HARARE, April 10 (The Source) – Zimbabwe is experiencing an oversupply and underutilisation of industrial space due to closure of manufacturing firms and low influx of foreign direct investment, according to a leading real estate consultancy.
Zimbabwe remains an FDI leper, with inflows declining from $399.2 million in 2015, to $254.7 million in 2016, reflecting low foreign investor sentiment in the country. Analysts blame an untenable political situation, poor operating environment, policy inconsistency and unfavorable investment policies for the low investor appetite.
“Very little foreign direct investment has come into the country as a result of the government’s indigenisation policies, the high cost of capital and socio-political instability. This has led to an oversupply and underutilisation of industrial space,” said Knight Frank in a research note.
High vacancy rates, declining rentals and the voluntary surrender of leased space by tenants as investors withdraw or reduce their investment is now characteristic of the sector, it added.
“A number of investors in this sector are looking to disinvest, but there is little or no demand except from a few owner-occupiers,” it said.
Office market activity has been stagnated, resulting in over 50 percent void rates in office buildings. The capital Harare has not seen new multistorey office buildings in the CBD in the last 20 years, said Knight Frank.
Residential market transactions are being slowed down by the lack of mortgage finance to assist buyers, it added.
Zimre Property Investments (ZPI) recently in its full year results presentation said demand for office and industrial space had deteriorated in 2016 full-year as tenants continued to either rationalise occupied space or vacate commercial premises to operate from non-traditional locations, resulting in excess supply of space in the market.
Old Mutual Zimbabwe (OMZ) recently said it intends to convert some of its commercial properties in the capital into residential flats as demand for commercial space in the central business district continues to fall.
The property market is expected to remain depressed in the short term as downward pressure on occupancy levels and rentals persist.