Enacy Mapakame BH24 Reporter
Property developers should focus on market needs and be demand driven this year to grow and offset the impact of business slowdown experienced in 2018, an industry body has said.
Residential properties, student accommodation and small to medium enterprises (SMEs) shelter ranked among the top three developers have been urged to pay attention to in 2019, as demand for such properties outstripped supply.
Real Estate Institute of Zimbabwe (REIZ) president Mike Juru told Business Weekly that business was generally subdued in 2118 as the economy faced several challenges ranging from limited foreign currency to low production, which also affected the property sector.
Business on the commercial property side was slow, which resulted in an increase in voids especially in the central business districts (CBD) with companies moving to suburban properties, office parks or closing down. Other tenants asked for reduction of rentals, which affected rental yields.
However, Mr Juru said, there was still hope of recovery for the sector driven mainly by residential properties. In addition, exploiting the new economic dispensation would play a key role in growing the sector and its contribution to economic turnaround efforts.
Currently, demand for properties is skewed towards residential developments. The emerging small to medium enterprises (SMEs) also have potential to boost the sector but the current properties are not suited for their business models.
“Right now demand is mainly on the residential side, this is what the industry must deliver given the high residential housing backlog.
“We also have the SMEs, they need space, if we cater for this market we will do well as opposed to having white elephants within the CBDs and office parks or malls simply because the big companies have scaled down operations,” he said by telephone.
Juru however commended Old Mutual for developing a new complex–Eastgate Market-to cater for SMEs in Harare’s CBD, saying the insurance giant had responded to a need other were still blind to.
SMEs are now the major drivers of the Zimbabwe economy and failing to acknowledge them in rebuilding the economy would result in missed opportunities for the country.
The Eastgate Market is expected to cater for about 500 stalls for SMEs and accommodation facilities for traders coming from outside Harare, supermarket space and parking space.
It will also have about 2 000 square metres of refrigeration facilities for fresh produce that usually goes to waste at other markets like Mbare due to lack of proper storage space.
Mr Juru said while development of malls and office parks was still welcome. However, the subdued activity in industry also cascaded into the property sector.
“We are operating in the same economy. If companies struggle, we also suffer as both industrial and commercial tenants will move out.
“Property developments should be demand driven, right now we have an oversupply of commercial space as opposed to residential and student accommodation,” said Juru.
Government has however acknowledged the challenge in student accommodation across the country’s higher learning institutions and stepped in to help narrow the deficit.
Financial services groups such as CBZ and the Infrastructure Development Bank of Zimbabwe (IDBZ) have been tasked to spearhead funding of the projects.
Other companies such as the ZPI have also taken the initiative towards student accommodation in Bulawayo.