LIVINGSTONE MARUFU
Government rushed to introduce the Real Estate Investment Trusts (REITs) without research resulting in the absence of proper law to kick-start the project, a new property sector report said.
The Finance and Economic Development Minister, Mthuli Ncube, in 2020 announced that the Zimbabwe Stock Exchange (ZSE) was ready to list REITS, which are securities that are publicly traded on stock exchanges the same way as equities.
But, two years down the line, nothing tangible has happened.
“The introduction of REITs was a noble move but the problem is that the Treasury started with the end game without setting up proper laws to govern the sector. Currently, the sector is still using 1976 by-laws,” Integrated Properties said in a latest report.
It said the regulations should be investor friendly and allow investment to take place.
The report said apart from regulation, there were some restrictions on the participation in REITs. The properties sector players have been pushing for their removals.
The report said there will be increased REITs listings if they remove restrictions on participation, remove old regulations and relax real estate laws.
Government said the introduction of REITS was part of efforts by the administration to diversify local securities trading through the introduction of a wide variety of investment products.
The development comes at a time when investment by players in the insurance and pensions sector is skewed towards equities and property, which does not create liquidity.
There were indications from the bourse that a couple of issuers were interested in putting up their properties on the ZSE.
The ZSE chief executive officer Justin Bgoni recently told Business Times that various pension funds were interested in REITS.
“The bourse is optimistic that there will be potential REITs listing this year as processes are at an advanced stage,” Bgoni said.
“The ZSE is talking to some pension funds that want to list their properties on the ZSE.”
The development comes at a time when ZSE has been making efforts to diversify its product offering as part of initiatives to make the bourse an attractive investment option.
Such initiatives are also expected to increase participation and enhance liquidity on the bourse.
Already, there has been notable increase in retail participation on the market following the launch of new products and platforms that enhance accessibility to the market, such as the ZSE Direct.
In 2021, the ZSE gained traction on the projects it was working on, the awareness of investing on the ZSE grew, as the bourse witnessed increased participation especially from the retail investors.
Early this year, the ZSE launched the Morgan and Co Multi Sector exchange traded fund . This followed the listing of the Old Mutual ZSE Top 10 ETFs in January last year.
The Receivables market also gained traction in the course of the year as the bourse managed to sign two big suppliers, the Edgars and OK Zimbabwe on the Zimbabwe Receivables Marketplace platform. The bourse also signed Datvest. This was in addition to the launch of the ZSE Depository.
These are part of the ZSE’s initiatives to diversify the bourse under its five-year strategy to 2025.
Other initiatives include introduction and launch of the ZSE Training Institute, the Victoria Falls Stock Exchange (VFEX), an exchange denominated in United States Dollars and enables companies to raise capital in hard currency.
More than a year after its launch, the VFEX has four listed counters, Seed Co International, Padenga, Bindura and Caledonia.
