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Empty units in the CBD have become visible with preference for suburban offices

 Property Reporter
SUBURBAN offices in Zimbabwe have become more sought-after invest¬ments due to their lower void rates, but sales transactions have remained low, a report by Knight Frank says.In its 2017 Africa Report Outlook, Knight Frank says most landlords are converting office space to shops while others are partitioning floors into smaller suites to reduce vacancy levels.

“Zimbabwe is suffering from economic and liquidity challenges, which have stagnated office market activity.

“Supply is higher than demand and tenants are voluntarily surrendering space. Office build¬ings in the Harare Central Business District have void rates in excess of 50 percent, making them unattractive investments,” says the report.

The prevailing economic challenges, char¬acterised by liquidity constraints have seen most commercial tenants relocating to cheaper properties outside the Central Business District.

The report also notes that demand for retail space remains high. However, empty units in the CBD have become visible and vacant space is taking long to lease.

It says retailers continue facing competition from street vendors who sell their goods on shop pavements.

The construction of new suburban shopping malls such as the Mall of Zimbabwe and the Gun¬hill Mall has been shelved in light of the country’s poor economic outlook.

Nonetheless, demand for prime suburban retail space remains buoyant and there are high occupancy rates in this sector.

Prime rents are currently higher for suburban retail space, at $25 per square meter per month, compared with $20 per square metre per month in the CBD.

“Investors are holding on to their retail invest¬ments, with Riverside Walk being the only sub¬urban shopping mall that has been sold since 2015,” says the report.

“On the industrial market, the report notes the continued decline of the economy has led to several manufacturing companies closing operations.

“ It says very little foreign direct investment has come into the country due to among other things the high cost of capital.

“This has led to an oversupply and underuti¬lisation of industrial space.

“The sector is therefore characterised by high vacancy rates, declining rents and the voluntary surrender of leased space by tenants.

“A number of investors in this sector are look¬ing to disinvest, but there is little or no demand except from a few owner-occupiers,” it says.

Residential market transactions are being slowed down by the lack of mortgage finance to assist buyers.

Most transactions are therefore on a cash basis, and the majority of the population does not have the necessary funds to be able to buy property.

Low disposable incomes and poor liquidity have depressed rental levels and reduced prop¬erty prices.

“Therefore, no major speculative housing developments have been built in recent times, and the few attempts to construct such projects have failed.

“The limited available new stock has mainly come from self-build projects and housing coop¬eratives.”