Zimbabwe property boom continues

The real estate sector has also grown significantly over the years with individuals and companies alike keen on establishing a lucrative niche in the booming industry. Equity analysts said real estate players have been drawn into the sector because of the need to hedge against spiralling inflation. They say property prices have largely matched or outpaced inflation growth, despite certain speculative tendencies inherent in the industry.

High Rise Real Estate property consultant Mr Movern Chisepo said prospects for the industry remained robust, at least until year-end. "The property sector gives investors an opportunity to preserve value on investments and this is why the industry has grown in leaps and bounds in recent years," he said.

"Currently, property prices have stabilised due to the Government price blitz but we expect the sector to continue offering positive real returns. It would not be too surprising to see more property listings on the ZSE in a few years coming if inflation continues like it is."

Yearly inflation stood at 4,500 percent at the end of May with widespread rumours it topped the 5,000 percent mark at the end of June. The only other investment option to match a similar inflation-beating feat is the stock market.

Over the last three years, more property companies have listed on the stock market as opposed to other sectors.

In 2004, Dawn Properties, unbundled from hotel and leisure group Zimsun Leisure, becoming the only company to list on the ZSE that year, and with vested interests in property management. Only a fortnight ago, Zimre Property Investments also turned public with high prospects First Mutual Ltd subsidiary Pearl Properties will follow suit later this month. Currently, investors are subscribing to Pearl Properties Initial Public Offer shares that close in three weeks' time to pave way for listing.

And yet, only Red Star Holdings' January 2006 listing stands out as the only industrial company to list on the bourse in a period spanning three years.

Property prices, whether residential or commercial, have risen to unsustainable levels, fuelled strongly by speculation and high demand. Rapid demand has been seen among the Diasporans, who -- backed by the strength of the US dollar or the British pound -- have found the property sector a cheap option. It now costs an average $2 billion, $8 billion and $15 billion to purchase a house in the high-density, medium-density and low-density suburbs in that order. Seven months ago, it cost just a fraction of the above amounts to acquire a house in the respective areas.

Analysts explained that opportunities for growth in the property sector still abound, as demand for properties remains high. This is in spite of the rising costs of construction brought about by soaring inflation, which has also impacted negatively on the construction industry.

Courtesy: AllAfrica

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