Property market faces balancing act as space absorption remains subdued

  • Banking on full recovery of the productive sectors to boost demand for space
  • CBD offices, high density suburban shopping centres and specialised industrial sectors most affected
  • Rentals predominantly indexed in foreign currency to preserve value
  • Meanwhile, residential sector development activity remains strong

HARARE – Space absorption in the property market remains subdued with continued supply demand imbalances, pending full recovery of the productive sectors to support demand for space, according to First Mutual Properties (

The real estate company with vested interests in the development and management of commercial properties in the major towns of Zimbabwe said in its consolidated financial results for the six months ended 30 June 2021, that despite the COVID-19 pandemic and a gradual shift to a hybrid of remote working and office presence, corporates have maintained leases.

However, the excess supply of space is mainly historical space redundancy, with the sectors worst affected being the CBD Offices, high density suburban shopping centres and the specialised industrial sectors.

Meanwhile, demand for retail warehousing, light industrial properties and office park properties remains strong.

The comments come as the COVID-19 has severely disrupted the economic landscape in Zimbabwe and the world at large. The country was already under significant economic pressures as persistent currency depreciation, higher than desired inflationary pressures and low production have resulted in limited affordability.

FMP chairperson Elisha Moyo noted that price discovery of rentals continues, with rentals predominantly indexed to foreign currency as landlords seek to preserve value of cash flows.

“Transaction activity remains subdued, as property investors hold onto real estate to preserve value,” he said.

“There are limited options to recycle into new assets as the current stock in the market has relatively aged requiring significant capital to upgrade.”

On the other hand, demand for quality real estate remains high, with investor appetite skewed towards real assets as high inflation expectations remain.

For the commercial development side, Moyo highlighted that activity also remains limited due to the supply-demand imbalances.

“The majority of development activity remains in the industrial/retail warehousing sectors, while limited owner-occupied office park-style buildings are ongoing,” he said.

On a positive note, the residential sector development activity remains strong, mainly supported by the informal sector of the economy and the Diaspora community.

On the outlook, Moyo highlighted that there are concerns around the general economy due to the increase in COVID-19 cases, amid a slow vaccine rollout, and the potential impact on the economy if stricter lockdowns are enforced to curb the spread of the COVID-19 virus, especially the Delta variant.

Any further COVID-19 induced disruptions will, according to Moyo, impact tenant cash flows, with possible negative impact on the collection rate.

“The Group continues to scout for opportunities within the market to further grow and differentiate the property portfolio, with additional strong emphasis on improving the performance of the existing property portfolio, and sustainably managing operating expenses,” Moyo said.

Equity Axis News


Please enter your comment!
Please enter your name here