Zim’s property sector exhibits growth in 2023
ZIMBABWE’S property sector exhibited growth in 2023, underpinned by the sustained surge in the residential property subsector, a research company has said.
Equities research firm Equity Axis, in its Zimbabwe sector review report, said commercial real estate also realised growth, but at a constrained scale.
“The performance of the residential housing sector is largely underpinned by a dollarised economy, which has allowed for renewed interest by developers and financiers such as banks and sustained demand from the diaspora,” reads part of the report.
The report noted that a growth in remittances, now surpassing US$2 billion per annum, the fourth largest in Africa, has helped the country not only attract foreign currency flows but also grow in the real sector, particularly the residential sector.
Equity Axis said the commercial sector has seen corporations and investors undertaking bite-sized projects with lucrative returns.
The market has witnessed the introduction of the Real Estate Investment Trust (REIT), whose potential market size is estimated at around US$40 billion.
A REIT is a company that owns and typically operates income-producing real estate or related assets, for which units of an investment pool are created and sold to investors in the same way as company stock.
The Tigere REIT pioneered the listing of REITS in the market last November, and the Revitus REIT became the second listing on December 18, 2023.
Equity Axis said the proliferation of REITs in various regions, particularly in third-world countries, can be attributed to a multitude of reasons.
“One prominent factor is the inherent appeal of REITs as an investment vehicle that offers numerous advantages.
“This feature enables individuals to diversify their investment portfolios, thus spreading their risk across a broader spectrum of assets encompassing residential, commercial, and industrial properties,” reads part of the report.
According to the REIT Association of Zimbabwe, the market is slowly evolving, with at least seven more new listings targeted for this year.
REIT Association Chairperson Dr Mike Juru recently said Zimbabwe’s documented residential and commercial infrastructure needs, coupled with the attractive investor returns, present a compelling business case for the broader market to take up REITs as a viable capital market instrument.
According to Dr Juru, considering that REITs are still in their formative stage in Zimbabwe’s capital markets, he is convinced that the market performance of REITs is primed for further improvement in the short to medium term as the market fully embraces REITs in their investment portfolio diversification and hedging efforts.