By Nyaradzo Nyere
The Covid-19 pandemic has hit Zimbabwe’s real estate sector hard as fewer people spend on properties while rentals have remained static due to low disposable incomes.
According to research by Knight Frank, a leading real estate agency in Zimbabwe, the pandemic worsened the problems that were already dogging the property sector.
“The lockdown measures have had adverse effects on consumer income, impacting various real estate sectors,” Knight Frank said.
“This was especially witnessed in the retail sector where businesses rely on walk in customers.
“Industrial tenants were also required to close their operations for the period of the lockdown, impacting on tenant’s ability to pay rent.”
Sinikiwe Muguti, a real estate agent based in Harare, said the past year had seen low purchases of residential houses and a poor uptake of office space as more people were working from home due to Covid-19.
“The real estate sector has suffered major losses and drawbacks,” Muguti said.
“Many people lost their jobs and sources of income because of the pandemic and this … adversely affected their buying power and consequently the real estate sector.”
“Additionally, some who used to rent offices in Harare have given them up.”
Some of the small to medium enterprises are also now operating from informal sites or from the boots of their cars as they cut down on expenses.
“The office is of no use to me anymore because l can do all my work remotely and without exposing myself to the virus,” said Violet Gumbi, a Harare entrepreneur.
Zimbabwe Stock Exchange listed entity, First Mutual Properties (FMP), said the property market continued to experience low demand for space with the central business district office sector being the worst affected.
FMP said the retail and industrial segments of the market remained resilient due to steady demand.
Muguti said in the years before the pandemic, people used to buy properties despite the difficult economic environment, but the pandemic had affected both buyers and tenants.
When the Covid-19 induced lockdown began, the government gave tenants a three month window to settle their rental arrears as a form of relief.
Most commercial tenants negotiated discounts of between 25 percent and 50 percent. Knight Frank said these were granted by landlords in a bid to retain tenants and attract new ones.
However, operating costs were not discounted and remained fully payable.
The agency also noted that residential market demand for residential properties for sale softened in the first half of 2020 due to the increased shortage of foreign currency, which was mainly preferred by sellers.
Non-availability of mortgage finance in United States dollars worsened the situation, Knight Frank said.
The economic activity slowed down in the first quarter of 2021 as the government imposed stringent lockdown measures in response to the second wave of the Covid-19 infections, a development that further weighed down the real estate sector.
“The lockdown this year has subsequently delayed rent review efforts, hindered collections and planned maintenance initiatives,” FMP added.