A high number of tenants are failing to meet their obligations, a development that has impacted negatively on the property market, according to a report by a real estate firm.
Report by Kudzai Chimhangwa
In its mid-year 2012 property market report, Bard Real Estate noted that the Zimbabwean property market’s major downside was the inability of tenants to meet their lease obligations while arrears, bad debts and collections charges were ballooning.
“Good tenants with strong covenants are not there anymore. This is one of the biggest concerns on the market. Office rentals are currently depressed due to rising vacant office accommodation, thereby affecting any upward rental adjustment,” reads the report.
“Operational costs have been a challenge for both landlords and tenants as a result of high rates charges, water and electricity. Despite, the poor services that municipalities are offering to their clients, water and sewerage disposals are rising above what is generally charged in the region.”
The report said these developments have resulted in huge arrears building-up on most property portfolios and in response to the huge arrears, local authorities are now attaching buildings.
Exorbitant rates being charged by local authorities are compounding the situation consequently discouraging investment.
The country’s property sector continues to reel from the contagion effects of a decade-long political stalemate and economic recession that saw a massive gap in any meaningful supply of real estate and little or no construction activities.
However, the report observed that property values in Zimbabwe were currently at their lowest and advised this would be the right time to buy. “Zimbabwe rentals are still trailing those that are charged in the region. International investors will only be attracted to invest if the rentals will adjust to accommodate an accepted rate of return,” the report states.
“The property sector’s ability to generate income in difficult operating environments has proven to be its main attraction, unlike most listed companies on the Zimbabwe Stock Exchange which have failed to declare dividends for the last three years, depriving investors of any returns.”
Experts say productive sector growth is the panacea to the real estate sector’s growth, which will stimulate demand for space in all types of real estate, further pushing up rental rates.
