This text was Extracted from by Knight Frank’s “Africa Report 2015: Real Estate Markets in a Continent of Growth and Opportunity.
The weakening of the Zimbabwean economy has led to poor office take- up in Harare and high void rates, in excess of 30%. The recently completed Old Mutual and Celestial office parks along Borrowdale Road have delivered 26,000 sq m of office space which remains largely unlet. Office rents have stagnated, as occupiers have struggled to meet rent and service charge costs, and are currently in the region of US$8- 10 per sq m per month.
Longcheng Plaza, a shopping mall built by a Chinese/Zimbabwean joint venture for an estimated cost of US$84 million, opened in December 2013. However, the proposed US$100 million Mall of Zimbabwe in Borrowdale has experienced delays to its construction. Retail space is in high demand, as a number of foreign brands are making inroads into Zimbabwe, including the South African retailers Pick n Pay and Mugg & Bean, Botswana supermarket chain Choppies and international fast food giant KFC. Prime retail rents are around US$25 per sq m per month. There is a trend for some landlords to redesign and reconfigure their existing space, to create smaller retail units.
Zimbabwe’s manufacturing capacity utilisation – a measure of the extent to which the country uses its installed productive potential – has fallen to below 40%. A number of manufacturing companies have folded or curtailed production. With the supply of industrial space exceeding demand, industrial rents and capital values have softened. As a result of the depressed economic activity and high cost of capital, investment in the sector has been low.
Residential market activity has been restricted by the absence of long term mortgage finance and poor liquidity. Expensive mortgages are offered on a selective basis, typically for 10-20 years at rates between 15-18%. This is unaffordable to most Zimbabweans. House prices and residential rents are falling as a result of the weak demand and low disposal incomes.
Source: Knight Frank