CLOUDINE MATOLA
The prolonged liquidity crisis has had a particularly severe impact on Zimbabwe’s property sector, making it difficult for companies to raise capital, Business Times can report.
Speaking to Business Times on the sidelines of the recent Institute of Architects of Zimbabwe conference held in the capital Harare recently, Mashonaland Holdings managing director Gibson Mapfidza (pictured) said the market was exceedingly dry.
“So currently when you look at Zimbabwe, our capital market is very much dry. It’s not easy to raise capital in Zimbabwe. Why? Mainly because of the liquidity tightening across the globe,” Mapfidza said.
He added: “But over and above that as well, when you look at offshore financiers, when they are looking at projects in Zimbabwe to finance, they are looking for projects which are going to cause exports as that would then reduce the risk in terms of them receiving their repayment.
“In most cases, they would then require the company here applying for the loan to open an offshore account, an export account, it then makes it very easy for them to also get their repayment offshore as well.
“So, most of the funds coming into Zimbabwe are very much targeted at exporters and other industries that are also generating jobs for the diaspora market.
“So, when you look at real estate, which is our industry, our product is very much a local product. Look at housing, it’s going to be consumed by a person here because of the devaluations of our currency, not just Zimbabwe, but across Africa.
“If you get a loan in the United States of America dollars and you go through a massive devaluation, repayment becomes a big challenge.
So less and less money is coming through to the real estate industry. Mainly because of that, we can’t export these houses or these buildings.”
According to Mapfidza, the disparity between the cash available from the insurance and pensions industries, which are in Zimbabwean dollars, and the currency needed by the real estate sector, which is in US dollars, is another issue facing the real estate sector.
“Traditionally, real estate should be financed through local resources, mainly from the pension fund industry and also from the insurance industry. Unfortunately, those savings are really coming through mainly as a local currency and in terms of construction industries happening in United States dollars. So, there’s a mismatch as well,” Mapfidza said.
Real Estate Investment Trusts Association of Zimbabwe (REITAZ) chairman Mike Juru weighed in saying: “So there are insignificant loans that have been issued into the (property) sector.
“So, there is no money in it. At the same time, if you look at the tenure, the loans that are being afforded, it’s for 12 months, at most 24 months. “Now for property, which is a long-term investment, which expects 10-year money, 25-year money. It then gets to be expensive.
“So, if it’s there, it’s short-term, which is not viable. And that’s on its own it then points to the direction that there is need for newer funding in the market,” Juru said.
