With the dramatic events in Zimbabwe in the month of November 2017, readers living in the diaspora will have renewed interest in the possibility of coming home, or at very least starting to invest for a future in their home country.
A market analyst for a leading real estate agency based in Harare is confident that there will be a good window for investing in property in 2018.
“If even some of what people are expecting happen in Zimbabwe happens, property prices are set to firm in coming years. If the optimistic view is realised, then investing in property now may even yield good to excellent returns in the short and medium term. It would take a totally unexpected and massive disaster to see prices dip below where they are today.”
Currently property prices are down over a lack of demand stemming from the unstable financial environment, specifically access to hard currency. It has resulted in buyers who are earning money outside the country being able to buy properties for up to 30% below asking prices – making the investment by Diaspora in land or housing even more tempting for now.
“We have already seen a spike in interest from diasporans looking to set themselves up here. The cost of building has skyrocketed in recent months, so most people are looking to buy up and running properties, or vacant land to cash in on in the medium to long term, or after building prices come down.”
The analyst believes that if the economy recovers in the medium term, the window for investment for` middle class families might close.
“In Kenya when the economy took off prices skyrocketed. Property prices in Kenya today are so high that ordinary families can only dream of owning their own home. My instinct says that we could be facing such a situation in Zimbabwe within a decade.”
Foreign owned retail franchises including SPAR, PicknPay and Food Lovers’ Market, who have struggled to pay their foreign suppliers for their imported goods in recent months are reported to have been snapping up property in Zimbabwe with a view to obtaining the land where their goods are produced, staff housing for management, and of course more outlets for their chains, all at low prices. Rather than fearing this development, the analyst encourages Zimbabweans to seize the day and invest as far ahead of the possible surge in prices driven to a large degree by this kind of foreign investment.
He warns however that investments are not likely to yield money in the short term, with rentals in Zimbabwe being among the lowest in Africa at the moment.
“Finding good, paying tenants is extremely difficult. The law favours the lessee in Zimbabwe, and evictions over non-payment are difficult and expensive,” he said. The analyst recommends partnering with a professional and well-known rentals agency that can both manage tenants and the upkeep of the property.
“Yes, you have to pay for the service, but most of our rentals are owned by clients who have had their fingers burned badly in the past.”
The analyst says that rentals of big, luxurious suburban houses will yield the lowest returns of just 2-3% per annum, whereas smaller, cheaper homes, including houses in Harare’s high density areas are treating owners with up to 15-16% returns per annum.
“Buying flats, town houses, and garden flats that are part of a well run complex is a very good investment. These are yielding better returns, are popular with Harare’s urban professional who actually pay their rent, and best of all, they are part of associations that share communal burdens such as security, borehole maintenance, and landscaping costs. Big old houses with rambling gardens are a headache to manage, even for an agent, but especially for an owner living overseas.”
As has been the case with other cities including Johannesburg where apartments in the formerly unappealing Hillbrow area for example have become very desirable, urban renewal is both inevitable and hugely rewarding for investors who risked their money in formerly run down or dangerous neighbourhoods.
“If I was looking to invest anywhere in the world, Zimbabwe would be high on the list of places to research right now. Apart from getting a foot in the door in case the market gets out of hand later on, I think Zimbabweans in the diaspora that invest in property here are very likely to see a good return when rentals firm up, and sales pick up again,” said the analyst.
In our next issue we will look at how you can improve your chances of finding good tenants for your rental property in the most cost effective way.
If you are looking to buy property in Zimbabwe, Access Finance will help you send the money home to pay for it. Use our amazing remittance services to get property sellers to sit up when you start negotiating, and ensure you get the best price and best return from your investment as you take this big step towards achieving your financial dreams.
Access Finance is a financial services company registered in Zimbabwe.
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