ZIMREAL Property Investment Forum’s (ZimReal) annual conference scheduled for next Wednesday will feature the scalable opportunities of real estate investment trusts (REITS).
There are two REITs listed on the Zimbabwe Stock Exchange — Revitus Property Opportunities and Tigere Real Estate Investment Trust — with a combined market capitalisation of over ZiG1,23 billion.
Terrace Africa group legal manager Christabel Shava said their REIT continued to see significant demand from both retail and institutional investors, indicating the trust’s value proposition.
Terrace Africa are managers of the Tigere Real Estate Investment Trust.
“With the limited financing options in the country, REITs are a viable source of financing and liquidity for property developers. They also serve as a capital preservation vehicle for retail and institutional investors,” she said.
“REITs are attractive because they enjoy corporate tax exemptions, which also increases net returns, promote liquidity and lessen the tax burden.”
According to ZimReal, there are six licensed REITs. Three REITs are billed to list on the forex-only Victoria Falls Stock Exchange by year-end.
“REITs, which have consistently featured on the ZimReal programme, are expected to be a topical discussion issue again this year as stakeholders plan to navigate the regulatory environment in order to speed up project implementation and attract investment into other subsectors,” ZimReal said.
- ZimReal conference to feature REITs benefits
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Shava said there is an undeniable shortage of quality retail infrastructure in Zimbabwe with REITs plugging the supply gap.
“The retail sector offers healthy rental yields of between 5% and 7%, so developers will naturally gravitate towards it,” Shava said.
“There are, however, increasing developments in the hospitality, industrial and residential sectors, which could culminate in more diversified REIT structures.”
The Tigere REIT is concentrated on retail developments such as its Highland Park retail centre, while Revitus is focused on revitalising the central business districts of Zimbabwe’s major cities.
Intellego Investment Consultants investment advisor Welcome Mavingire said the market was likely to see more REITs focused on hospitality and medical assets, which would add a social impact.
He called for some of the regulations to be refined to unlock more capital as well as maximise and enhance investor value.
“As a start, great work has been done. There, however, needs to be more clarity on the tax incentives and more comprehensive REIT rules to ensure consistency, proper governance and a better operational framework,” he said.
“While it is important for regulators to promote the development of REITs, they also need to safeguard the markets’ integrity by ensuring that REIT developers are carefully screened so that only those with projects that reach full development and deliver returns for investors are registered.”
The annual conference is expected to bring together over 250 stakeholders, including property developers, hospitality and tourism players and financial institutions from across Africa.
