LIVINGSTONE MARUFU
The prevailing economic headwinds threaten Zimbabwe’s real estate and property sector growth amid indications that an inhibitive mortgage financing framework, high interest rates and waning disposable
incomes will not allow people to buy properties.
The bulk of Zimbabweans are living from hand to mouth and cannot afford to save extra amounts to buy stands, later alone houses.
Integrated Properties chief executive officer Mike Juru told Business Times that an anticipated revenue boom in a functional economy with affordable mortgage finance models is every realtor’s dream.
“In our case, unless addressed, a liquidity crunch, imported inflation, high-interest rates, and an inhibitive mortgage financing framework stand in the way of realtors in 2023.
“The inflation situation is worsened by the fact that the world is in the midst of a global energy crisis, with impacts that will be felt for years to come,” Juru said.
“As such, as is the case across the globe, Zimbabwe’s real estate industry faces transformational shifts as supply chains are yet to align to the impact of global shocks on how buildings will be used, valued, and transacted in 2023 and beyond.
“Globally, terms like “dual sourcing”, “near-shoring”, and “friend shoring” are being used to describe collaborative efforts to manage the supply chain challenges in real estate,” he said.
Juru said the potential for a regional or global recession or stagnation looms—and these impacts would be felt across the sectors.
The IMF estimated the Global GDP for 2022 to be 3.2% which will slow down to 2.7% in 2023.
The analysis is found inconsistent with the Zimbabwe scenario where, based on the World Bank projections and analysis, in 2021 Zimbabwe’s GDP was 5.8% and projected to slow to 3.7% in 2022 and projected to settle at 3.6% in 2023 and 2024.
“The good news is that the projected marginal shrinkage of the GDP from 2022 to 2023 infers stability in the property market considering that the real estate industry is generally not sensitive to minor economic shifts and changes,” Juru said.
He said key points drawing reservations include the 200% interest rate regime that if not drastically reduced will see the property market remaining stagnant and reliant on cash transactions which are not palatable with real estate development.
“Practical, reasonable property finance options need to be created to enable the growth of the real estate
sector, which is an anchor sector for both industry and commerce,” Integrated Properties boss said.
He said unlike in other economies, Zimbabwe’s property investment fundamentals are bent on hedging
instead of on economic growth and income generation.
“Ultimately, the Zimbabwe property market is the biggest beneficiary of monetary and financial policy proclamations and a general lack of alternative investment instruments that can act as inflation
hedges,” Juru said.
With properties being long-term investments, real estate stakeholders largely base their decisions on future economic factors.
