REITs to underpin ZSE 2024 prospects
DESPITE a slowdown in real US dollar terms in 2023, Real Estate Investment Trusts (REITs) are still expected to anchor this year's growth prospects on the Zimbabwe Stock Exchange (ZSE).
Recently, the ZSE witnessed a significant development in its REITs landscape with the recent listing of the Revitus Property Opportunities REIT Fund last December, becoming the second REIT to be listed on the exchange.
Property developer Terrace Africa’s Tigere Property Fund became the first REIT on the exchange, following its listing in November 2022. In terms of performance on the exchange, the Tigere REIT had gone down by 34 percent (in US dollar terms) by the close of the year. Despite this decline, experts believe the REIT remains a lucrative opportunity for the primary bourse, worth pursuing as it also increases investment options for investors, providing an avenue for those seeking exposure to the Zimbabwean property market.
Recently, ZSE chief executive officer Mr Justin Bgoni also indicated the REITs market was one area providing growth opportunities for the exchange, in the short to mid-term.
“We see REITs as our main growth area, there is much more on the VFEX side because of currency issues. But on the ZSE side, the REITs is where we think a lot of our growth is going to come from in the short term to medium term,” he said.
REITs are entities that own and operate income-generating real estate, offering investors a chance to participate in the sector without directly purchasing physical properties.
This can be particularly attractive for individuals who lack the capital or expertise for direct property investment.
The ZSE's embrace of REITs aligns with its strategic goals of fostering the growth and diversification of the capital market, also at a time some counters are migrating to the US dollar-denominated exchange – the Victoria Falls Stock Exchange (VFEX).
The budding REIT market on the exchange holds promise for both investors and the broader Zimbabwean economy. For investors, REITs can provide diversification benefits by adding a new asset class to investment portfolios, potentially mitigating overall portfolio risk. Investors also earn dividend income as REITs are typically required to distribute a significant portion of their taxable income to shareholders as dividends, offering a potential source of regular income.
REITs make real estate investment accessible to a wider range of investors compared to directly purchasing properties.
On the other hand, for the broader economy, a thriving REIT market can contribute to increased investment as REITs can attract new investment into the real estate sector, potentially fueling development and job creation.
They also boost liquidity as increased trading activity in REITs can improve the liquidity of the real estate market, making it easier for investors to enter and exit positions, while operating under a regulated market promotes transparency and efficiency within the real estate sector.