-assisted mortgage schemes, and diaspora remittances. These factors contributed significantly to the upward trend in demand for residential properties across Zimbabwe.
The most in demand price bands in Harare include:
Northern Suburbs - USD300,000 to USD1 million
Eastern Suburbs - USD80,000 to USD400,000
Southern Suburbs - USD60,000 to USD250,000
Western Suburbs - USD60,000 to USD250,000
The demand for retail properties is on the rise in suburban areas, as evidenced by the emergence of several upscale retail developments in locations such as Highlands, along Chiremba Road, Chinamano Corner, and throughout Harare.
Buyers and Sellers
There are three main categories of buyers, namely: (1) high density buyers (low-income earners, mainly civil servants, mining workers, and employees under Employer-Assisted Mortgage Schemes); (2) medium-density buyers (upcoming entrepreneurs, informal traders, farmers, young couples, miners, and business executives); and (3) low-density buyers (high-income earners seeking luxurious homes). These include the diaspora community, tenderpreneurs, senior civil servants (government officials), and business executives.
The main categories of sellers include (1) individual property owners, (2) property developers, and (3) corporate organisations (pension funds, property investors, and insurance companies).
Rental Market Remains Active and Dynamic
The rental market remained highly active throughout 2023, with most rentals denominated in the USD currency and only a few based in the local currency.
Residential rentals remain in high demand due to rapid urbanisation. The most in-demand categories in Harare include:
Northern Suburbs - USD1,000 to USD4,000/month for a modern 4-5 bedroom apartment.
Eastern Suburbs - USD600 to USD2,500/month for 3-4 bedrooms.
Southern Suburbs - USD450-USD1,000/month for 3-5 bedrooms.
Apartments in areas like Arlington Estate - USD1,000 to USD2,500/month for 3-5 bedrooms.
Western Suburbs - USD500-USD1,500/month for 3-5 bedrooms.
Retail Rentals Market
Throughout 2024, the demand for retail space in Harare surged, primarily due to the expanding informal sector in the country. The retail market is playing a significant role in mitigating vacant space in Harare's Central Business District (CBD). Property owners are adapting by repurposing and partitioning their buildings into smaller units to cater to the operational needs of small and medium-sized enterprises (SMEs).
Retail rentals in Harare's CBD typically range from USD20 to USD30 per square metre, varying based on the quality and quantity of the space leased. In suburban areas, rental rates for retail space range from USD15 to USD20 per square meter. The average yield for retail properties is around 7%.
Office Rentals Market
The demand for office space in Harare's Central Business District (CBD) is unlikely to rebound, as many office seekers are opting to relocate to suburban areas. Rental rates for Grade A offices typically range from USD6 to USD10 per square metre, while Grade B offices command rentals ranging from USD7 to USD12 per square meter. Suburban offices are fetching higher rentals, ranging from USD8 to USD15 per square meter. Office space has maintained an average yield of 8%.
Industrial Rentals Market
The demand for industrial space is steadily increasing in tandem with the rise in industrial activities, including mining, logistics, and the need for storage space. Rental rates vary depending on the size of the units. For units smaller than 500sqm, rentals typically range from USD5 to USD7 per square meter. Larger industrial units, with areas exceeding 1000sqm, command different rental rates. Units between 500sqm and 1,000 sqm fetch rentals of USD3 per square meter, while those above 1000sqm have an average rental rate of USD1 per square meter. Industrial properties are achieving an estimated average yield of 11%.
Challenges in the Real Estate Market
Sellers in the real estate market encounter challenges such as high transaction costs and misinformation about the market. Buyers tend to have to grapple with high property transaction costs and pricing distortions.
Landlords are still facing late rental payments, while the process of evicting tenants remains very expensive. Tenants, on the other hand, have to grapple with challenges such as recovering their security deposits, unfair rental increases, and property maintenance.
Nonetheless, the Zimbabwe property market remains dynamic and active, offering a variety of opportunities for property buyers, investors, and sellers, as well as landlords and tenants across the residential, retail, commercial, and industrial property sectors.
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