Property owners struggle for tenants
ONE of Zimbabwe’s biggest property investment company Old Mutual Zimbabwe says occupier demand across most real estate sectors has decreased substantially since March 2020.
The month of March marked the spread of the Covid-19 pandemic into Zimbabwe with Government subsequently placing the country under lockdown to stem the spread of the novel coronavirus which first emerged in China last December.
In May, President Mnangagwa declared an indefinite lockdown as Covid-19 spread across the globe uncontrollably.
While in July, Government imposed a 12-hour curfew, the restrictions have since been eased with businesses operating at almost normal working hours.
The pandemic and the subsequent measures taken to stem its spread, however, left significant damage to the economy amid subdued business activity.
“Covid-19 has seen sentiment deteriorating across all sectors, although the industrial sector is still more resilient than retail and offices,” Old Mutual said in an observation that accompanied notes on its Old Mutual Property Fund for the half year to June 2020.
The view is in line with observations made by this publication as low consumer demand has affected retail revenues which largely determine rentals property owners can get from the sector.
Office space, in particular in the CBDs, has also suffered as some small to medium players in the informal sector had no access during the lockdown period with some now choosing to work from home indefinitely.
“Covid-19 pandemic induced business trading restrictions have also negatively impacted the real estate market due to the reduced income earning capacity of many in the formal and informal sectors.
“This has put pressure on rentals thus forcing property owners to shift focus to collections, thereby easing on rent reviews,” Old Mutual noted.
A recent market update by Knight Frank, shows that to retain a steady flow of income, landlords were forced to accept up to 25 percent US$ discounted rents.
Rentals paid in local currency for both residential and retail segments remained unstable due to the weakening currency, observed Knight Frank.
“The office space remained largely depressed with central business district (CBD) buildings recording voids. Demand also remained subdued worsened by the pandemic as businesses implemented the social distancing requirements and working from home except for those in the essential services,” reads part of the Knight Frank market update.
As a result, Old Mutual is of the opinion that virtual offices and core working space will become “more common in the aftermath of the virus thus lowering demand for traditional office space.”