Residential property market remains resilient
THE residential property market remained resilient during the six months to December 31, 2022 as demand for affordable housing continued to outstrip supply, according to experts. This has seen an increase in demand for middle to high-income properties as investors look to preserve their value amidst uncertain inflationary trends.
According to a market update report for the review period by Knight Frank, this has led to an increase in property values.
“The high demand against static supply saw property values in this market segment increase phenomenally as properties in some areas like Eastlea, Hillside, Milton Park, Belgravia and along major roads leading away from the CBD being converted for commercial use,” said Knight Frank.
Financial institutions have delivered good housing stock and private self-financed cluster house schemes have been noted. The majority of rentals are being paid using United States dollars, indicating a stable economy.
According to Knight Frank, the retail market has also been relatively resilient despite low consumer disposable incomes.
Informal traders have caused a boom in the retail market, with vendors flooding the CBD to maximise on the high volumes of traffic.
This has led to an increase in rental rates for retail space in the CBD, ranging from US$20,00 to US$25,00 per square meter.
To accommodate small and medium-sized retailers, several property players have subdivided their buildings into small units, achieving higher rental rates and returns.
Rental rates for suburban locations have remained stagnant.
However, retail in the capital is at a low pace with a few ongoing developments including Highland Park Phase 2, Madokero Shopping mall and fuel filling stations.
“There was an expansion in supply of retail space as new complexes are being constructed for example the Madokero Shopping Mall, Highland Park Shopping Mall and Pomona becoming major economic zones,” said Knight Frank.
In terms of industrial segment, storage, distribution and logistics are becoming the predominant use of space as the manufacturing sector continues to be affected by competition from imported goods.
Hardware retail traders have established their presence in a number of the industrial and business parks.
Demand for industrial and logistics space is high, but supply is limited, leading to private players and corporates making significant investments in this sector.
The new industrial developments in Mount Hampden, Msasa, Madokero Business Park, and Pomona Industrial parks have become major economic zones. Despite challenges like power outages, poor water supply, low capacity utilisation, and deteriorating infrastructure, rental rates have remained stable.
Knight Frank said: “Though growth in the sector is hampered by power outages, poor water supply, low capacity utilisation and deteriorating infrastructure, rents have firmed to about $5 per square metre for units less than 500 square metres.”
Rental rates have remained stable, achieving US$3,00 per square metre for units of up to about 1 000 square metres while larger spaces are achieving in excess of US$1,00 per square metre.
Overall, the property market in Zimbabwe has seen significant growth in the second half of 2022, with the residential, retail and industrial markets all experiencing increased demand and supply struggling to keep up.
The stable rental rates indicate a positive outlook for the country’s economy.