The next wave: Emerging trends,strategic insights and future funding opportunities
STAFF WRITER
Real Estate Investment Trusts (REITs) hold immense potential to propel property development and accelerate urban renewal.
This has been a key talking point ahead of the ZimReal 2024 conference, Zimbabwe’s premier property investment conference. This year’s conference is being held under the theme “Driving Growth, Seizing Opportunity” and is set to take place on 28 August 2024.
Christabel Shava, Group Legal Manager for Terrace Africa, the asset manager of Zimbabwe’s first listed REIT, Tigere Property Fund, said the Fund continues to see significant demand from both retail and institutional investors, indicating REITs’ value proposition.
“With the limited financing options in the country, REITs are a viable source of financing and liquidity for property developers. They also serve as a capital preservation vehicle for retail and institutional investors,” she said.
“Furthermore, REITs are attractive because they enjoy corporate tax exemptions, which also increases net returns, promote liquidity and lessen the tax burden.” Currently there are six licensed REITs, two of which are listed on the Zimbabwe Stock Exchange, with three others expected to list on the Victoria Falls Stock Exchange (VFEX) by year-end.
REITs, which have consistently featured on the ZimReal programme, are expected to be a topical discussion issue again this year as stakeholders plan to navigate the regulatory environment in order to speed up project implementation and attract investment into other subsectors.
“There is an undeniable shortage of quality retail infrastructure in our country. REITs will serve a great purpose in terms of closing this supply gap,” Shava explained. “The retail sector offers healthy rental yields of between 5-7%, so developers will naturally gravitate towards it. There are, however, increasing developments in the hospitality, industrial and residential sectors, which could culminate in more diversified REIT structures,” she added. The Tigere Property Fund has concentrated on retail developments such as the successful Highland Park retail centre which will form part of a groundbreaking 200,000 square metre mixed use retail and residential Highlands Precinct which will dramatically change the face of the area, while Revitus, the other listed REIT, is focused on revitalizing the Central Business Districts (CBDs) in Zimbabwe’s major cities.
Welcome Mavingire, an investment advisor with Intellego Investment Consultants, said over time, “The market is likely to see more REITs focusing on hospitality and medical assets which adds a social impact to the REIT development story” He called for some of the regulations to be refined in order to unlock more capital and maximize and enhance investor value. “As a start, great work has been done.
There, however, needs to be more clarity on the tax incentives and more comprehensive REIT rules to ensure consistency, proper governance, and a better operational framework,” he said.
Mavingire added: “Whilst it’s important for regulators to promote the development of REITs, they also need to safeguard the markets’ integrity by ensuring that REIT developers are carefully screened so that only those with projects that reach full development and deliver returns for investors are registered.”
Mavingire will be sharing the stage with several local and international experts at the ZimReal Property Investment Forum on 28 August, 2024. The annual conference will bring together over 250 stakeholders, including property developers, hospitality and tourism players, and financial institutions from across Africa.
