ZIMBABWE has experienced a steady increase in rentals during the month of July as a result of property shortages, increased salaries across the board and a resurgence of low-scale mortgages, property analysts said this week. However, most rentals being charged on the market have been described as unjustified, while the revival of mortgage lending is seen as a desperate attempt by building societies to grow business under a recovering economy.
Ailse Properties managing director, Andrew Chifamba, said there was increased activity on the market between April and June caused by increased number of loans which were made available during the period under review.
The second quarter of the year has been active, with a number of companies giving their employees loans. Also there is a marked interest in commercial and industrial property, he said.
Salaries up
There are a number of properties for sale at the moment. The increase in rentals is being attributed to salary reviews, which were upwards for most sectors, Chifamba said.
Dream Properties director, James Ruza, told The Zimbabwean that the rise in residential property rentals was due to a shortage of properties and financial institutions limiting loans due to liquidity challenges.
He said the industry was still working on the percentage increase of residential properties and rentals. During the first half of the year prices of residential properties rose by an average of 12,5% while rentals rose by about 25%.
Investing in a residential property, however, makes very good financial sense, especially if it means not having to pay rent. And if you can afford it, investment in real estate makes a huge amount of sense, said Ruza.
Profiteering
He said most rentals were not justified as many landowners and estate agents were profiteering, at the same time failing to maintain the properties.
Overall, Zimbabwes residential property outlook is looking decidedly more positive with a number of factors injecting renewed confidence and money in the market and delivering a number of compelling reasons why property is still your best investment, Ruza said.
The immediate past president of the Confederation Industry Federation of Zimbabwe, Daniel Garwe, said the construction industry was yet to benefit from mortgages being offered being offered by financial service institutions.
There is no clear path on how mortgage finance is being provided. Building societies have not given us a clear direction, Garwe said.
Too high
He said the two year mortgages being offered at the moment at interest rates of up to 22% were too high.
The Zimbabwe property market is experiencing an increased in activity, but affordability is still a big challenge. While Rutendo is anticipating good trading conditions in 2010 and has already seen an increase in property transactions, affordability, he says, will continue to be a challenge.
In July a standard residential property in high-density areas were being sold for between US$25 000 and US$40 000. A standard property in medium density areas cost between US$45 000 and US$65 000. Residential properties in low-density areas are going for anything above US$90 000.
Realty Centre Properties, based in Harare, said the increased activity was exceptionally positive coming from an adverse environment where the monetary transition to the US dollar last year was a big shift for the people of Zimbabwe who had to adjust their income accordingly.
High density
Properties in high-density areas are the most popular due to their affordability, selling for between USD10 000 and USD15 000 upwards. Properties is such areas usually consist of two- or three-bedroom apartments with a relatively small floor area.
For USD60 000 and more, buyers can purchase a two- or three-bedroom home in a medium density area. As incomes improve, more loans are advanced and there is more activity in these areas across the board. As always, location determines the property price.
An acre of land with a home consisting of three or four bedrooms, a lounge, dining room, swimming pool and security in low density areas, such as the northern suburbs of Harare, can be purchased from around USD200 000.
Property analyst Michael Russell said while the market was adjusting itself after dollarisation, the same could not be said about residential properties.
The rental yields, themselves a function of the income levels and the pace of economic activity, have improved in the middle density and low density segments but the cost of building when compared to the region has not, Russell said.
Increased activity
Going forward, the availability of loans for properties mainly below US$50 000 is expected to increase activity on the property market as investors take positions to acquire inflation-proof investments.
The residential property market has been active especially in areas below US$50 000.
Most houses in this bracket are said to be below standard and unworthy of the asking price but buyers are prepared to make renovations at their own pace when they buy.
Meanwhile property-linked counters such as Dawn Properties, Pretoria Portland Cement company, Larfarge, Murray and Roberts traded mixed during the period under review.
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