Transformation in Zim’s real estate sector
A TRANSFORMATION is taking place in Zimbabwe’s real estate sector, with operators repurposing buildings, optimising portfolios and aligning operations to e-commerce, as the terrain shifts under Covid-19, according to Mike Juru, chief executive officer at Integrated Properties (IP).
In an interview with businessdigest this week, Juru said the repurposing of buildings would be a big deal, with some central business district (CBD) properties turning into homes as executives stick to home offices.
The former Real Estate Institute of Zimbabwe president dispelled fears of a catastrophe in the sector as the pandemic forced businesses to adopt new ways, saying Covid-19 had created big opportunities.
He said houses had already reported better incomes after being transformed into offices, while demand for Wi-Fi had barrelled as companies restricted staff to work from home in order to avoid contagion.
“More warehouses are also required in strategic locations and close proximity to residential areas for distribution,” Juru, who is the current chairperson of the Institute of Directors of Zimbabwe, said.
“There are also greater opportunities in new developments, particularly housing and local production of modern and quality finishings.”
He, however, said one of the biggest problems faced by Zimbabwean players last year was that the property sector was classified as a non-essential service.
“Consequently, commercial and residential construction projects were halted, rental incomes for property owners and pension funds were disrupted, actuarial services were disturbed and property management practices across the country were also compromised,” Juru said.
“There are silver linings in these dark clouds. The market has come to realise that in order to work, you do not need loads of space. This realisation will reduce the cost of doing business for most corporates, in the process making them more profitable.”
He foresees a rise in demand for home offices at the expense of central business district (CBD) properties. This will be the driving factor behind the repurposing of CBD buildings into residential accommodation.
Juru sees investment into properties peaking up because this remains one of the safest investment havens in this market.
He said the establishment of Real Estate Capital Markets through the Real Estate Investment Trusts (REITs) was another opportunity in the property sector.
The addition of REITs to the capital markets, he said, allows institutional investors to issue property derivatives that can improve their cash-flows.
“As an instrument, REITs allow rigid portfolios, such as pension funds that are heavily invested in properties, to unlock liquidity backed by the value of a portion of their properties. Previously, pension funds would end up disposing their properties at a loss to meet their short-term liquidity demands,” Juru said.
“As a fairly new instrument, government is promoting the uptake of REITs through implementing supportive policies, including the exemption of REITs transactions from income tax obligations, amongst others. Further, REITs have opened an opportunity for more participants in property investment as the registration requires a minimum of 100 individuals.”
“An investor must aim to keep a balanced portfolio to insulate themselves during downswings and create a buffer during upswings to cushion themselves during rainy days like these. For those with a higher risk appetite, student accommodation presents an opportunity for a short- to mediumterm return on their investments. However, from a long-term view, it is critical to read into this narrative with the emergence of a digital economy in mind,” Juru added.