How to play the housing backlog theme

While the impact of the Covid-19 pandemic has not fully released its grip on the Zimbabwean economy, there are indeed pockets of opportunity in certain sectors.

One area that is evident is the surging demand for houses.

There is a clear preference for affordable suburban homes within the general populace.

In fact, land barons have been making a killing, particularly in urban areas.

In many cases, rogue land barons have taken advantage of the circumstances and haphazardly demarcated and sold pieces of land, some smaller than the stipulated minimum size of 70 square meters.

The demand for affordable housing has also been spurred by rural-to-urban migration. This has also resulted in the mushrooming of illegal settlements on the periphery of major cities and towns. 

According to the 2020 Africa Housing Finance Yearbook, the unaffordability and unavailability of mortgage finance in Zimbabwe has been the limiting factor for aspiring homebuyers.

In addition, new housing is inhibited by inflationary increases in the cost of building materials.

Potential borrowers cannot always afford to raise deposits of an average 25% for housing loans and meet monthly instalments, especially with high interest rates and compressed repayment periods.

As a result, Zimbabwe had a reduction in the number of mortgage loans during 2020. This declined from 11,485 as of 31 December 2019 to 8,282 as of 30 June 2020.  The housing backlog in urban areas is estimated at 1.3 million concentrated within the high-density sector.


The existing stock of housing in this sector is largely inadequate, as many families share houses with lodgers, resulting in crowded and unhealthy living conditions. Covid-19 disruptions have also forced many diasporic Zimbabweans to return home due to widespread loss of income in their host countries .

In a recent development, Shelter Afrique has extended a US$25m line of credit to Zimbabwe’s private sector housing programmes through three Zimbabwean institutions to build 5 000 low-cost houses. 

Of the total lines of credit, BancABC will receive US$11m, National Building Society US$4m and the Urban Development Corporation US$10m. Shelter Afrique is a pan-African finance institution involved in housing.

 It is a partnership of 44 African governments, the African Development Bank and the Africa Reinsurance Corporation. Besides the three institutions that had received financing, there were other applications from Zimbabwe that were at an advanced stage of approval, which could drive the total credit from Shelter Afrique to US$35m. 

Morgan & Co Research contends that the availability of credit for low-cost housing developments will create opportunities for construction and building materials stocks. We think Masimba Holdings is well positioned to take advantage of housing development projects as well as government’s extended infrastructure spending.

The company has also been investing in the latest equipment. The sustained international remittances inflow directed towards the residential housing sector is also expected to continue driving activity in the real estate sub-sector.

Based on our estimates, the stock is trading on a Fwd PER of 11.9x that is undemanding when compared to its peers. We rate the stock BUY.

Elsewhere, Turnall multiples look attractive. However, we maintain that the group could fail to adequately tap into these dynamics because of an influx of cheaper and stronger alternatives in the housing material and piping markets.

These low-cost materials have resultantly begun placing downward pressure on the group’s revenue and margins.

We have a SELL recommendation on Turnall Holdings.

Batanai Matsika is the Head of Research at Morgan & Co, and Founder of He can be reached on +263 78 358 4745 or      /

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