Bleak Outlook for Zimbabwe Real Estate Market

The outlook for the Zimbabwean real estate market is still bleak on the back of macroeconomic factors which are negatively impacting on returns, raising concerns about a potential decline in demand for commercial rental space, investment firm Bard Santner has said.

This, according to the company, is a result of the economy continuing to experience considerable endogenous and exogenous inflationary pressures that have a major direct impact on the local currency.

“This will negatively affect consumer disposable incomes, business profitability and result in lower demand for commercial renting space. Consequently, returns from office, retail and industrial space markets will remain lower than regional peer markets like Zambia, Mozambique and South Africa.”

This increased uncertainty raises the possibility of more rental income declines over the medium and long terms, Bard indicated.

The retail market has been severely impacted by the country's current economic difficulties, which have been made worse by COVID-19 lockdowns during the past two years, according to the firm's review of the real estate industry in Zimbabwe.

“There also seems to have been a noticeable shift to online shopping by consumers, undermining the business model employed by a large majority of landlords across the market. 

Again, a growing number of informal traders and vendors in cities and towns are driving traditional formal tenants out of business. In a bid to manage cost and fight competition, tenants are being forced to downsize or close, leading to excessive supply of space in the commercial lease market.”