Glittering Harare loses its sparkle
Prospects poor as state steps in to end estate agents’ fees war
INCREASING DEFAULTS: A three- to four-bedroom house in the medium-density Harare suburb of Mabelreign costs in the region of $110 000 AT the peak of Zimbabwe’s short-lived economic recovery in 2010, legend has it, illegal panners from the diamond-rich Marange area briefly became property moguls.
The omakorokoza would walk into posh real estate offices in Harare, with cash in duffel bags, and snap up properties without blinking at million-dollar — US — price tags.
In 2013, Pam Golding Zimbabwe, one of the biggest estate agencies in the country, reportedly had a property listed in the upmarket Harare suburb of Borrowdale for $6.2-million.
At such high valuations, properties in upmarket Harare could comfortably compete with their high-end equivalents in the Cape Town suburbs of Clifton, Camps Bay, Bantry Bay and Fresnaye.
The boom was largely driven by new money from the diamond wealth, diaspora buyers and positive foreign investor sentiment after Zimbabwe ditched the local currency in favour of the US dollar.
Just three years later, though, those good times feel like a distant memory.
Property experts cite the military’s tightening control over the diamond mines and President Robert Mugabe’s victory in the 2013 election as two of the reasons the bull run in Zimbabwe’s property sector ground to a halt.
Once viewed as a safe haven for investment in Zimbabwe, the property sector has slumped together with the rest of the economy.
Nico Kuipa, vice-chairman of the Estate Agents Council of Zimbabwe, said: “The property sector’s ability to weather the current economic downturn is dewe pendent on when upturn in the economy takes place.
“We believe the fortunes of the property sector will not improve in the very short term.”
Juliet Harris, MD of Pam Golding Zimbabwe, said if a property was priced right it still could be sold, despite the tough economic environment.
Harris said the most expensive property on the company’s books was priced at $2.3-million (about R33-million).
“At least 99% of our clients are local. There are very few foreigners buying property in Zimbabwe.
“There are some South Africans who put in queries in order to get bargains, but these are usually snapped up before,” she said.
“Generally, property in Zimbab- is more expensive than in South Africa.”
The market is mostly only prepared to accept prices of up to $1-million at the moment, a price ceiling that is largely the result of “uncertainty”.
To underscore the difficulties prevalent in the market, Pearl Properties, a Zimbabwe Stock Exchange-listed property investment, development and management company, recently released half-year results that showed a slump in revenue.
Revenue fell 2.41% to $4.16-million from $4.26-million last year. Rental income fell 4.96% to $4.03million in 2015.
Elisha Moyo, chairman of Pearl Properties, said the property sector remained depressed due to “increasing defaults, declining occupancy levels, increasing evictions and voluntary space surrenders”.
The worst-affected areas were the central business district office sector and the industrial sector, he said.
Although demand for CBD retail space remained relatively strong, tenants were increasingly requesting lower rentals to stay in business.
The depression in the property market has also been blamed on the liquidity crunch.
Furthermore, uneasiness prevails over the looming introduction of bond notes — a Zimbabwean version of the US dollar — which will be launched at the end of this month.
Property sector players said anxiety over the introduction of bond notes resulted in some sellers pulling out of sales “at advanced stages”.
A property agent for R.E.D. Property, who asked not to be named, said that in the first quarter of last year the company sold 25 houses — compared with the 10 sold in the first quarter this year.
“The market is very shaky and there is a lot of uncertainty. Most sellers wanted to take their cash out of the country once they disposed of their properties. But now they cannot do that because of the Reserve Bank of Zimbabwe cash restrictions,” he said.
“There has been a withdrawal of as much as 50% of houses on the market and there is no confidence in the government . . . players in the property market are finding the going very tough.”
For estate agents, it has become survival of the fittest as they undercut each other on sale commissions to attract the trickle of clients.
Securing business has become so cutthroat that last month the government intervened, issuing Statutory Instrument 89 of 2016, which sets the commission that estate agents should charge for general service rendered at 5% of the transaction amount.
Bennias Gweme, the registrar of the estate agents’ council, said the law set the minimum fee agents could charge for facilitating the sale of a property.
“They cannot charge below the gazetted minimum limit.
“This has been necessitated by the behaviour of some players who have been getting business by undercutting their competitors,” he said.
Moyo said the property sector in Zimbabwe had experienced an intensification of investment into low-, medium- and high-density residential developments.
Banks such as CABS, CBZ and FBC — which are also mortgage lenders — have rolled out their own housing schemes.
Harris said the banks were hedging their funds in housing development and interest had been significant — especially in the lower-income brackets.
Mugabe’s government has also taken a keen interest in the property sector.
It is making thousands of stands available to young people, which political observers suggest is part of Zanu-PF’s 2018 election campaign strategy.
According to the government’s estimates, Zimbabwe has a housing backlog of 1.25 million.
Generally, property in Zimbabwe is more expensive than in SA Sellers wanted to take their cash out of the country . . . But now they cannot