Prop sector fortunes depend on Zim’s economic trajectory
PROSPECTS of the property market this year are expected to depend on the recovery of the economy, with sales skewed towards the residential segment, experts have said.
Treasury and the International Monetary Fund (IMF) have both given positive economic growth projections for Zimbabwe in 2021, mainly driven by agriculture and mining. Economic growth for 2021 is estimated to be at 7.8 %, slightly above the 2021 National Budget growth target of 7.4%.
For this year, the economy is projected to grow by 5.5%, which will shape business in the real estate sector. The latest IMF World Economic Outlook report for October 2021 projects the global economy to grow by 5.9 % in 2021 and slow down to 4.9%.
According to Rawson Properties Neighbourhoods Report for the 2021 fourth quarter, the positive economic growth projections are anticipated to contribute towards improved demand in the real estate occupier market, although more activity is expected in the residential segment.
“Within the short to medium term, the outlook much relies on the recovery of the economy. Within the short to medium term, the outlook much relies on the recovery of the economy as the property market tends to track the overall economy quite closely.
“If the recovery trajectory continues, we expect the property growth to continue as well. “Property sales activity is expected to be highly concentrated in the residential space. Commercial sales expected to steadily increase for strategically located properties for redevelopment purposes,” part of the report reads.
The retail segment is expected to remain resilient this year and going forward, driven by growth in the retail sector, especially by small to medium enterprises (SMEs).
“Improvements in occupancies for the retail sector are expected to continue, especially for modernised and refurbished properties in good location,” the Neighbourhoods Report said.
The report acknowledges the major changes the retail sector has gone through, especially in Harare’s central business district (CBD) in the past few years.
The sector is dominated by SMEs and informal businesses, with large retail outlets still maintaining a presence within the sector. In past years, property owners have been repurposing, refurbishing and remodelling space to suit demand.
Today, low-rise strategically located buildings are targeted for retail leasing, which is experiencing high demand.
Big corporates like Old Mutual, Meikles Limited and many other property owners have repurposed their properties in line with these changes.
For Meikles, the diversified hospitality group expects to complete planned redevelopments of its properties once occupied by its retail segment across the country by end of this current financial year following closure of its departmental stores in the country such as Barbours.
The group also operated Greatermans Stores, which also closed. In Harare’s CBD, the space once occupied by Barbours is now occupied by SME retailers.